Impact Pricing Podcast

Ep118: The Power of Conjoint Analysis with Matt Johnston

 

Matt Johnston is the Founder and CEO of EPIC Conjoint. As a highly motivated seasoned commercial marketing professional possessing 25 years Pricing, Product and Segmentation experience with Tier 1 brands in Europe, North America, MENA and Southeast Asia, he is a huge fan of conjoint analysis but massively frustrated with the time, effort and cost barriers to conducting a conjoint study. So, instead of grumbling about its limitations, he designed and developed his own rapid conjoint platform EPIC Conjoint. 

In this episode, Matt talks about the confidence and reassurance conjoint study provides in coming up with crucial pricing decisions. And how it helps you differentiate from competitors. He also shares how he started EPIC Conjoint to provide a simple, fast, and inexpensive conjoint study. 

Why you have to check out today’s podcast:

  • Find out a more cost-effective conjoint analysis to help in your company’s pricing decisions 
  • Find out how conjoint analysis not only help in pricing decisions on new products and services but also on the existing product context 
  • Discover how close to the truth you can get in terms of assurance that is statistically significant to your pricing decisions 

 

“It’s always very important to look at the transactional data, the behavioral data, the previous data that will inform your assumptions. But then cap it off by asking the customer.”

– Matt Johnston 

 

Topics Covered:

00:57 – How it was like starting his pricing career at Comedy Central 

01:26 – An Impact partner in the course creation 

03:03 – A funny story of how Matt started in Pricing 

04:43 – How most pricing people never started with a pricing role 

05:45 – What made start EPIC Conjoint 

07:13 – The budget and the investment involved in designing conjoint analysis 

08:41 – What drove the timing to put up EPICConjoint 

10:18 – Bringing automation and rigor into the pricing process 

14:31 – What do you need EPIC conjoint for 

18:04 – How EPIC conjoint gives you an amazing capability to differentiate yourself based on value  

19:32 – How conjoint captures price sensitivity 

19:57 – Conjoint analysis being a big help in B2B companies 

21:38 – How close to the truth can you get with conjoint analysis 

22:15 – Matt’s impactful pricing advice on your business 

 

Key Takeaways:

The point I’m trying to make is, actually there are a lot more use cases that you can apply conjoint to because it is a trade-off methodology.” – Matt Johnston 

“We capture that price sensitivity as well, in conjoint, at a segment level so you do see it, you can see that change.” – Matt Johnston 

“It [Conjoint] can keep the middlemen honest even within your organizations, the sales folks, it can keep them on as to where you can leapfrog them and actually check and see what exactly the customers are saying.” – Matt Johnston 

“The comfort and the confidence of launching them – new products or making price changes. Having done a conjoint, having been in that situation, is priceless.”  – Matt Johnston 

 

Resources Mentioned: 

 

Connect with Matt Johnston:

 

Connect with Mark Stiving: 

  • Email: mark@impactpricing.com
  • LinkedIn

 

Full Interview Transcript

(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)

Matt Johnston   

It’s always very important to look at the transactional data, the behavioral data, the previous data that will inform your assumptions. But then cap it off by asking the customer. 

[Intro] 

[EPIC Conjoint Intro] 

Mark Stiving   

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the measurable relationship between them. I’m Mark Stiving. Today, our guest is Matt Johnston. And here are three things you want to know about Matt before we start. He is the CEO of EPICConjoint. He started his career as an analyst, meaning he’s probably pretty good with spreadsheets. And my favorite thing about Matt, he was a pricing analyst for Comedy Central in New York. Welcome, Matt. 

Matt Johnston   

Thanks, Mark. Delighted to be here. Yeah, that brings back memories. It’s like, you know when I think about my pricing career in the main, it’s, yeah, it started back in Comedy Central as I priced airtime with Comedy Central. We were slap bang in the middle of Manhattan, very much a work hard, play hard atmosphere. But yeah, I learned a lot from the great boss there. And yeah, fascinating sector to work in on pricing. 

Mark Stiving   

I saw a young kid in Manhattan working on Comedy Central; that’s got to be a great job. 

