Customer struggle, often viewed as a business challenge, presents a significant, frequently untapped, frontier for strategic growth and equity value creation. For private equity sponsors and portfolio company CEOs, understanding and addressing these areas of high customer effort is not merely about problem-solving; it's about identifying potent opportunities for innovation and revenue generation. This guide explores how, at thrv, we use Customer Effort Score (CES) data, integrated into our proprietary Jobs-to-be-Done (JTBD) methodology, as a precise instrument for monetizing customer struggle effectively, thereby accelerating growth in our portfolio companies.
To effectively monetize customer struggle, one must first accurately identify and comprehend it. At thrv, our approach is rooted in the Jobs-to-be-Done theory, which posits that customers "hire" products or services to get specific "jobs" done. Struggle arises when they find it difficult to execute these jobs quickly and accurately.
Customer struggle isn't abstract; it's tied to specific actions customers are trying to complete. For instance, a customer isn't just "struggling with software," they are struggling to "calculate the projected revenue" or "identify integration errors." These are unmet customer needs. When numerous customers report high effort for particular job steps, these areas signify substantial struggle and, consequently, opportunity. Understanding these valuable customer insights is foundational to our approach at thrv.
Customer Effort Score (CES) measures the percentage of customers who report that it is difficult to satisfy a given step in their Job-to-be-Done. This difficulty is assessed based on three measurable criteria: the effort required, the speed of execution, and the accuracy of execution. A high CES indicates a significant unmet need—a point of friction where customers are expending undue time and energy. This is precisely where opportunities for monetized solutions lie.
Our JTBD methodology uses CES to pinpoint where customers experience the most difficulty. We measure how quickly and accurately customers can get their job done. For example, a high CES for a job step like "determine the correct configuration settings" signals a prime area for innovation. By improving the speed and accuracy with which customers can perform this action, we create value that can be monetized. This focus on CES differentiates our method, moving beyond vague notions of dissatisfaction to concrete, measurable effort.
Monetizing customer struggle is a strategic decision that transforms how companies approach customer needs and product development, directly impacting equity value.
Traditionally, addressing customer issues has been viewed as a cost center. However, by identifying high-effort areas through CES data, our portfolio companies can develop premium solutions that customers are willing to pay for. This represents a strategic move from cost to revenue generation—a transformation we've implemented across our portfolio companies.
For thrv, monetizing customer struggle is central to our mission: accelerating growth in our portfolio companies to create superior equity returns. Innovations that effectively reduce high customer effort scores not only solve problems but also create differentiated value. This value translates into stronger market positioning, increased customer willingness to pay, and ultimately, higher valuation multiples for our portfolio companies.
Reducing customer effort has a profound impact on business outcomes. When customers can execute their jobs quickly and accurately with a product, their loyalty increases. When our portfolio companies reduce customer effort through targeted solutions, we consistently see improved customer loyalty and increased willingness to pay. Companies that effectively monetize solutions to customer struggle often experience significant improvements in retention and revenue growth. Solutions that demonstrably reduce effort command a premium because they save customers time and resources, improving their own productivity.
Our systematic approach ensures that efforts to monetize customer struggle are targeted, effective, and aligned with overall growth objectives.
The first step is the precise identification of customer struggle. We deploy CES surveys at critical touchpoints in the customer's job.
Once high-effort job steps are identified, we assess the potential for value creation. This involves:
With a clear understanding of where struggle exists and the value of resolving it, our portfolio companies use our JTBD methodology to guide product innovation.
The final phase involves packaging these innovative solutions into monetizable offerings.
CES data, analyzed through our JTBD lens, directly informs the types of monetizable solutions our portfolio companies can develop.
When CES data reveals significant struggle with core job steps that are critical for the customer, offering premium versions of the product or service can be highly effective.
For complex jobs where customers struggle with specific expertise or time constraints, specialized, fee-based services can provide immense value.
At thrv, we often find that customer struggle stems from products lacking specific capabilities needed to get critical parts of their job done effectively.
Monetizing customer struggle must be approached ethically and transparently to build trust and long-term customer relationships.
At thrv, we ensure that any monetized solution offers substantial, demonstrable value by significantly reducing customer effort related to a specific job step. The goal is not to exploit difficulties but to provide superior ways for customers to achieve their objectives. Our experience with portfolio companies confirms that the highest returns come from improving operations and customer experience through solutions that genuinely reduce customer effort.
It is crucial to be transparent about what is included in standard offerings versus premium, paid solutions. Customers should clearly understand the additional value they receive for the additional cost. This ensures a fair exchange and reinforces the idea that the company is a partner in their success.
At thrv, our proprietary JTBD method is significantly amplified by our AI-powered platform. This synergy is crucial for efficiently identifying and acting upon opportunities to monetize customer struggle.
By embedding AI within our core JTBD methodology, we ensure that monetizing customer struggle is not a one-off tactic but a continuous, scalable engine for growth and equity value creation in our portfolio companies.
Identifying and monetizing customer struggle through the strategic application of Customer Effort Score data and the Jobs-to-be-Done framework is a powerful lever for growth. For private equity sponsors and portfolio company CEOs, this approach, as implemented by thrv, offers a clear path to developing innovative products and services that customers value and are willing to pay for. By focusing on reducing customer effort and improving the speed and accuracy with which customers can accomplish their jobs, we not only enhance customer loyalty but also build more profitable, resilient businesses with superior equity returns.
Are you ready to transform customer struggle into a strategic advantage for your portfolio company? Explore how thrv's JTBD software and platform can help you identify unmet needs and accelerate growth. Learn more about our approach at thrv.com or see our solutions for private equity.
Q1: What is Customer Effort Score (CES) and why is it important for monetizing struggle?
A1: Customer Effort Score (CES) is a metric that measures the percentage of customers who report high difficulty in getting a specific job step done using a product or service. It's crucial for monetizing struggle because it precisely identifies areas of high customer effort—these are unmet needs representing opportunities to create and charge for solutions that reduce this effort, thereby improving how quickly and accurately customers achieve their goals.
Q2: How does Jobs-to-be-Done (JTBD) relate to monetizing customer struggle?
A2: JTBD theory helps define what customers are trying to achieve (their "job"). Customer struggle arises when they find it hard to complete steps within that job. By understanding the JTBD, companies can identify these difficult steps (often highlighted by high CES) and then innovate solutions that help customers get the job done better. Monetization occurs by offering these improved solutions as premium offerings.
Q3: Can monetizing customer struggle negatively impact customer relationships?
A3: It can if not handled ethically and transparently. The key is to ensure that any monetized solution provides genuine, significant value in reducing effort for a specific job step. If customers perceive that they are being charged extra for solutions to problems that shouldn't exist or for basic functionality, it can damage trust. However, when done correctly—by offering true premium value that helps customers achieve their goals more effectively—it can strengthen relationships.
Q4: What are some examples of monetizing customer struggle?
A4: Examples include:
Q5: How does thrv use AI in monetizing customer struggle?
A5: At thrv, our AI-powered platform accelerates the analysis of CES data and other customer feedback to quickly identify high-effort job steps. AI helps scale the process of translating these insights into actionable product roadmaps, enabling our portfolio companies to rapidly develop and deploy solutions that address specific customer struggles, which can then be monetized. This provides a speed and precision advantage in creating equity value.
Q6: What is the first step a company should take to start monetizing customer struggle?
A6: The first step is to systematically measure customer effort. Implement Customer Effort Score (CES) surveys at key points in the customer journey to understand where customers are struggling the most to complete their job steps. This data will provide the foundation for identifying opportunities.