EP36: Valentin Radu – Why Your Website is Leaking Sales

 

Valentin Radu is the founder and CEO of OmniConverta growth enabler for mid-size eCommerce websites looking to become customer-centric.  It is being used by top companies worldwide, like Avon, Orange, WWF, Wordstream, Whirlpool, etc. Valentin has spoken to over 100 International events over the last six years, including DMEXCO, Mobile Web Congress, SMXL, etc.   

In this episode, Valentin talks about how his company, OmniConvert, uses technology that allows its customers to choose different market segments.  Through these segments, customers get personalized experiences on all touchpoints   Learn more of this in this epis

 

 

 

Why you have to check out today’s podcast: 

  • Check out what market segmentation is 
  • Know the strategies used to get information from customers without the survey questions feel 
  • Learn why it is essential to communicate and know the problems of persons inside your client’s company and help them improve their jobs 

 

“I think you should take a look at your churns. So, if you are in the software as a service industry, take a look at your churn. Because once you understand how your churn works for various segments of customers, you might want to change your pricing from being a month to month to annual.” 

 – Valentin Radu

Topics Covered: 

 

01:32 – Valentin describes what his company OmniConvert does 

02:35 – How OmniConvert does market segmentation and its relevance to the buyer’s experience 

04:45 – How he orchestrates different messages to different segments 

07:33 – Detailing how they educate their customers on what they offer 

10:24 – How knowing their target customers and the services they offer relates to pricing 

12:27 – Tactics used to determine the segments when customers go to their client’s website 

16:19 – Valentin tells other sales strategies to ask questions to customers that don’t look like survey questions 

19:21 – The importance of communicating to people inside the customer’s company on their problems and how to help them do their jobs better 

21:05 – Valentin answers the question if they teach pricing to their customers  

22:10 – Narrating an example when he helped their customer put the right wording around their product that improved their conversion rate by 18% 

27:17 – A price of pricing advice that would impact the business of the listeners 

 

 

Key Takeaways: 

 

“I feel it’s highly important that unless you don’t know who you need to target, you don’t need to spend any penny in an acquisition.” – Valentin Radu 

 

“The first thing and the most important thing is that if you don’t know the value that you’re giving, and if you don’t know who’s your target, and if you don’t know if you are selling a painkiller or a vitamin, you don’t have to mess with the pricing” – Valentin Radu 

 

“This job of optimizing and crafting different website experiences, it’s a job of crafting psychological experiences so that people are behaving differently. And that’s why you always need to adjust your strategy.” – Valentin Radu 

 

“Things like a buyer’s guide for customer experience software is pretty important. And that’s why you need to do this kind of material so that you are revealing the value of your product for people, which are different and will look product from different angles.” – Valentin Radu 

 

Connect with Valentin Radu: 

 

Connect with Mark Stiving 

 

 

Full Interview Transcript

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

Valentin Radu: I think you should take a look at your churn, so if you’re in the software as a service industry, take a look at your, your churn because once you understand how your churn works for various segments of customers, you might want to change your pricing from being a month to month to being annual.

Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value and the amazing relationship between them. I’m Mark Stiving and today, our guest is Valentin Radu. Here are three things you want to know about Valentin before we start. He’s an entrepreneur at heart. I counted at least three companies he started, he’s currently CEO of Omniconvert and he was at one point a radio producer, so I’m a little bit nervous he’s going to be judging the quality of our show the entire time. Welcome, Valentine.

Valentin Radu: Welcome. Yeah. Glad to be here, Mark. Thanks for inviting and no worries, I am not going to judge because I’ve heard that if you don’t judge, you have far more chances to be happy.

Mark Stiving: Oh, the excellent answer. Excellent answer. So let’s start, I did a little bit of research on the company, Omniconvert, but I want to hear from you. How do you describe what the company does?

Valentin Radu: In a nutshell, we are helping online players to improve their customer experience by making use of their own data and by our data as well. So we have the technology, the capacity to educate their people so that they can improve the customer experience.

