Announcing, The Flow: your SaaS growth bible  

Customer Value Chain: Definition and Application in Product Development

Prioritizing sales goals in their product strategy is common among many companies. But customers are becoming more and more clear about their expectations, and they prefer products that provide them with value. 

This is where the customer value chain comes into play.

The customer value chain puts the customer first instead of what you think might be most profitable or what your competitor is doing. This approach brings more loyal and satisfied customers.

So what is the impact of this approach on product development? Let’s look for an answer to this question starting from the beginning.

What is the customer value chain?

Chain illustration

The focus of the customer value chain is the customer. It’s not about your business goals, exciting product ideas, or sales quotas. It focuses solely on the value you add to customers.

So how will you identify and evaluate your customer value chain for product development?

Unlock the customer value chain to build better products

Let’s take a look at how you can leverage the customer value chain:

#1 Get to know your customers

As stated earlier, the main focus of the customer value chain is your customers. That’s why the best way to start the customer value chain is to understand your customers’ expectations.

  • What are your customers’ requirements?
  • What pain points do your customers have?
  • What does your target audience expect from a product?

Answering these and other questions will be the first step in aligning your product development process with your customer value chain.

There are some methods you can use to best answer these questions. Let’s look at them together.

Behavioral Segmentation

A group of people forming a pie chart

All customers in your target audience will have different answers to these questions. Therefore, treating all your customers as one group will lead to nothing but confusion.

Segmentation is a great way to avoid these problems.

When you segment your customers based on their purchasing and consumption behaviors, it becomes easier to generate insights about your customers. You can also pinpoint your customers’ expectations and pain points. In this way, you can increase the impact of your product development strategies.


I mentioned some questions you should focus on to get to know customers. The best way to get the correct answers to these questions is to ask customers directly.
One of the easiest and fastest ways to communicate directly with customers is through surveys. Thanks to surveys, you can quickly reach each customer segment simultaneously and get all the necessary answers within minutes.

HockeyStack's survey screenshot
From HockeyStack

With HockeyStack, you can take this process one step further. HockeyStack also allows you to analyze survey results in detail as if you were analyzing a funnel. You can also evaluate the responses of each segment separately with HockeyStack. In this way, you can better examine the expectations and feedback of your users and extract the most meaningful insights for your customer value chain and maximize the chances of product success. 

#2 Identify how customers use your product

Now you know your customers’ expectations. So, do your customers think your current product meets these expectations? Or to ask in more detail:

  • What features of your product do your customers find most valuable?
  • What features make it difficult for your customers?
  • What reasons do your customers in different segments choose your product?

This customer value chain is about answering these and other questions. Of course, there are different ways to do this as well, such as measuring the right metrics that will show you how much value your customers can get from your product. 

Let’s start with the first one.

Measure Feature Engagement

Tracking your feature engagement lets you observe how your customers interact with the product’s features. This helps you understand what they find the most value in and allows you to make data-driven decisions to improve product adoption and user experience.

Now that you know what feature engagement means, let’s take a look at how you can measure it.

Measuring the feature engagement rate is the best way to find out how your users interact with the different features of your product. The higher your feature engagement rate, the more your product’s features are valued and used by users.

HockeyStack's product dashboard screenshot

The feature engagement rate will give you an idea of ​​how popular your product’s features are. However, when it comes to the customer value chain, you may need to use another method to understand the value of features: analyze the feature adoption funnel.

The feature adoption funnel provides a detailed look at how your features are being used. The feature adoption funnel has four stages: Exposed, Activated, Used, and Used Again. If users repeatedly go through all of these stages for a particular feature, that means that it offers the kind of value that they were looking for.

Want to learn more about product and feature adoption funnels? Visit here!

Gather User Feedback

Another thing that customer-first product teams should consider is collecting customer feedback. Customer feedback includes all subjective opinions of customers about the value of products. That’s why it unlocks excellent insights into the customer value chain when combined with information like feature engagement data.

Just as you can get to know customers, you can also use surveys to gather customer feedback. This will facilitate and speed up the process.

HockeyStack's survey example

Product feedback is essential not only for existing products but also for new products to market. It would be best if you started collecting feedback early to ensure your new products offer value to the customer. Also, if you identify that your customers cannot find utility in your product’s features, you’ll be able to make any necessary improvements to increase the feature engagement rate. 

