Impact Pricing Podcast

EP66: Why Knowing How Your Customers Perceive a Price is as Important as the Price Itself with Valerie Howard

 

Valerie Howard is the Solution Strategy Director at PROS. She manages the go-to-market strategy for the PROS pricing solution portfolio. 

In this episode, Valerie shares her insights on how to use data science to optimize price in today’s world of personalization and digital selling, how to leverage the benefits of Artificial Intelligence (AI), and why knowing what appeals to the customer and how they perceive a price is as important as the price itself.  

 

 

 

Why you have to check out today’s podcast: 

  • Understanding why continually aligning your pricing to what customers value is a never-ending journey 
  • Discover the importance of knowing what appeals to the customer and how they perceive your price when optimizing your price and value offer 
  • Learn how to leverage AI-powered pricing strategies to take your customer engagement to the next level 

 

When it comes to pricing, we’ve got to constantly invest in that. There’s no end goal there. It’s a constant journey of evolution to continually align your pricing to what customers value and to gain a better understanding of what it is they value specifically.” 

– Valerie Howard

 

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Topics Covered: 

 

02:36 — Backstory of how Valerie got into pricing and the socio-economic behavior lessons related to pricing she learned while working with Continental Airlines 

04:35 — What she does at PROS, how she manages the pricing solution portfolio of their airline clients 

08:00 —  How does cross-selling work with the solution that PROS offers 

08:47 —  All about price optimization and price governance: How this helps in the price execution across all channels and regions for PROS airline clients 

09:56  —  Personalization and Digital Selling defined: how they differ from each other 

15:11  —  The infrastructures of digital selling  

18:59  — All about dynamic pricing and how it works  

20:46 —  Valerie on the  importance of knowing what appeals to the customer and how they perceive your price when optimizing your price and value offer 

22:35 —  Where do price segmentation and  dynamic pricing come into play with regards to a speaker’s of ‘fee integrity’ 

23:26 —  Discussion around price variation and price segmentation techniques in the medical service industry 

 

Key Takeaways: 

 

“When it comes to personalization, I think what we always hear is that customers really want their buyers to understand them, really want to understand their needs at a personalized level. I think pricing gives us a unique way to better understand, ‘Do they really value this?’  Because if they’re not willing to pay for it, then maybe it’s not something they value all that much.” – Valerie Howard 

 

“When it comes to digital selling, there is a relationship to personalization there, too. It’s easier for us to purchase in a self-serving way. What are the different ways businesses are tuning into their customers and making it easier for them to purchase? — It’s  by understanding them so well that they don’t even have to be present and don’t have a sales rep holding their hand through the whole purchase process.” – Valerie Howard 

 

Resources: 

 

Connect with Valerie Howard: 

 

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 clearly sound better in real life.)  

 

Valerie Howard: When it comes to pricing, we’ve got to constantly invest in that. I think what I see is that there’s no end goal there. It’s a constant journey of evolution to continually align your pricing to what customers’ value and the better understanding of what they value.

Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the personalized relationship between them. I’m Mark Stiving. Today our guest is Valerie Howard. Here are three things you want to learn about Valerie before we start. She spent three years in pricing with Continental Airlines and I say that carefully because she didn’t say pricing, but I think all the things she did had to do with pricing. She’s now been eight years with Pros and is currently the Director of Solution Strategy there. What an awesome title and when I asked her what pricing she’s passionate about, she’s passionate about personalization and digital selling. You know, this is going to be a phenomenal podcast. Welcome, Valerie! 

Valerie Howard: Thank you, Mark. It’s such a pleasure to be here and speak to you today. 

Mark Stiving: Oh, this is going to be great. So first, how did you get into pricing? 

Valerie Howard: Well, let’s see. Goodness, my mother had a wonderful career with Continental Airlines and then I also loved Math. And so, you know, when it came to looking for my, one of my first roles, you know, outside of school, the role of being a revenue management analyst at Continental was such a thrilling job for a young person there. You got to, you know, watch the demand of consumers where they wanted to go and also business people, right? And there was so much data there that the airlines had about, you know, the way people move and then you know, thinking about how they valued that movement and trying to move inventory or allocate inventory accordingly to the way consumers behave or the way people generally behave. It was really, really fascinating and it’s just, you know, fascinating to watch the way people move and what they’re willing to pay for when it comes to travel and business. 