Matt Johnston   

Well, actually, my next job was probably, depending on how you look, it was even better, it was actually pricing stocks, as an equity analyst for JP Morgan on Wall Street. So, from rags to riches. And a couple of years, I look at that, you know, I did that for about two and a half years and then realized, you know what, I was selling my soul to the street. And I’d rather add value in other forms, you know, working back in private companies again and bringing that skill. 

Mark Stiving   

Before we jump into the real content, I just want to say thanks for being an Impact partner, especially thanks for your help in creating the new conjoint course we put up. You guys were hugely helpful to us. 

Matt Johnston   

Yeah, it was our pleasure, it was a great exercise for us to do because, you know, it kind of really helps us focus. You know, we go through a lot of demonstrations and, you know, they’re engaging, but I have saved the exercise of, you know, developing the course, collaboration with your good self was, yeah, it was a real learning experience for us to just kind of really fine tune our thoughts on, you know, where EPIC, what the value EPIC really brings to the table and, you know, where we want to take it, you know, what the journey we want to go on. 

Mark Stiving   

Nice! 

Matt Johnston   

…partners like yourself. 

Mark Stiving 

So, let’s start back at the beginning. How did you get into pricing? Did Comedy Central just say, ‘Hey, we need a pricing, and come let’s join us.’ Or, ‘We did something else, get you into pricing?’ 

Matt Johnston   

Yeah, actually, it’s a funny story. Well, literally I graduated with a Master’s in Economics from University College, Dublin, in Ireland. And back then, I was talking about the early 90s. You know, it was a fact of life. You emigrated, with absolutely no jobs, coming out with kind of analytical skills here in Ireland. So, yeah, you went to the UK, US, Australia, even the continent, anyone who had decent, French or German went to those countries. So yeah, we pretty much finished the last exam and jumped on the first plane out of Ireland and landed in New York. And, you know, the original intention was to try and find some financial analysis roles. So, you know, apply to a lot of the banks, investment companies, and whatnot. But I remember the kind of the first real advice I got from a recruiter; I’ll never forget, he said to me, yeah, look at financial analysis, analysis roll with an entertainment company. And you know, me being green behind the ears and, you know, doe-eyed, new to the whole scene of entertainment. We didn’t really have that much in terms of entertainment in Ireland at the time, say for the pubs. The first thought that came into my mind was, ‘Oh, my God, you know, how can I tell my mom, I work for Playboy.’ Got to break that news. But as it transpired, it ended up in Comedy Central, which was much better. And that kind of kicked off. Yeah, it was a pricing role, literally in on the ground floor. 

Mark Stiving   

I don’t know if I’ve ever met anybody whose first job was a pricing role. That is pretty cool. 

Matt Johnston   

Yeah, I was looking. David Epstein took a punt on me and he was my boss. Yeah, did it for two and a half years and then kind of moved there. From there within the company into Finance and then that kind of… was a springboard into that equity analyst role with JP Morgan and effectively pricing stocks, more of fundamental analysis work, you know, spreadsheet work, balance sheets, analyze, but also talking to…was amazing… the exposure, we got talking to C-levels in these companies. The beauty of it was, actually, the sector I was covering was media and entertainment. So, you know, I was talking to News Core, Sky, New York Times Company, Tribune Company, fantastic companies in the US. Yeah. 

Mark Stiving   

Well, let’s jump forward in, and how did you either come up with the idea, or why did you start EPIC Conjoint? 

Matt Johnston   

Yeah, good question. So, I guess, you know, just jumping forward a few roles, I ended up as head of pricing for one of the major telecom companies in Europe; O2 was primarily mobile at the time. It was bought subsequently by Telefonica, which is number two or three in the world, in telco land. So, that’s where I got introduced to conjoint analysis, because, you know, the size of the best we were making, in terms of pricing, you know, we were talking a couple of million subscribers, small beans in the context of the US granted, but nevertheless, in the Irish context, it was a lot. That was, you know, a testable point in the wrong place, or, you know, the consequences of getting something wrong, where, you know, could be catastrophic. And that’s where Conjoint came onto my radar, where we managed to, you know, for the big risk decisions, like, you know, implementing price increases, or refreshing the portfolio, the product portfolio. You know this, we managed to persuade the C-level, particularly the CFO, to release enough funds to pay an agency to come in who had the expertise in conjoint and conduct a conjoint project for us. 