Mark Stiving: And when you say customer experience, we’re talking about the customer buying experience. So it’s really the buyer’s experience.

Valentin Radu:Yeah. That’s what a customer is. Yep. So if he’s not buying, he’s not a customer. It’s a user. Yeah.

Mark Stiving: Completely with you on that one. Okay. So if we’re thinking about buyers or customers, from what I saw, you do A/B testing and that’s probably the simplest of all the things that you do.

Valentin Radu:Yeah.

Mark Stiving: And one of the things that I was really excited about was market segmentation. Can you describe how you guys do market segmentation and how that’s relevant to the buyer’s experience?

Valentin Radu:Yeah. At the beginning we’ve started with A/B testing because we’ve noticed that a lot of companies are not making use of their opportunity to deploy different versions of their website. And that was my case as well. And afterward, after A/B testing, it was natural to go towards personalization. But personalization used to be a buzzword like two or three years ago, even though personalization wasn’t the case. So using the customer’s name and just saying hello, John there is not personalization, from my perspective. Once you offer a personalized experience means to know things regarding the relation you, as a company have, with that customer or with that visitor. So in order to do so, of course you need to grab the insights towards what kind of segment this customer is in. And that means if you want to segment your customers properly, you might want to know if they are happy or not if they are a power user or not, if they are a VIP customer or not.

Valentin Radu: So that kind of segmentation is on our behalf. So what we are doing, we are using a method called RFM segmentation, which stands for Recency, Frequency and Monetary value. And instead of looking at the customer simply based on their lifetime value, you are looking at them based on their recency score. So how recent is the last purchase based on their frequency score, how often they have purchased from you and what’s their monetary value. So how much they’ve spent on your e-commerce, let’s say. And aggregating all this data, you come up with a lot of insights. Things like, I don’t know, 1.5% of the total customers are generating something like 20% of the total margin. And you might want to give those kinds of folks a different experience. So that’s what I, what we called personally, we are calling personalization actually.

Mark Stiving: And when I looked at the website though, it looked like segmentation was way more than that. It was also an industry or market segment or country or…

Valentin Radu: Yeah.

Mark Stiving: And so for you, segmentation is like an A/B test. Is that how I think about that? I give different messages to different segments.

Valentin Radu: Yeah. I orchestrate a different experience to different segments based on how qualified they are to buy and what kind of relation they have with me. So if you correlate their buying data with their experience data, like what kind of NPS score they have and what kind of resolution time they have from their customer, from the customer support. You might come up with the interesting segments because you could have ticking bombs, in terms of a satisfaction level but VIPs, in terms of lifetime value. So you might want to give a different experience to these kinds of folks. Like if they have a high NPS and a low lifetime value, they are happy customers but they are not your ideal customers. Yeah? Even though they are very satisfied and based on these kinds of data, you can also add another layer of data from this first-party data, you could add more layers like their company or their industry or their location and their traffic source.

Valentin Radu: But this is not that relevant unless you know what kind of emotions they have towards your company. Because we are living in an experience economy. So it doesn’t matter if I’m saying Hello John from Oklahoma, if John is very pissed off because he’s not getting his goods, right? So what matters the most for John is to receive the product that he bought from you, he paid for you. Yeah? So that’s how we are seeing personalization, orchestrating different kind of website experiences based on all these data that is available right now. The problem with this kind of approach is that is not that simple. So it’s not for everyone to do and that’s why we’ve been changing our approach and we’ve been raising the bar over and over again and now we are not serving a low-end customers. We are serving only mid-size enterprise companies.

Mark Stiving: I could see that completely because one of the questions I wanted to ask you is when I look at what you do, I would say, oh my gosh, this is way too complicated for me. My little one-man company with the, you know, half dozen people working with me. But this would be way too complicated for me to try to figure all this out. Can I just put up a webpage and tell people what I do? And the fact that you focus on mid-size makes a lot of sense, but it still feels really complex. Do you educate your customers or do they come to you saying, here’s what we want to do.