The best way to achieve this is to take advantage of MVPs. When you launch your product’s MVP, you can shape your development based on the feedback it receives.

#3 Design a customer-first strategy and bring it to life

At this stage, you know your customers’ needs and wants. You are aware of the pain points. You know which features offer value and which ones cause churn. But the customer value chain is not limited to just detecting them. It also includes strategies that will make the company customer-centric.

But what are these strategies? Let’s take a look.

Customer-centric product strategies

Customer-centric product strategies aim to create a positive customer experience at every stage. Doing so builds customer loyalty and satisfaction, which leads to referrals for more customers.

All you need to do to create a customer-centric product is extract insights from all the collected data. You must make the customer your decision maker and create the right product to meet their expectations.

Align marketing strategies with product strategies

Even if you incorporate customer feedback in the development phase, if your product is not marketed correctly, your audience will probably not be able to see the value in it. 

Here’s what you can do to ensure that your prospects understand exactly what’s in store:

Focus on demand generation: Marketing adds value by creating demand for a product. Consumers cannot purchase a product if they are unaware of its existence or if they are unable to understand how this product will help them for various use cases. What’s more, these users can’t find solutions if they don’t realize they have an issue to begin with. Remember to remind customers of their problems when marketing your product in order to drive demand and add value.

Create a powerful brand: A company’s brand is as valuable as the features of its product. When you use marketing to create a consistent, appealing brand, you add value to your company by increasing customer loyalty.

Don’t forget onboarding

HockeyStack's onboarding funnel

Onboarding is a process that allows you to introduce your product to customers when they first interact with your product. This process is a tremendous opportunity for you to show your customers that you will deliver a good experience.

Customer-centric onboarding includes numerous step-by-step tutorials and many customer support services. This way, it answers your customers’ questions about your product or service before they even think to ask.

The customer-centric onboarding process is much more than just welcoming new customers. Instead, it’s about introducing new users to the product and making them understand how it will change their lives for the better. After completing the onboarding process, customers become aware of the product’s potential. Thus, onboarding is one of the most critical elements of the customer value chain.

#4 Track and monitor success

The customer value chain does not end when you develop a successful strategy. Customer expectations and perceptions of value can change over time. This is why you must regularly monitor whether your strategies match customers’ expectations.

Leveraging the power of metrics at this stage is a great tactic. Here are some metrics you can measure to track the success of your processes:

Feature engagement: Just like in the second stage, you also need feature engagement in this phase. This metric reveals how your customers interact with your product’s features. In this way, you can track the success of your product development strategies. You can also take immediate action when faced with an issue, for example, when customers don’t react to a feature the way that you expected.

Churn rate: The churn rate indicates how many of your customers have stopped using your product. This metric is crucial because it shows what percentage of your customers no longer find value in your product. Therefore, the lower your churn rate, the more successful your strategies are.

Churn rate form HockeyStack's product dashboard

Active Users: This metric shows how many people actively use your product. You can follow active users on a daily, weekly or monthly basis. This metric is important because the more users actively use your product, the more users find your product valuable.

“Wow! I have so many things to keep track of.”

Such a thought may have crossed your mind. And you are right. It can be pretty challenging to extract insights while keeping track of all these metrics and more. But there is a way around this: Dashboards.

HockeyStack allows you to collect all the metrics and create the funnels you need in a single dashboard and monitor them in real-time. This way, you will be aware of the results of your customer-centered strategies. You can quickly identify which innovations your users like and the ones they don’t find helpful. And when you need to fix something, you can make the necessary changes on time.

HockeyStack's product dashboard screenshot

If you’re new to creating dashboards and have no idea where to start, don’t worry! HockeyStack offers many different templates that you can use. You can choose the one that best suits your needs from these templates and customize them as needed.

Key Takeaways

The customer value chain helps to make all operations in product development customer-centric. It ensures that the customers’ expectations and demands align with the product. There are some stages you need to go through to ensure this. It isn’t straightforward to complete these stages without having adequate analytical tools. HockeyStack helps you implement the customer value chain most effectively into your product development strategies.

Curious about more? Try out the live demo and or start your free 14 day trial today!

Subscribe to the The Flow's weekly issues Sharing everything we know about growth, with real playbooks we use, interviews with top growth leaders, and research & opinion pieces.


Uncover What Drives Revenue