Stacy Sifleet is a consultant whose expertise includes pricing strategy, business process improvement, change management, inventory, S&OP, advanced problem solving, strategic planning and procurement.
In this episode Stacy shares how using data analytics, correctly, identifies value levers for customized pricing, especially in the B2C market.
Why you have to check out today’s podcast:
- Learn how pricing in retail is done, the strategies to implement to get the right data analytics for value pricing
- Why throwing out a number before a customer tells you your value to them is a mistake
- Understanding the impact of category management on retailer prices and performance: theory and evidence
“I think it is important that once you figure out what you want your pricing strategy to be, figure out how to make it easy for your team to execute it.”
00:45 – Stacy’s backstory in pricing
01:22 – Her biggest mistake in pricing: Why throwing out your number to a customer without knowing your value to them is a mistake
06:10 – Differences between B2C and B2B in business systems’ pricing
08:53 – How using data analytics, correctly, identifies value levers for customized pricing
09:40 – What is category management is all about and its relation to value pricing
16:11 – How pricing in the retail industry is done?
20:39 – Stacy’s favorite data tools and strategy she implements to get the value pricing right
“When I think about B2B, I think the sales team, even if the’re working on a specific account, they really should be diving into the data across their account and say.’ How are these customers different? Which of these customers add more value to the business?‘ You cannot do that just by conversation, you have to look at the numbers.” –Stacy Sifleet
Stacy Sifleet: I think it’s important once you figure out what you want your pricing strategy to be, figure out how to make it easy for your team to execute it.
Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value and the extremely tight relationship between them. I’m Mark Stiving and today our guest is Stacy Sifleet. Here are three things you want to know about Stacy, before we start. She has worked at some companies that I am extremely curious about, including Sears and True Value. She has both an undergrad and Master’s Degree in Math, which means we’re geeking out today. Sorry. She just launched her own pricing consulting firm and I can’t wait to hear what she’s planning for that as well. Welcome, Stacy.
Stacy Sifleet: Hi Mark. Thanks for having me.
Mark Stiving: Oh, it’s going to be fun. How did you get into pricing?
Stacy Sifleet: So I actually started my career working on the procurement side and consulting and learn all about procurement and identifying ways to help companies cut their costs. And kind of from that, it’s the opposite side of the table of pricing. So when you’re sitting on the side, kind of driving down costs, driving down pricing, the other side is the sales team trying to win pricing. So it kind of ended up flipping after about six years, seven years working in procurement. It’s interesting, right?
Mark Stiving: Anybody who’s listened to my previous podcasts or many of them know that I despise procurement people and I have very few good things to say about them. So let’s not go down that path today. I’ll give you a hard question. What’s your biggest mistake in pricing? If you think back through your career and you’re like, oh man, I shouldn’t have done that one.
Stacy Sifleet: Yeah, some mistake in pricing. That’s a good one. I, I’d say rolling out a number before somebody else throws out a number. You know, if you’ve ever thrown a number before you really understand the value to the customer, that’s the biggest mistake. I probably did that in one of my first pricing roles and you know, you lose a ton of value there.
Mark Stiving: Yeah, that almost sounds like a sales role, right? If you’re doing that in the world of pricing, it means it touches multiple salespeople too. So that’s really big. Ouch. How did you get to where you are today? I’m totally fascinated by the retail aspects and we talked for just a few seconds and we’re not going to slam any companies as we go through this and we’re not trying to pick on any companies, but what we want to do is I just want to learn how companies think about pricing, especially in this retail space where I know so little because I’ve never worked in that space and I’m just, I’m fascinated.