Valentin Radu: Yeah, we are heavily on this and we are doubling down on educating them. I must tell you a story regarding how we’ve crafted our own software because we’re coming a long way. So there are six years since we’ve started and back into 2016, we realized that we are serving too many types of customers from too many industries and too many sizes. And we’ve made deep diving in our own data and we realized, Oh look, here’s our ideal customer profile. So it’s the good old Pareto, right? But you just need to do this deep-diving into your own data. And we realized that our best customers are eCommerce players that are making more than 5 million euro or US dollars in annual revenue. So if they do less than that, they are not our ideal customers. Why? Because their churn is higher.

Valentin Radu: Their talent is lower and they are the most demanding in terms of tickets and instead of having the same language that we have. So that’s how we’ve decided to go to midsize enterprise companies. However, what I think is highly important is that unless you don’t know who you need to target, you don’t need to spend any kind of penny in the acquisition. You know, if you have the first customers, let’s say, first 100 customers, in our case we’ve got more than 1000 in that moment. And it was way too far. I mean we’ve wasted like one year because of this bad assumption that we need to serve everyone with from all the industries. So we know that our product is not for everyone and we know that some people will not get it, but we are educating them. We are about to release a certification program at the end of this year towards how to do customer experience through the digital channels. Moreover, we are also looking at ways to scale our business by doing… Making use of machine learning because back in 2016 we’ve got two directions. Either we educate the market, either we come up with the no brainer plugin plate, fully automatic product. And we’ve done both of them. We’ll see next year what’s gonna be the best bet, but we have decided to build both products.

Mark Stiving: Nice. And what I want to do now is, as you might know, I’m a pricing guy and this is a pricing podcast.

Valentin Radu: Of course.

Mark Stiving: Let’s see if we can tie all of this back to pricing. And before I ask any specific questions, let me just open it up to you. How do you think any of this relates to pricing?

Valentin Radu: The first and the most important thing is that, if you don’t know the value that you’re giving, and if you don’t know who’s your target and if you don’t know if you are selling a painkiller or a vitamin, you don’t have to mess with the pricing. So first of all, we ever knew, I mean looking at our own history, we haven’t used our ideal customer profile what’s the problem that they needed to be solving and what’s the job that needs to be done with our product. And that’s why our pricing was here and there. I mean, we started with a free trial with a card, then we’ve ended up giving away a free trial with no card. Then we’ve got to a freemium and we’ve been doing this kind of roller coaster towards pricing. Thank God that we, we’ve been doing A/B testing throughout the whole process because otherwise, we wouldn’t be here.

Mark Stiving: And so at least you’re using your own product for your own business to try to figure out what works, what doesn’t work. So here’s what I love about what you just said is I talk, I teach value-based pricing and most of the time I’m dealing with B2B type customers. And in B2B, what happens is I’ve got a salesperson who goes out and builds a relationship with a client and I have a chance to learn and communicate and educate about value. So it’s a really, it’s understandable and I can do value-based pricing much easier. And once we move into mass-market B2C someone buying on the internet, it becomes much harder to do what I just described. However, with what you’re doing, the fact that I could take market segments and once I understand what segment you’re in, then I can give you the right message, which describes the value to the customer in the way that resonates with that customer. I think that’s incredible. Right? I think that’s amazing. What are some of the tricks you use to figure out what segments someone is in when they come to a client’s website?

Valentin Radu: The behavior is the most important. Besides that, you have all these integrations with the… If we are talking B2B, you could use tools like MadKudu or Clear Beats to grab more data and revealing what kind of companies this visitor is coming from, how many sessions they’ve been previously on your website. But the most important thing that I feel that needs to be looking at this moment is the fact that once you craft the experience, you should have it dynamically and you should be making it revisiting every now and then. So you can grab data regarding their behavior, how many pages on which kind of sections are, then on your website, where they are on your funnel. But you always need to revisit these kinds of data because the rules that they are taking, let’s say if you have 50 pages on your website and we are looking at a B2B.