Mark Stiving   

Can you tell us how much it costs, approximately, give us a range of what you think you paid? 

Matt Johnston   

The agencies, the word that many in the market, you know, I don’t think we ever paid less than 50,000, probably in dollar terms, your terms, roughly the same, 50,000. But the problem wasn’t even the budget. The problem was, you know, the part that the frustration about the amount of time we had to invest in, it wasn’t like writing a research brief and handing it to the agency, that was a huge investment, had to be put in in terms of designing the conjoint survey with the agency, because, yeah, once we found out really wasn’t their expertise, you know, they weren’t pricing experts, they weren’t a product, as you know, they weren’t familiar with the nuances of our products, on the competitors on the market, in general, the telco market. So, it was a painstaking and long exercise. And it turned out to be a big distraction, and the only a handful of times we actually got to conduct the conjoint. From the start, from the design through all the way to the results, you know, two to three months, which is an eternity, definitely, in the telecom world. 

Mark Stiving   

So, would you say it’s fair to say that you guys had the expertise on the market on the products on the features and the attributes and the levels, but you didn’t really know conjoint and how to put together a study, and the agency had expertise in conjoint, but they really didn’t know the market or the attributes or the levels? And so somehow, we’re trying to figure this out jointly. And that’s what drove the timing. 

Matt Johnston   

Yeah, no, you hit the nail on the head. And, you know, why here? Now, when we sit with clients, and we do contract, but they’re like, ‘Oh, my God, you know, I can remember doing those long, painstaking contract products in the past with agencies. And, you know, once it was baked, that’s it, you couldn’t change it, you know, you couldn’t revise, you couldn’t start again, you know, there wasn’t that agility. It was literally a project, like an IT project, you know, take two to three months. So, that was the scary part. And so those are, you know, the limitations, the amount of time invested, and the budget required to do it. Yeah, it was an arduous process. And, you know, as we since found out, the agencies don’t even like doing conjoint because it’s a big manual task for them as well. And they will prefer as one agency totally is, the amount of time it takes to do one conjoint we could do ten market sizing studies. And the yield on a market sizing study is much better than on a conjoint to get and man our terms. So, even they don’t like to do the conjoint. So yeah, it was kind of two disconnected parties trying to figure it out. And sometimes, these things can go wrong. 

Mark Stiving   

So where was your big aha? Because if I’m going to summarize that for you, so you don’t have to brag, right? The thing I love about EPIC is that it’s simple. It’s fast. And it’s inexpensive. Right? So, I think it’s great. But where was the big aha that said, ‘Oh, we don’t have to do it that way? We could do it this other way. That’s easier, faster, less expensive.’ 

Matt Johnston   

Yeah, good question. So, let’s fast forward another couple of years; I was head of group pricing for a category telecom company. So, I was based in the Middle East and lived in Qatar. And this company had operations all over the Middle East, North Africa, Southeast Asia, so a lot of weird and wonderful places. And upfront from a pricing perspective, probably amazing challenges, like, you know, so one of our markets was the Maldives, believe it or not, 600,000 subscribers are Palestine. And then our biggest market was Indonesia, with 65 million subscribers. And Indonesia was like day trading, even in telco land products, and promotions, and whatnot. So, you know, massive, massive risk in terms of making mistakes, and it’s all very manually done. And what I really wanted to do was bring some automation and rigor into the pricing process, the pricing governance process. So, you know, where these kinds of big bets, pricing decisions actually had some rigor and science applied to them. So that when you did get to the go-to market committee, or the pricing governance committee, that you could say, you know, you could stand over the assumptions you are making in your business case. To say, Well, hey, you know, we actually did go out, ask the target customers, you know, so these weren’t just picked out of the air, plucked out of the air, in terms of assumptions, price, you know, willingness to pay and whatnot. So that’s what I wanted, because my primary role there was to bring best practice pricing tools, skills, and processes to the group operations. And I really, really wanted to bring conjoint in, but I couldn’t find a provider who provides that service on an agile basis, enough of an agile basis to get the buy in from the local markets. And that kind of got me then started to look into it more detail. I said, No, because you obviously understood that was pretty sophisticated algorithms underpinning conjoint analysis. But the more people I spoke to, in terms of academics, actually, one of the professors in Columbia University was one. Practitioners and statisticians, I realized that you could box off that complexity in a backend. And by putting an intuitive frontend, and what I meant was, you know, intuitive to pricing, and product and commercial marketing people. Let’s say, we could inject a lot more speed and, arguably user-friendliness into the contract process. And also, then the byproduct of that was, you know, much, much more cost-effective conjoint analysis. 

