Your money are where others suffer Value Erosion

Quick word:

I’m working to launch a customer understanding workshop for tech product builders.

I would love to have a discovery call and understand how you did it.

The first 5 who will sign up will get the workshop at a discounted price:

https://forms.gle/oRKXWAPDKJQ9kiUa9

In the first part, I explained what is the Customer Value Chain based on the book "Unlocking the Customer Value Chain" - of Thales Teixeira.

In this chain, you have 3 types of value activities:

Value Creation: Making something that helps people solve a problem.

Value Capturing: Earning money or benefits from the solution you created.

Value Erosion: Losing value when others offer something better or your solution becomes outdated #noAI

Let’s dive deep into each one and, in the end, discuss how you can capitalize on value erosion as a builder.

Below I tried to come up with examples based on the context of a project management tool because I see a very big battle between ClickUp , Jira Atlassian , Basecamp 37signals , monday.com and the list can continue.

1. Value Creation:

This is where businesses provide something new or improved that solves a real problem, creates efficiencies, or delivers a superior outcome.

In the B2B world, this often comes from innovation or optimization.

Value creation happens when your product makes the customer’s job easier, faster, or more cost-effective.

Let’s get practical - A B2B SaaS company that creates a project management tool for enterprises.

This tool integrates with CRM and other platforms, reducing time spent on manual data entry and improving overall productivity.

The value created here is the efficiency gained by automating tasks and providing seamless integration, which solves a pain point for many large organizations.

2. Value Capturing:

This refers to the process by which a company monetizes or retains the value created. This can be done strategically by value-based pricing or upsell opportunities.

The easy example that comes to mind is from the B2C world, same product, but different prices:

In the world of B2B SaaS, a company offers tiered pricing for its project management tool, based on nr of seats, nr of boards, etc. or they capture value by offering advanced features—like AI-driven project forecasting or deeper data analytics—at higher subscription tiers.

This way, they’re monetizing the extra value they provide to larger organizations, making sure that as the tool’s usage scales, so does the revenue.

3. Value Erosion:

This happens when the value created by a business starts to decline due to various factors, such as increased competition, changing customer needs, or technological obsolescence.

Value erosion reduces the company’s ability to capture value, it occurs when companies fail to adapt or when competitors offer more attractive alternatives, causing a loss in market share or pricing power.

In the Project Management space, if a SaaS fails to keep up with innovations like AI or data privacy features, competitors offering more advanced or secure solutions will start eroding their market share.

Customers may leave for newer tools that better align with their evolving needs.

As the value perceived by customers diminishes, the company's ability to capture revenue decreases.

How you can benefit from the value erosion of the big players?

When you are an early-stage startup it’s hard to have value erosion, the challenge comes from the fact that a big competitor can replicate your solution because they have the resources and the market.

But by understanding value erosion you can spot opportunities in the market to build better products on an existing demand.

That’s how the disruptive innovation concept appeared because it’s?an innovation that simplifies and makes more affordable products and services to undesirable markets by big companies or ignored customer segments.

Established companies typically strive to improve their products and services for their profitable customer base, largely ignoring the needs and desires of untapped segments.

If you want to do disruptive innovation it’s really important to understand the old way of doing and come up with a new innovative solution that would make value creation.

How you can capture value erosion?

Simple :)

Better understand the reasons why someone wants to change a solution, the old way of doing something.

Thanks for reading, if you want to work together, book a free intro call here, and let’s have a discussion:

https://app.reclaim.ai/m/intro-with-mircea