Valentin Radu: If you have 50 pages, the permutations between 50 by 50 factorial, it’s pretty large. Right? So they have a lot of ways to go. So what you think they are using in order to navigate is a total different thing than what they are actually doing. So what you might want to do is to nudge them so that you can get them from unknown visitors to known visitors. And this is the first step in a B2B. So once you know their ID and once you reach the level of information do you have around them. So any kind of white paper, any kind of PDF, any kind of, let’s say micro-conversion that reveals things regarding who they are, it’s very useful because then you could craft the experience over and over again and you are directing them towards, I don’t know, I’m a project manager and I’m in the company that has more than 500 employees.

Valentin Radu:And my main pain point is this, you could craft this by using this kind of segmentation, but if you let them, I mean, if you let the visitors with your prepared version of your website, and if you don’t nudge them and if you don’t direct them towards what’s the pain point and if you don’t amplify the pain point that they have, you’re not going to succeed. I mean, you could have a lot of traffic but you’re not going to end up having enough conversions. And, based on this technique, we’ve been able to improve 400% our own efficiency per visitor in the last two years. So we are making four times more money per visitors just by realizing what’s the pain that this customer and prospect has.

Mark Stiving: It does in a lot of ways. I think you’re also making 400% improvement because you’ve realized who the right customer is and that’s who you go after. That’s who you want to come visit your website now. Yeah. And so you don’t have a lot of people visiting that shouldn’t have been there or that aren’t your ideal customer profile. One of the other things I noticed as I was looking through the Omniconvert webpage or I think it was a PDF for a slideshow I watched was, you do surveys and I thought, oh, I hate surveys on webpages. And then I saw some of the sample questions and things that you did and I thought that was really brilliant. So you would ask somebody, um, what was it? The example was something like, what size are you wearing? Or do you want to look for the size? And the next time she shows up, it’s just, hey, let’s see what’s available in this size. I thought that was really awesome. Do you have any other examples of ways you ask questions that don’t look like survey questions?

Valentin Radu: Yeah, it’s actually that kind of question is resonating with the choice reduction. So in e-commerce, if you don’t, let’s say you are an e-commerce player and you have 2000 products on your website, the first step is not to sell and not to nudge your customer with the price or any kind of argument, any other kind of argument. What you want to do is to reduce the choices that they have because there is the framing bias that kicks in. So if I’m doing an action, the words what I want, and if you are revealing the things that I want, I will unconsciously think that this is for me. If I’m not doing these things, I mean, if I’m doing the things on my own and if I’m doing the product discovery on my own, then I’m not going to be hit by the framing bias. So the framing bias is pretty important because you have the same products with the same pricing, but it’s how you are pushing them o your audience. So how you’re asking is far more important than what you’re asking. So that’s the framing bias. And that’s why I think this job of optimizing and crafting different website experiences, it’s actually a job of grafting psychological experiences so that people are behaving differently. And that’s why you need to always adjust your strategy.

Mark Stiving: It also sounds like… You may have heard that sales strategy, where a salesman wants to ask questions where they get the customer saying yes, yes, yes. So they’re used to saying, yes, it almost sounds like it’s that strategy where I’m getting the customer to make decisions to move down the path and they’re getting more and more involved or more committed to your solution.

Valentin Radu: We are all affected about the desires and the pains, right? So we are running from being in suffering, you know, the words, fulfilling our needs and aiming for our desires. And if we are all affected by these kinds of things, then that means, are not the characteristics of the things that we are buying, that we are really buying. We are escaping from suffering. And once you are framing the reality and your products towards what’s the pain that you really have. So in the B2B space, it’s far more important to understand that there are a lot of stakeholders because you have the guy which is doing the research on your website, could be the user, but he has a decision-maker that has different KPIs and that’s the, let’s say the awkward thing in this world, you know, but you have the same company that has a single objective to grow or to whatever or to save the planet or it doesn’t matter.