Mark Stiving: If somebody would hire me, I would take a three-month job at an airline just to do that. That would just be so much fun to see all that. 

Valerie Howard: It absolutely is. It’s fascinating. You learn things about socioeconomic behavior that maybe you hadn’t considered in the past. For example, I could share with you that, you know, because of the one child policy, a lot of kids from China would come to the States to study during the year. And so all the flights that would come back from China after the semester had ended or go back to China from the States after the semester had ended, would be completely full with full fares. And then as they came back from China to the States, it was the same way. So just incredible, you know, perspectives on, you know, why are people willing to pay so much in these situations? And that was one of those interesting scenarios. 

Mark Stiving: Absolutely fascinating. So I’m not sure I should ask this question or not, but did they use Pros software? 

Valerie Howard:They did. 

Mark Stiving: Nice. I know that Pros was really big in the airline industry early on. 

Valerie Howard: Yes, absolutely. That’s, you know, in my role today, I manage the pricing solution, marketing portfolio from a marketing perspective. And so what we’re concerned with is helping B to B companies better understand how to manage their pricing across channels and across perhaps their eCommerce and managing negotiated sales and the pricing that they would recommend to their sales teams as well. And you know, really why I got into this is because I knew how sophisticated the airlines were when it came to pricing, right? And considering how the price should change throughout what they call the booking cycle, right? If you’re 330 days out from that flight taking off, there’s a certain price point that buyers are willing to pay and it’s actually in many cases not the lowest price, right? And that changes as you move towards a window that’s closer to that departure date. So, you know, often close in, there’s a lot of business buyers. And so those dynamics are so interesting and I just see that in, you know, every other industry better understands the dynamics of why customers are willing to pay a different price because of the unique situation of that buying engagement. In my perspective, every buying engagement is unique. 

Mark Stiving: Yeah. So we’re going to dive into that in a second, but I really want to ask, can you describe easily what Pros does? And I know this is a really hard thing to do. 

Valerie Howard: Yeah, absolutely. Well, we do have, you know, definitely several solutions across the breadth of the B2B commerce platform and the travel platform as well. But what we’re ultimately trying to help our customers do is to better engage with their customers by better understanding what they value, right. And helping to optimize both the offers and the prices for each of those unique engagements. 

Mark Stiving: So I don’t think we’ve said these words yet to everybody, but this is a software solution. This isn’t me coming in and doing consulting. 

Valerie Howard: Very good points. Yes, we’re leveraging artificial intelligence and machine learning to help drive those recommendations. Right. So a lot of times these recommendations are coming through to customers even in a self-serve way. So one of the solutions that we offer is a solution called Opportunity Detection and it helps to personalize offers for unique buyers. And so if I was coming perhaps to a distributors website, they would know that Valerie Howard is on the site and you know, based on her last purchases, she may be interested in buying this, but hey, you know, buyers like her also buy, you know, maybe I guess, let’s see, they buy hand soap and hand sanitizer. So maybe she would like to buy hand sanitizer today also. So those types of recommendations are really helpful, you know, to get them straight to the customer and it eases that whole buying process and it ends up actually really expanding what customers are willing to pay or expanding the full wallet share that customers are buying with their suppliers. 

Mark Stiving: Yeah. So, what I just heard you say is that we have a special solution to help companies do better cross-selling. So a customer comes to buy one thing, we know what else they want, let’s see if we can sell them something else. 

Valerie Howard: That as well as if they, for some reason, if their demand has been declining over the last period of purchasing, we’ll be able to say, well, hey, you know what’s going on with this business? We can identify that and maybe support a sales rep and proactively having a discussion. You know, is that buyer perhaps reaching out to competitive suppliers, are they getting a better deal? And so it really supports them in having that conversation and we’re able to support that insight across both the sales angle as well as maybe the customer self-serve perspective. 

Mark Stiving: Yup. Okay. So let me not minimize it all. Pros is one of the first pricing systems ever, and I’m sure it does a gazillion different things, but I just wanted to clarify it by large, what it was that you guys were, what you had just talked about. 