Stacy Sifleet: So I think my career, kind of, in getting to where I’m at today where I’m really trying to focus on pricing and value and delivering that, that benefit to the businesses, it’s taken an interesting path. So as I mentioned, I started truly consulting on the operations procurement side and then kind of slowly made my way to work, specifically, pricing. So the first big step away was Sears and that wasn’t really a specific pricing role. I, I helped build an internal consulting team in the Shop Your Way Program and Shop Your Way has a loyalty program where they have just masses of data on all sorts of customers. And we wanted to use that data to figure out how to benefit the business. And like I said, it wasn’t really pricing focus, but he made sure we had the right products in the right locations for the customers in all those locations. And Sears is a big company. You think they’d been really smart and they have some really, really smart data scientists to use all that data. But what I found being there is you had some people who had been there 20, 30 years who just had no interest in changing. And then other people who were really fresh and excited to use this information. But it was such a complex layered organization. It took so much to actually get things done. So I’ve seen that in a lot of really big organizations that it’s, you know, they kind of step on their own toes and strong execution.
Mark Stiving: It is so hard for big companies to change. There is no doubt. It is really challenging. Couple thoughts on what you just said, first off, I think of pricing like a lot of different things and the fact that you’re talking about where do I put the product? Okay, maybe that’s a logistics. We’ve got some merchandising, but it’s also a, I want to make sure that people perceive the value of my product properly. And so I think of pricing, not only is I got to put a price on the product at the very end, but I have to communicate the price. I have to communicate the value, I have to create products or you know, I guess in retail space I have to choose products that have value until I find it. All of that part of pricing.
Stacy Sifleet: Yeah. One of the really interesting projects I did at Sears was hyper localization of marketing. Basically, they didn’t have any marketing funds so we had to figure out, I was working with Lawn and Garden organization, figuring out kind of where do we market and tell people we’ve got your lawnmowers, we’ve got your patio sets. It was kind of pricing was a piece of it because certain used the indicators of when is grass growing when’s the weather going to be nice so we could trigger at the right time for the right markets. But we also couldn’t trigger every single market. So we had to figure out where when we did spend the money we’d be able to get people in. So that was really interesting as using data to say, okay, which markets make sense? What’s the right time? And then where are we going to get our biggest bang for the buck on that marketing. That was interesting. And that to you actually was able to execute, you know, it’s exciting.
Mark Stiving: Yeah. That kind of says it’s not nationwide. It’s, you know, we’re going to do little regions or even stores. Yeah.
Stacy Sifleet: Yeah. Exactly! Go ahead. Sorry.
Mark Stiving: I was just as, I think that’s fascinating. You’ve said the word data a bunch of times and I want to differentiate or hear… I want to hear your opinion for a second about B2B versus B2C for a second. I tend to live in the world of B2B and I think about individual buyers and how they make decisions. And if I were in the B2C world, I would be thinking way more about data and how to use it. So when you use data, how much are you thinking about the buyers and the decisions that they make?
Stacy Sifleet: So I’ve worked in B2B, I’ve worked in B2C and I’ve worked in B2C. I’ve worked kind of across the board. And I think, you know, sometimes you have to, when you’re thinking about a huge national account in B2B, you have to think about the individual decision-maker. But even in B2B, where you’ve got a lot of customers, you have to figure out how to group your customers and figure out how these types of customers are similar and how they think as a group. And sometimes there’s, you know, some groups within those groups and it can be extremely complicated. But if you can think about consistencies in grouping data, then you can really see trends and use statistics and run all sorts of very interesting tests, which is fine if you want to geek out on Math a little bit.
Mark Stiving: Yup. But so pause for just a second and then we’re gonna come back. I agree 100% I think of that as market segmentation. And just to be clear about what I was describing is if I’m a salesperson selling to an account, now I’m dealing one account at a time. How much value does that account have? Okay. Back to you.
Stacy Sifleet: Yeah. So, okay, say that one more time. So what we’re thinking about one account at a time and how do we use data for that one account? I’m…
Mark Stiving: No, no, no, no. I don’t want you to address that. I want, I would just wanted to clarify for the listeners that when I think of B2B, I’m also, I’m often thinking about how is a salesperson discovering and communicating value for an individual client or an individual prospect. But when we talk about data, it is, it is absolutely market segmentation or it’s absolutely big markets and we’re combining people together and we want to do that and B2B as well as B2C. Those are all true statements completely with you. B2C feels like it’s way more data-driven than B2B.