Valentin Radu: And then you have the people within the company that is making the decisions towards your products. And these people are having different agendas. The user has the agenda of keeping their KPIs and keeping their job secure because they will be the ones in charge if the tool or the platform that they are choosing will mess around with their company. Then the manager of the user has his agenda of hitting their quota and he’s in a different emotional state. (inaudible) product, so it doesn’t matter about your features. He is all about hitting his own quota. And then you have the financial decision-maker and all of them have different agendas. And that’s why in the B2B you should be grafting a different kind of materials that are relevant from the guys which are in the decision making systems. That’s something that you could do on your website, right? Because if you’re a CEO and you want the product for project management for your team, then here’s what you should know. And that’s why things like a buyer’s guide for customer experience software is pretty important. And that’s why you need to do these kinds of materials so that you are revealing the value of your product for people, which are looking at your product from different angles.

Mark Stiving: And I think of those as different personas inside my company or inside a company or a customer’s company. And we have to communicate with each of those personas about their problems and what problems we solve for them and how we help them do their job better. I think that’s absolutely right. I’m impressed with how you help companies try to figure this out from the webpage perspective, right? How do we make, essentially a dynamic webpage? Yep. Do you teach your customers, these are your customers now. Do you teach them anything at all about pricing or communicating value to the customer?

Valentin Radu: We don’t teach things regarding the pricing as most of our customers are e-commerce players. So we don’t do pricing optimization for e-commerce. We don’t think that’s… Let’s say, ethical because there were a few companies that have done that, let’s say, I don’t know if you know about Orbitz.com that made this pricing experiment. So I think it’s not relatable to the e-commerce where you are selling the same object as other 25 companies and it’s too dangerous to do it. And I don’t think it’s ethical. However, what we are teaching them is how to put the right wording around the product. And I can give you an example here that I recall. This was like five years ago and I was (inaudible) the trench is there to realize what is the value that we are giving to the customers.

Valentin Radu:And I remember that we had a customer, that was one of the leaders in the fashion clothing industry in Romania and they had the problem with the conversion rate and they weren’t happy, of course, about their results and after running these kinds of surveys to understand what the problem was, what is the barrier that the visitors have in order to convert, we realized that a large amount of customers were happy with the products and with the pricing. But they had a problem with the trust because their return policy was hidden somewhere, you know, in the footer of the website. We’ve done a very cool experiment, which is pretty easy. I mean the beauty with A/B testing is that not all the winning experiments should be complicated. The A/B test was like this. Where was the most important zone from a product page?

Valentin Radu: Where was the price we’ve just added? We’ve suggested them to add something like order with no worries. You have 30 days to change your mind. I mean it wasn’t like our return policy was like this sale. It was pretty personal. So go ahead order, you have 30 days to change your mind. And that improved the conversion rate by 18% so that was 18% less customer acquisition cost for the whole period of the existing of these websites. And it was pretty amazing. And there are still things that you could improve in… This is applicable on a B2B as well because if you justify the price and if you say, okay, go ahead, try before you buy, you have these 30 days to change your mind. But too few people are understanding that the moment, the zero moments of truth is around that buy now button and you should diminish the friction or you should amplify the motivation. But it’s usually the friction diminishers that are working the best near the pricing because they feel it like a pain. You know, I have to pay, I don’t know, 900 US dollars per year to buy the software.

Mark Stiving: Yup. Okay. Valentin, I’m going to disagree with you on one thing. Sorry about that. But luckily ethics are always in the mind of the beholder. And I teach companies every single day, you should charge different customers, different prices. Every day I teach that.

Valentin Radu:I am with you on this, of course.