Mark Stiving   

I have to say that I really enjoyed using it. So, what do you think is the most common use of epic conjoint? When you think about crusher customers, what’s the key decision they’re trying to make? 

Matt Johnston   

Yeah, you know, and this is something we’re trying to because actually, you take a step back, you know, underpinning this choice-based analysis. And as humans, we really don’t like to make any decision, particularly a purchase decision, without some kind of a compare and contrast or a benchmark. And that’s what underpins conjoint analysis. It’s such an attitude of teasing out, and you know, we’re going through exercises now, your clients are requesting Van Westendorp. And why we can do it and offer it, it doesn’t sit very easy with us in terms of, it’s just not a natural way of posing a purchase decision, or is not a natural purchase decision environment, if you stack it against a Van Westendorp and conjoint against each other. So, it’s very, in terms of the broad, you know, just taking a step back, it’s helping clients in terms of most applications we find on top of probably 80 to 90% are new products and services. But the point I’m trying to make is, actually, there are a lot more use cases that you can apply conjoint to because it is a tradeoff methodology. So, for example, you know, applying it in a competitive context. One of your competitors launches a threat, a new product, or drops their prices; you can conjoint that, pretty quickly to understand, well, how significant is this threat to our business to our customers? What do our customers think about it, whether they’re customers, and that that plate context, you can make educated decisions as to whether you need to react or not? My experience, I’d like to know if the listeners experienced in the pricing role you know, it always was a Friday afternoon, when a competitor of Vodafone launched a new product or service, or a three or whatever. You know, there goes your weekend, you were in scramble mode to try and understand, you know what this meant what this you know, would mean for the business for the customers. And that was always at the back of my mind; you know what contract to keep that speed and agility to actually say, hang on, okay, I see they’ve done this, I’m going to take that new product they’ve just launched, I’m going to pop it into my competitive concept matrix. I have my own product; I have the other competitors’ products in there. And I’ll run this over the weekend. And on Monday morning, first thing, I’ll have the results of the survey so that now I can go to my superiors and stakeholders and say, hang on, we’ve assessed this, the customers think this or, you know, this is something we need to worry about. And look at some wargaming exercises, which by the way, is another use case for conjoint. Or we put this on a watching brief. So that’s what I’m trying to educate clients to say, ‘Hang on a second, it’s not just for new products and services, it’s you know, you can keep an eye on the existing context.’ Another use case, Mark would be… 

Mark Stiving   

I find conjoint so powerful. But my favorite use case, or my favorite use for it is, I want to put $1 value on each attribute. Right? I love being able to say this is how much this attribute is worth to my marketplace or to that market segment or to that individual. I just, I think that’s an amazing capability. 

Matt Johnston   

Yeah. And that’s, you know when we get to the stage where we’re reviewing results, and that’s what we like to do because you know, that’s what I love to do because my background is pricing, but actually, you know, in the results dashboard, meet the clients, rolling up the sleeves, they get really excited by the power of being able to, you know, select that drop down list, change it from 12 megapixels to 40 megapixels. What does that mean to the ultimate price and the willingness to pay? Oh, actually, you could charge another $50 by going from a 12 megapixel to a 14-megapixel camera in that smartphone. Yeah, so they look at that when your clients love and that’s where we get the access, we give them the access then to go in and start splicing and dice. The inside gems are below the averages because when you start to filter based on various segments, demo segments, span segments, then the little insight gems can pop out and give you that target to maybe differentiate yourself. 

Mark Stiving   

And that becomes really obvious when you look at the data that you had created for us. Right? That was a phone survey that you did for us. And we were able to dig down and say, what’s the difference between an Apple customer and a Samsung customer? And what decisions do they make? And what do they perceive? And I mean, it was just so powerful to be able to do that on my own. And just click through and look at the analytics. So 

Matt Johnston   

yeah, yeah, and the other obviously, for the audience. You know, the price sensitivity, we capture that price sensitivity, as well, at a segment level so you do see it you can see not change. 