Stacy Sifleet: Well I that might be how it is. It’s not how it should be. I think. So when I think about B2B, I think our sales teams, even if they’re working with one specific account, they really should be diving into the data across their accounts and say, how are these customers different? Which of these customers add more value to the business? Which of these customers come and get to add more value to the business. But you can’t do that just from a conversation. You have to look at the numbers, you have to look at the data. So I think one of the things that led me to really open up by me, my company is focusing on pricing as I think a lot of the small and medium businesses aren’t tapping into that data and they’re kind of just doing what they’ve always done, which is relationship building and kind of driving pricing that way when really if we leverage the data, we can still maintain those relationships, but we can be a lot smarter and capture a lot more of a value.
Mark Stiving: Cool. Let’s talk about some specific retail stuff for a second just because I don’t know the answer.
Stacy Sifleet: Okay.
Mark Stiving: There’s a thing called Category Manager. One of my best friends was a Category Manager and I have no idea what he does. Um, does Category Management play a role in pricing?
Stacy Sifleet: So I think category managing management, merchant overlapping types of roles. Um, and I think it varies depending on the company. Uh, when I was at True Value and I joined pricing kind of previously, I think before I joined there had been three or four pricing leaders in three or four years and pricing lived with the merchant and then maybe look with finance. And then ultimately when I was there it was under operations. And I think it’s interesting and kind of, you can be creative on where pricing should live, but I don’t think it should necessarily live with the merchants. You need some kind of outside perspective that comes into category managers or merchants. I think their role needs to be done we have the right products and we have good relationships with our vendors, are we marketing it correctly, but not necessarily what’s the right price? And kind of how do we figure that out for each market?
Mark Stiving: Okay. So I wouldn’t have, I would’ve thought the answer was different than that. Um, and that’s okay cause I don’t know the answers. How do you get people into the store?
Stacy Sifleet: So I didn’t do a ton of work on promotions and marketing, but True Value, I’ll kind of step away from Sears a little bit and go into True Value. And True Value is an interesting company. When I was there, it was a pure co-op so that the retailers owned their own stores. And really, um, at corporate we had 4,000 swore owners that were essentially our bosses. So they could kind of operate how they wanted. We had programs at corporate that they could leverage. But you know, you have flyers so you do marketing to get the word out. They had their email marketings different ways to get out there, but some value was really interesting because a lot of the times we couldn’t compete on price, so the price wasn’t necessarily how we were trying to get people in. It was more kind of the support and getting that kind of really neighborhoody feel and getting help with your, your project versus the big contract or going into Lowe’s or Home Depot for the best price.
Mark Stiving: So it’s much more of a service or a value add than a price thing. and I guess the reason I asked the question is we often hear of milk at the back of the grocery store and so we’re going to advertise milk at a really low price because I want you to come to my grocery store and I know I’m going to sell you a whole bunch more stuff. And back when I was a doctoral student, I read papers where these are the 20 products that people actually remember the price of and so they know if you’re giving them a low price or not. And I find all these just so fascinating about how do we as pricing people use this information as we start setting prices for so many different products in a retail space setting.
Stacy Sifleet: Yeah. So at True Value, we basically would label a product or a line of products, visible, highly visible walking along that line, is this an item where we have to be super sharp because they know what it’s going to cost. It becomes really, really challenging. And a bit in a hardware business where you’ve got, you know, 60,000 items in a store and you know, a mom coming in to maybe get hit something to fix something, but also, you know, a hardcore contractor coming in to fill something that they both have very different understanding of what prices should be. The mom might know batteries cost X, but the contractor knows this drill should be Y. So your visibility varies by customer. Um, so it becomes really challenging. And then you’re also competing with just longest companies that have much better buying power that even if you know, cement should cost a $1.99 a bag and that’s what home depot sells it for. True Value cannot meet that price. So kind of figuring that out and figuring out where you want to match the competitor and where you’re just going to say, nope, this is a convenience item and we’re going to charge more and, and we’re going to have to lose some of that business because of it.