Valerie Howard: And then I guess if I spoke to the price optimization side of it, you know, we work with a lot of global enterprises on helping them to centralize their pricing platform, right? So they have a source of pricing governance and that’s helping in the execution of those prices across all the channels, all the regions, maintaining some coordination of that pricing to, you know, limit arbitrage, you know, the concerns of channel conflict, but also harmonize pricing across those channels. And then also optimize that pricing based on science. Right? So we have algorithms, proprietary algorithms, we’ve got, I think it’s about 30 days in the sciences, decades of experience where we’ve got the latest generations of algorithms on predicting the willingness to pay of a buyer in their unique situation. 

Mark Stiving: Yup. Absolutely. Sounds fascinating. So now what we’re going to do is we’re going to jump into what you’re passionate about. You actually sounded passionate about all that too. Now let’s talk about what you’re passionate about, which is a personalization and digital selling. Now are these the same thing or are they different? Define the two terms for me. Would you please? 

Valerie Howard: Yes, absolutely. So when it comes to personalization, right. I think what we always hear is that, you know, customers really want their buyers to understand them, really want to understand their needs at a personalized level. And I think that pricing gives us a unique way to do that, to better understand, you know, well do they really value this? Because if they’re not willing to pay for it, it’s a clear sign that, you know, maybe it’s not something they’re so valuing so much. And then when it comes to digital selling, I think there is a relationship to personalization there too. Because a lot of us, you know, it’s easier for us to purchase in a self-serve way. So what are the ways in which businesses are tuning in to their customers and making it easier to purchase by understanding them so well that they don’t even have to be present. They don’t have to have a sales rep holding their hand through a purchase process. 

Mark Stiving: Yeah. So when I read them, you send me a white paper and if I’m allowed to, I’ll link that white paper to the show notes, please. Okay. So it was a really interesting white paper. I enjoyed it a lot, but as I read through it and I was trying to figure out how I would define those two terms, I was thinking personalization sounded a lot to me like dynamic pricing. 

Valerie Howard: It is, yes, a dynamic understanding of what that customer values I think and then just because it’s so related to the offer as well and the sort of, you know the dynamics of if a customer has a large footprint with your business, they may be a strategic partner, they might drive a lot of volume. That drives a different approach on pricing. 

Mark Stiving: Yeah, and then the digital selling part, I define it easily as sales without salespeople, but in truth, what you guys are really doing is using tons of AI, tons of data that you’ve gathered and you’re trying to piece together a buyer’s journey for different buyers and treat different buyers differently. Did those words make sense to you or did that, was that not right 

Valerie Howard: On the buyer’s journey perspective? I think that’s what makes sense to me about that is that yes, like if a customer or a buyer perhaps is a new buyer to you, that would probably be an attribute that’s driving a certain willingness to pay, right? Like they may not yet trust your business to supply the quality services that they’re expecting or the quality products that they’re expecting. I think on that buyer’s journey, you know, what we were, we had really explored with a Hanover research through the white paper was, you know, we went out and we did, I think it was about maybe 15 interviews with purchasing professionals to better understand, you know, when it came to the vendors that they really trusted. What were the attributes of those vendors? What had they done and what was forcing purchasing professionals to make a decision to switch to an alternate vendor. They don’t often want to do that. They enjoy working with suppliers that they trust. They want the status quo, I guess, if you can say that right, because they want to maintain some consistency. And so one of the things that I thought was so interesting was that a purchasing professional that seemed to really sophisticated would say that you know, they want pricing to be a non-issue. They want there to be so much established trust that that buyer or that supplier is going to give them a market relevant price that they don’t have to spend the time negotiating. 

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Mark Stiving: Yeah. And so, let’s talk about digital selling then. What are some of the things that you guys do? I assume Pros helps with this or we wouldn’t be talking about it. So what are some of the things that you guys do to help in the world of digital selling? 