Mark Stiving: And the idea that says it’s unethical, I could see how you say, I don’t want to be involved in that. Right. Because I don’t do medical pricing because of the ethical issues or questions. I’m not saying it’s unethical. I just don’t want to have to deal with them. So…
Valentin Radu: What, I think is unethical. Let me give some perspective over this matter. So I’ve had some, let’s say PR (inaudible) on this matter because it’s not only that we are not involved in this price testing, but also we are not doing, we are not sustaining gambling, which is online gambling is legal here in Europe. We’re not involved in adult industry as well. And we are not into this kind of things. Not because we don’t think these are somehow useful for the planet, but amplifying the bad behavior, which is not making people more free or more happy with their life. I don’t think that’s the right thing to do. And if I would have a customer that let’s say catches me, if he’s going through an Apple, he’s having a 10% the more price. I mean the price is bigger by 10%, I don’t think that’s ethical to him because he’s my customer. You know, he’s my former customer. He paid for the services and he realizes that once he’s going through his android phone, he’s seeing a price and once he’s on the incognito tab on an Apple device, his price is bigger and I think that is not good for that former customer and you should…

Mark Stiving: So there are always examples where things seem unethical, but as a general rule, we want to figure out how do we charge different customers different prices based on their willingness to pay. And by the way, here’s what I want to say is I think your technology enables us to do that exceptionally well because what you’re allowing me to do is, choose different market segments. Once you’ve come to my website, I now know what segment you are. I can communicate to you. And because you’re in that segment, I happen to know I solve problems that are really, really big and I charge really high prices in that market segment. So I think that’s awesome. I love this. I’m not complaining. I just want to make sure my listeners heard that. I don’t believe it’s unethical.

Valentin Radu:I totally respect this.

Mark Stiving: So Valentin, we gotta wrap this up, but let me ask you one final question. What’s one piece of pricing advice you could give our listeners that you think could have a big impact on their business?

Valentin Radu:I think you should take a look at your churn. So if you are in the software as a service industry, take a look at your churn. Because once you understand how your churn works for various segments of customers, you might want to change your pricing from being a month to month to be annual. So we’ve done this and that worked beautifully for us because the time to first value at the product such as we have and we provide is not that fast. So you need to work and you need to change your website. You need to come up with the hypothesis, which should be data-driven. But after three months of working, if you are not getting the value from the product, you’re going to be churning. And we’ve made this conscious decision to change this monthly pricing and to diminish our conversion rate, but that ended up in the better revenue per visitor eventually. So with the same traffic, we are making more money by changing this because once the customers that are paying for an annual license, their willingness to use the product is going to be higher and they will make the extra mile to grab the value out of their investment.

Mark Stiving: Yeah, I think that’s really interesting. The thing that reminds me of is that it’s harder for clients to make the commitment if I have to make the year commitment. So it’s harder to get that for sale, but it’s much more likely they’re going to put their effort behind the product and they’re going to get to that point that says, oh, I’m actually getting value from my product. So the renewal’s much, much higher.

Valentin Radu: And also the amplification that you’re getting, the word of mouth you’re getting from happy customers is hard. So back three years ago, we’ve got these kinds of zombie customers that used to forget about us and they’ve got these monthly subscription going on and you don’t want to have that. So at the end of the day, you want your customers to get the value of out of your product unless you just want the Zeros without giving the value back. If you’re happy with that, that’s it.

Mark Stiving: Now, I think that one’s unethical, Valentin. So Valentin, thank you so much for your time today. If anyone wants to contact you, how can they do that?

Valentin Radu: I’m a LinkedIn fan, so Valentino Radu on LinkedIn. I’d be happy to connect with you and help you out if I can.

Mark Stiving: Excellent. Thank you. Episode 36 in the bag. Let’s see, what was my favorite part, when Valentin didn’t mind that I disagreed with them. I like that. What was your favorite part? Please let us know in the comments or wherever you download and listened. While you’re at it, would you please give us a five-star review? It would help us out immensely. 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!

 

**Note: Mark Stiving has an active LinkedIn community, where he participates in conversations and answers questions. Each week, he creates a blog post for the top question. If you have a question, head over to LinkedIn to communicate directly with Mark.

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