Mark Stiving: How’s the podcast going? Are you getting value? Research shows the people don’t really value what they get for free, but I’m hoping you’ll prove this research wrong. Please demonstrate to us and the entire world that you value this podcast. Would you please pause the podcast, subscribe if you haven’t already done so. Rate the podcast and leave us a short review. You’d be doing a huge favor. And research shows, if you invest this little bit of time, you’ll probably like the podcast even more. Win-Win! Pause, do it now. We’ll wait for you.
Mark Stiving: Yeah, and I want to jump back to category management then for a second and ask the same type of question and that is I have somebody coming in and they’re going to buy, I have no idea. Let’s pick up where… They’re going to buy a shovel. And I could have two or three different types of shovels or qualities of shovels and I want to set prices because I’m trying to influence which shovel they buy and how I maximize the revenue on the margin to the company based on the decision that buyer’s gonna make.
Stacy Sifleet: Yes. It’s very interesting. Yeah.
Mark Stiving: And isn’t that category management or is that pricing?
Stacy Sifleet: So the two have to work together really well and you have to make sure, as a Category Manager, you have to make sure, you know you’ve got, you know, the appropriate kind of assortment and you’ve got maybe that good, better, best private label that is good, but you can get it at a price that allows you to have it kind of be at a really more step in price point. And then, um, kind of figuring out what assortment you want so you’re not kind of overwhelming the customer, but you have maybe two or three options that make sense, provide various characteristics that that may need to have different prices. But then you have to work with the vendors and the pricing team to figure out kind of that price step-up strategy. So it’s, well it’s not Category Management kind of meeting the price strategy. They do have to do a lot of the day to day work. But I think you need that overarching pricing team to develop the strategy and make sure it’s being implemented.
Mark Stiving: And I’m not going to ask about True Value or Sears, but your experience at retail, do they tend to use a simple cost plus algorithm or are they actually thinking almost on a product by product basis? Or maybe it’s a category by category basis. This is the margin that we think we could get away with from this product.
Stacy Sifleet: My experience has been all over the board. It depends on the category manager, but I don’t think it’s, I’ve never seen it be a pure cost-plus at retail. I think a lot of it is driven by kind of an understanding of the market and understanding of where the competitors are and an understanding of kind of how much or how little can we get on this category. So I think it’s kind of triangulating some of those factors to get to the price.
Mark Stiving: Yeah. I’ve just found this so fascinating. If you, out of curiosity, can you share with us how many SKUs is in an average Sears store?
Stacy Sifleet: I have no idea. Honestly, I don’t know. I would, I would get some a hundred, I don’t know. From True Value, I know it’s probably 30,000. So I would guess Sears is significantly more than that.
Mark Stiving: Yeah. Yeah. Okay. And so managing 30,000 prices has got to not be easy.
Stacy Sifleet: No, it’s not easy. No.
Mark Stiving: Okay. By the way, congratulations. You launched your new company three months ago now. Is that right?
Stacy Sifleet: Um, yeah, I guess it was, yeah. June. Yep.
Mark Stiving: So you escaped the corporate world and said, I’m going to go help more companies with what I know and what are you going to do? How are you going to offer this? What, uh, what types of solutions are you going to offer?
Stacy Sifleet: So my experience has been, especially with the small and medium-sized businesses that they just don’t have the capacity and the time to really put a lot of strategy behind pricing. So my goal is I want to help small, medium-sized businesses increase profits by implementing really targeted price strategy and kind of growing from just reacting to quotes and getting a price out there to develop a process where they can capture that additional value, um, where they, where they can, I think there are many different ways to do it, but I see, um, kind of the first step is really understanding their customers, understanding their products and understanding some of the hidden costs in their products and customers and kind of figuring out how can they recapture that cost.
Mark Stiving: Nice. And is this going to be mostly data-driven or is it going to be, I use data as I need it,
Stacy Sifleet: So I don’t think you can make a lot of these decisions without data. I think there’s going to be a lot of data to understand where you are and understand where you can go. But then there’s also going to be just the inherent knowledge from the people in the business that’s layered on top of it. So I think it’s really kind of, um, using always using data, but always kind of using your brain and thinking realistically as well. Cause you can’t just say, oh, this costs us more. We gotta charge more and there’s a lot of pieces that go to it.