Valerie Howard: Yeah, to what you said, you know, leveraging AI, we’re helping to personalize those offers, but also help from a dynamic pricing perspective. One of the things that we spoke about within that white paper was the fact that what we’re seeing is those businesses that are getting a majority of their sales through digital channels. We’ve kind of equated that to if you’re able to sell a lot through digital channels, you’re successful with those digital channels. It’s not now a lot of businesses are investing in our pricing infrastructure level right there. They’re putting money not only towards the pricing teams but towards technology as well. And one of the things additionally that we’ve seen is that kind of the typical approach to uploading a static process or a static price list for your eCommerce channel just isn’t enough to maintain the competitive pricing that you need. We’ve seen, you know, some companies will go and they’ll update that pricing on an hourly basis, you know, through an updated price list on that frequency. But the most sophisticated companies now are calculating that pricing in real time. And that does take, you know, significant processing and performance power and scalability and availability as well. You don’t want, if you’re going to rely on a calculation engine to supply, you know, pricing directly to e-commerce, you can just imagine if I’m looking at a full catalog, maybe there’s 30 products on the page that I’m looking at and I want personalized pricing for that because you know, I’m a longtime customer of yours and I expect, you know, maybe my contracted price. But again, you know, those products that I haven’t purchased before, I believe I deserve some incentive on those products. We’ve got to calculate that in real time for the competitive conditions. And the sophisticated companies now are moving towards doing that real time calculation. We’ve got a solution called Real-time Pricing Engine that is enabling that and we’re seeing a lot of success with our customers in their ability to move, you know, what were traditional direct sales to digital channels with that. 

Mark Stiving: So let me see. I think I might have a misunderstanding. So let me make sure that I’m on the same page as you. When I read and thought of digital selling, I was thinking more on the marketing side and helping the buyer’s journey and moving people through the process. And what I’ve heard you say over and over again is pricing in the digital selling world, is that, was that more accurate pricing in the digital selling world? 

Valerie Howard: Well that’s a lot of the focus, yes, Pros provides is we can help to optimize prices through helping pricing across both the e-commerce, you know, maybe a partner portal engagement or also even just like making that price retrieval faster and getting, you know, a sense of what the right market relevant prices for salespeople quickly for a lot of value. 

Mark Stiving: So I have to confess, this just became more interesting to me if you want to talk about pricing in the digital selling world. So let’s jump. I want to jump to the B to C example for a second only because all of our listeners would understand this and it’s probably not a company that you’re doing business with. Okay. But let’s talk about Amazon. Yeah. So Amazon has got some wild pricing engines back behind trying to figure out what price they’re going to charge different people at different points in time. And so I could imagine a time where I logged on and I looked at a price for something and then I logged on and a private browser on a different IP network and using a VPN and I get a very different price. Has that caused a problem in the B2B world? 

Valerie Howard: So I think, you know, what we’re seeing and what we saw in that white paper was that it needs to be explainable and trustworthy. Right? I mean, because you said there was some time lapse right between when you logged onto one computer versus the next. You know, maybe, I know Amazon’s prices changed for me quite a lot sometimes, right? Like maybe a matter of a few dollars if you sense. But you know, I may have looked at something a couple of days ago and I come back to it. They let me know an item that I put in my cart or that I had on my list has changed price. So I think buyers are seemingly better understanding perhaps because of the Amazon effect that pricing is going to be dynamic. And in fact, what we saw was that actually two thirds of buyers would actually prefer a vendor that was pricing dynamically because they viewed that as perhaps, you know, that might be an opportunity for them to get cost savings in some cases as well. Maybe when you know, demand for a product had declined, that company would more quickly update pricing. And so I think just the alignment to being trustworthy I think is what’s most important there. If it’s, you know, we never want to get to a place of price gouging. Right. But if it makes sense, if it’s explainable, then I think, you know, buyers are willing to work with dynamic pricing in that way. 

Mark Stiving: So that sounds so nice. But pricing is so often not explainable. Okay. Right. So you have two salespeople going out to negotiate prices and one doesn’t negotiate and the other does negotiate. Yeah. And that’s not explainable. That’s just two different companies getting two different prices based on how salespeople behave. 

Valerie Howard: I hear what, you’re on that absolutely, and so that is actually one of the things that we support our customers in from a price optimization standpoint. One of our customers, he’s been running pricing at a med device manufacturer that we work with and he is so proud of the fact that his team has actually reduced the variation in the prices of some capital medical equipment that they sell and it’s great, right? Because now they have, that’s part of their brand now is that you know they have an established price point. They’re actually on the higher end of the price point, but that’s because they’ve been able to communicate the unique value of their products in such a way that buyers and even like the market indices for that specific, I guess product line show that this particular manufacturer doesn’t often discount and they do a lot actually when it comes to pricing to consider perhaps the non-dollar negotiations. They’ll do stuff with their services to move that offer to a place that works for their clients. 