Mark Stiving   

We’re going to run out of time, Matt, so I got to ask a really important question. I am often asked the question. Oh, it is conjoint work for B2B. I’m going to let you answer the question. I know how I would answer, but I’m going to let you answer it. 

Matt Johnston   

very much. So ultimately, it’s the supplier and the customer relationship. Pricing is critical in most cases. And yes, we conduct many B2B conjoint surveys, or across many sectors. And it’s good in the context where you have a middleman, a supplier, or a distributor who is saying, Oh, you need to drop the price, you need to drop the price. It’s not selling; it’s not. So, it’s good to leapfrog them and go to the end customer, do your contract and say, ‘Hold on a second. It’s not a pricing issue here. It’s actually a distribution issue, a channel issue, or a particular product feature.’ And we can address that. But it’s certainly not the price. So, it can keep the middlemen honest within the organization. Even within your organization, the sales folks, it can keep them on as to where you can leapfrog them and actually check and see what exactly the customers are saying. 

Mark Stiving   

Yeah, I think it’s fair to say the conduit has 100 different applications, right? I mean, it really does. It’s so powerful. But I think you see it in new products most often. Because that’s the hardest thing for companies to do. Right? What are the features I should put in? How much should I charge when I launched the product? It’s such a hard set of decisions where you could take any other decision; one of my favorites is, what’s the best marketing message to use? Right? And so, you can take any of those decisions and say, Yeah, but I could kind of guess at the answer, or I could do a survey and maybe get close. And so, I think people don’t, don’t think through well, conjoint would be a much better way to go solve that problem to go understand it. 

Matt Johnston   

What essentially a conjoint is, it’s like an insurance policy, how close to the truth can you get? Then going out to ask the customer and using a methodology that is proven to be statistically significant. The comfort and the confidence of launching then, new products, or price making, price changes. Having done a conjoint is, having been in that situation is, is priceless. 

Mark Stiving   

Yeah. Awesome. Awesome. Matt, we’re going to have to wrap this up. But final question for you. What’s one piece of pricing advice you would give our listeners that you think would have a big impact on their business? 

Matt Johnston   

Ask the customer. It’s always very important to look at the transactional data, you know, the behavioral data, the previous data that will form your assumptions, but then cap it off by asking the customer, what do they think, what are they willing to pay? That reassurance is, it just can’t put a price on that. 

Mark Stiving   

Yeah. So first of all, I’m going to agree with you completely in that. Too often, we think we know what our market is thinking. And so, we just make decisions or make assumptions and the truth. We’re clueless; go talk to your market. And then I’m going to make a caveat. You did say ask them what they’re willing to pay? And I’m sure you didn’t mean to ask them how much are you willing to pay? I’m sure she meant to find out using other techniques. 

Matt Johnston   

Exactly. Yeah, it’s a Yeah. And that’s where the kind of the Van Westendorp kind of falls down, I believe, but visibly conjoined. But for me, it’s the reassurance and the confidence that brings with pricing, you know, because when you work in these organizations, a lot of responsibility, the pricing role is highly and it’s not compensated for the degree of responsibility that’s given. But that’s, that’s another day’s conversation. 

Mark Stiving   

Yeah, it is huge. So, Matt, thank you so much for your time today. If anybody wants to contact you, how can they do that? 

Matt Johnston   

Okay, sure. Well, my LinkedIn or epic conjoint, we have our own LinkedIn page or website epicon joint.com. All one word.com or mattjohnson@epiconjoint.com. 

Mark Stiving   

Sounds great. Episode 118 is all done. This is the moment of the podcast when I beg you, listeners, to leave a review for me. Apple podcasts don’t make it easy to find and figure out how to do it. But they’re so valuable to us. And please know you’re doing a huge favor if you go through that effort. Finally, if you have any questions or comments about the podcast, or about pricing in general, feel free to email me mark@impactpricing.com. Now, go make an impact! 

[EPIC Conjoint Outro] 

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