Mark Stiving: Yeah. So the thing I find fascinating about data is data is interesting. Data is useful. The only way it’s really useful is if someone creates a model and says, let’s go test it. Is this really what’s happening in the market? Is, you know, are people really buying more on Sundays or whatever the heck it is. There’s some, some experiment or hypothesis we have to run to go get that data.
Stacy Sifleet: I actually, my last role I worked, one of the companies I was working with was an eCommerce company where we were kind of running into the Amazon kind of effect where Amazon was kind of slowly taking over market share and it was really hard. It hard to compete with Amazon pricing and, and we did some of that testing. We said you know, can we, if we match Amazon or if we beat Amazon can we gain share. And, uh, I think Amazon is a whole other topic. So I don’t want to go too deep in, but I think kind of doing some of those testings with different control groups and trying things out and giving it time, does 100% help you see their results and kind of prove one way or the other. And you can also give some of these businesses confidence that the changes they’re making are working and they’re capturing value.
Mark Stiving: Yeah. Absolutely. This has just been absolutely fascinating, Stacy. I’ve, I’ve enjoyed this a lot. Okay. Before we go, I got, we always have the ending question but, but first give me a couple of data tools, statistical tools you like to use as you’re doing your pricing work, a couple of your favorites.
Stacy Sifleet: So there, honestly I use typically very basic tools cause I think when I’m working with companies that are super early on in their pricing journey, using even just Excel, Sequel, Tablo can have to understand the data is, is often the easiest, easiest way to go about kind of getting quick change. Um, and then you can get into kind of more advanced statistical tools with AR or SaaS. But often, you know, just the incremental changes drive a lot of value and sometimes not more as needed with smaller companies.
Mark Stiving: Yeah. I guess instead of a tool, I should have said the word technique. What statistical techniques are we going to use? Just a couple of your fave… I mean there’s so many out there. I was just curious about what you like.
Stacy Sifleet: Yeah, I mean I like A/B testing. I like when (inaudible), I like, kind of, segmenting products, segmenting customers. Um, those are the type of techniques I use.
Mark Stiving: Yeah. When you’re in Excel, pivot tables are magic.
Stacy Sifleet: Oh yeah. Right. The charts. I love a pivot chart. I mean it can blow your mind so quickly. You can turn just zeros and ones into a picture that, that can tell you something.
Mark Stiving: Yeah, pretty fascinating. Pretty fascinating. Okay. I end every podcast with the following question. Here it is. What’s one piece of pricing advice that you would give our listeners that you think could have a big impact on their business?
Stacy Sifleet: So I think it’s important once you figure out what you want your pricing strategy to be, figure out how to make it easy for your team to execute it. I think often we kind of can create a strategy and figure out what we want to do, but if it’s complicated and you know, hard to implement, you’re not going to be in success. So kind of what can you do and how do you make it easy to implement?
Mark Stiving: Yeah, the internal implementation is often hard and often companies or people just take it as a constraint and said, I’m not going to do anything cause I can’t do anything.
Stacy Sifleet: Yes.
Mark Stiving: Nice. Nice. All right. Stacy, thank you so much for your time today. If anyone wants to contact you, how can they do that?
Stacy Sifleet: You can reach me at pricingvelocity.com or [email protected]. And that’s S-T-A-C-Y.
Mark Stiving: Perfect. All right, episode 32 in the can. My favorite part… Oh my gosh, all of it. I love learning about retail or I love learning about anything I don’t really know about. So that was really fun. What was your favorite part? Please let us know in the comments or wherever you downloaded and listened. While you’re at it, please give us a five-star review. We would hugely appreciate it. If you have any questions or comments about the podcast or about pricing in general, feel free to email me, [email protected] Now, go make an impact!
**NOTE: Mark will participate in the conversation about this post on LinkedIn which you can get to here.Tags: pricing data, pricing strategy