Mark Stiving: Yeah. It’s actually interesting because I’m really torn on this topic when I think about it, I play in the speaker’s world a lot. And in the speakers world they have this phrase called fee integrity, which means you don’t negotiate your fee, right? Whatever your fee is, that’s what your fee is. And then I live in the world of pricing where we talk about price segmentation or dynamic pricing, or we’re going to change prices based on the condition or a customer’s willingness to pay. And those feel like the two opposite ends of the spectrum. And I can’t say which one is right or wrong on any general way, but I could say, look, there are circumstances where it makes a ton of sense to say, no, we don’t negotiate fees or we don’t negotiate prices. And on the other hand, there’s tons of situations where I want to charge what my customers willing to pay. And that’s price segmentation. 

Valerie Howard: Yeah, I mean, I kind of view it as, you know, negotiation is your opportunity to better understand what the customer values. Right? And so I’m not familiar with the way speaker’s fees are structured. I would imagine that they were, you know, maybe tailored to audience sizes or length or travel and things like that. I would consider segmentation would be a way to support that. Yeah, I think, I mean that’s definitely a challenge, right? So you’re coming back to your question, you’re saying, you know, you want to have fee integrity, 

Mark Stiving: Let me go straight to the medical device company and ask you if I can reduce all variability in my pricing, doesn’t that by definition say I didn’t do price segmentation? 

Valerie Howard: Yeah, that’s an interesting question. Well, price variation, I think what we’re trying to look at there is unexplainable price variation, right? And that may include things like, you know, what are my shipping costs or you know, where am I servicing from that type of thing. So that’s an interesting point. But I think what we’re so concerned with is where the price variation is for something less explainable. Maybe like, you know, the sales reps perhaps have a less than comprehensive perspective on the market. 

Mark Stiving: Yup. Yeah. So I tend to like it when I’m doing B2B work and we have a direct sales force. I like the price variation because what it does is it gives me the ability to try to figure out what customers value and don’t value. Right. And I’m sure you guys do this too. You take the price paid as the dependent variable in a statistical analysis and then we figure out, so why did those people pay more? We like that. 

Valerie Howard: Absolutely. Yes. So what we offer in one of our flagship solutions, it’s called Pros Guidance, is we provide a window of pricing, sort of a price envelope, I guess is what we call it from the floor to the expert price. And so that allows for the salesperson to have that negotiation, but they’re better equipped with this guidance for that unique situation. 

Mark Stiving: Yeah. Oh man. Valerie, I’m having a great time with this conversation, but we’re going to have to wrap it up. What’s one piece of pricing advice that you would give our listeners that you think could have a big impact on their business? 

Valerie Howard: Well, I think, you know, pricing, you know, the process of pricing, the strategy of pricing is a constant evolution. I think, you know, unfortunately we are in the midst of the covid 19 crisis today. And what we’re seeing is businesses have to accelerate the shift to digital selling. And so, you know, we’re constantly evolving. The market is constantly changing. Sometimes we’re going to have to change faster than I guess standard times. But you know, when it comes to pricing, we’ve got to constantly invest in that. I think what I see is that, you know, there’s no end goal there. It’s a constant journey of evolution to continually aligning your pricing to what customers value and better understanding what they value. 

Mark Stiving: Nice. So pricing is absolutely a process and an evolution, right? It’s not static. Excellent. So Valerie, thank you so much for your time today. If anybody wants to contact you, how can they do that? 

Valerie Howard: Yeah, reach out to me. My email address is vhoward@pros.com or you can find me on LinkedIn as well. Valerie Howard on LinkedIn. 

Mark Stiving: Episode 66 all done. Let’s see, what was my favorite part of today’s podcast? I think I struggle with that fee integrity versus price variance issue or price segmentation issue a lot. So just thinking about it a little more is always interesting. What was your favorite part? Please let us know in the comments of wherever you downloaded and listened while you’re at it, would you please give us a five-star review? We take these very seriously, and by the way, they’re hugely helpful to us. Don’t forget, we have a free community where you can access all of my publications. It’s at community.championsofvalue.com. 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! 

 

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