Don’t Just Create Value—Capture It: A Framework for Unlocking New Revenue in Modern Industries

TLDR:

• Innovation without value capture is a missed opportunity: Companies often excel at creating value but fail to implement effective strategies to capture it, leading to lost revenue.
• Five key value-capture strategies can unlock new revenue streams: Adjusting pricing models, rethinking who pays, changing what’s priced, timing payments, and targeting new customer segments are critical levers for growth.
• Industries like SaaS, FinTech, HealthTech, and BFSI thrive on innovation, but applying these value-capture strategies can dramatically improve profitability and sustainability.
• Customer engagement, omnichannel experiences, and advanced MarTech (e.g., AI-driven analytics) are essential to effectively capturing and maximizing value in today’s fast-evolving markets.
• Strategic pricing and personalized customer experiences are the future of competitive advantage; businesses must evolve their models to ensure long-term growth.

💥 Innovation without value capture is like planting seeds and forgetting to harvest the crop.

Too many businesses focus on creating cutting-edge products, but here’s the real question:

Are you capturing the full value of your innovation?

The gap between creating value and capturing it is where companies leave billions on the table.

Imagine revolutionizing your industry, yet watching your competitors capitalize on your innovations.

Don’t let this happen to your business.

Unlock new revenue streams by mastering the art of value capture—here’s how you can start today!

According to IMD professor Stefan Michael, many organizations focus heavily on value creation while neglecting the equally important aspect of value capture. This imbalance can result in missed revenue opportunities, particularly in fast-evolving sectors like e-commerce, #SaaS, FinTech, HealthTech, and BFSI (Banking, Financial Services, and Insurance).

This article presents an actionable breakdown of Michel’s value-capture framework, demonstrating how businesses can rethink their strategy, target new revenue streams, and build sustainable growth by focusing on value capture.

We’ll also explore how these insights can be applied in modern business landscapes and across key areas such as #CustomerEngagement, #omnichannel experiences, customer experience, and marketing technology.

The Blind Spot in Innovation: Value Capture

Many organizations, particularly those in highly innovative industries, assume that once they create value, the rewards will follow. However, Michel argues that without a clear focus on how to capture that value, businesses leave money on the table. This blind spot is often found in companies heavily investing in innovation but not paying equal attention to revenue models, pricing mechanisms, and other elements that can transform customer value into business profit.

Five Key Value-Capture Strategies

Michel’s framework outlines five strategic areas where businesses can rethink how they capture value:

1. Change the Price Mechanism: Shifting from traditional pricing models to value-based or auction-based pricing can unlock new revenue. In SaaS, for example, instead of charging based on features or usage, companies can adopt performance-based pricing where customers pay based on outcomes. Google Ads is an iconic example of auction-based pricing, allowing businesses to bid for ad space, capturing the maximum willingness to pay.
2. Change the Payer: In some cases, businesses can shift who pays for the value. In FinTech or BFSI, for instance, companies could partner with financial institutions to subsidize the cost of their services for end-users, leveraging third-party payments to unlock broader market access. A notable example is LifeStraw, where carbon credits subsidize the cost for end-users, making it affordable for those in developing countries.
3. Change the Price Carrier: This involves rethinking what part of the product is priced. Nespresso revolutionized coffee pricing by charging per capsule rather than per kilogram, allowing for premium pricing on individual units. In #HealthTech, companies could shift the price carrier from products to services, such as pricing based on personalized health insights rather than the devices themselves.
4. Change the Timing: The timing of value capture is critical. Subscription models, common in SaaS, BFSI, and e-commerce, allow companies to spread out the payment over time, creating predictable revenue streams. In HealthTech, offering long-term care subscriptions or remote monitoring packages can enable businesses to capture ongoing value, rather than relying on one-time product sales.
5. Change the Customer Segment: Targeting new or underserved customer segments is another way to capture value. In e-commerce, for instance, companies can introduce low-cost tiers or premium membership services to cater to different levels of customer willingness to pay. Similarly, in FinTech and #BFSI, focusing on the underserved segment of financially excluded individuals opens new avenues for value capture.

Applying Value Capture in Modern Industries

E-commerce, SaaS, FinTech, HealthTech, and BFSI are industries that thrive on innovation, but capturing the value from that innovation can be tricky. Here’s how Michel’s framework can be contextualized for these sectors:

E-commerce:

In e-commerce, value capture often involves optimizing pricing models and monetizing customer behavior insights. Companies can deploy dynamic pricing, changing price based on demand, and leverage customer data for personalized recommendations that increase the likelihood of purchase. Subscription models (such as Amazon Prime) offer another way to capture long-term customer value by bundling services like faster shipping, exclusive deals, and streaming into a single package.

SaaS:

For SaaS companies, the key to value capture lies in flexible pricing and subscription models. By adopting outcome-based pricing, where customers pay based on the results they achieve using the platform, SaaS providers can align customer success with business profitability. Another approach is to offer freemium models, where basic services are free but advanced features are paywalled, allowing companies to capture more value from high-usage users.

FinTech and BFSI:

In FinTech and BFSI, value capture can be revolutionized by two-sided market models where financial institutions or third-party providers pay for access to customer data or usage insights.

For example, companies could subsidize transaction fees or account management fees by partnering with advertisers or other financial service providers. Additionally, subscription-based financial services that offer personalized advice, fraud prevention, or automated savings plans provide ongoing value capture opportunities.

HealthTech:

HealthTech companies often face challenges in capturing value due to the complex nature of healthcare pricing. Shifting the price carrier from one-time device purchases to subscription-based health monitoring services offers an opportunity for ongoing revenue.

Additionally, targeting new customer segments—such as elder care or chronic condition management—through personalized health insights can unlock significant value.

Key Insights

For the C-suite, understanding how to implement value capture strategies is essential for long-term profitability. Here are several key insights that leaders should consider:

• Customer Engagement: Capturing value isn’t just about pricing—it’s about deepening the relationship with your customer. Companies should focus on how their pricing and value-capture strategies contribute to ongoing customer engagement and loyalty. Omnichannel strategies, where customers interact with your brand across multiple platforms, can increase both engagement and opportunities for value capture.
• Omnichannel Experience: As businesses operate in an increasingly digital environment, capturing value through omnichannel experiences becomes critical. Companies should ensure their digital platforms allow for seamless transitions between touchpoints, offering personalized and convenient services to retain customers across channels.
• Customer Experience: The best way to capture value is to provide exceptional customer experiences. By leveraging customer data and marketing technologies to personalize experiences, businesses can increase customer satisfaction, loyalty, and ultimately, the revenue they capture.
• Marketing Technology: Marketing technologies like AI-driven analytics, customer data platforms (CDPs), and automated marketing tools are key enablers for value capture. These technologies allow companies to understand customer behavior, predict future needs, and adjust pricing or offerings in real-time to optimize value capture strategies.

Balancing Innovation with Value Capture

For executives across e-commerce, SaaS, FinTech, HealthTech, and BFSI, innovating in value capture is just as important as innovating in product or service offerings. By applying Michel’s value-capture framework, businesses can rethink their pricing strategies, explore new revenue streams, and enhance profitability.

Ultimately, the companies that succeed in today’s fast-paced business environment will be those that not only create value for their customers but also ensure they capture that value in a sustainable and scalable way.

🎧 Want to dive deeper? Listen to our podcast where we break down the full strategy for capturing value in modern industries. Plus, don’t miss the full article that reveals five actionable steps you can take today to unlock new revenue streams.

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