Jason Covitz is a VP of Pricing, Analytics, and Strategy at Safelite AutoGlass. His specialties include: P&L Management – CFO/CIO, Business & Risk Analysis, Value-Based Pricing, Sales Effectiveness, Product Management & Marketing, Business Strategy, and Data Analysis. And he has experience in a wide range of industries that includes Retail, Healthcare, Financial Services, Manufacturing, Online Services, Outsourcing, Telecommunications, Defense, and Strategic Consulting.
In this episode, Jason talks about how to measure value and how to get paid for value you give. As a business for profit your goal is not so much about increasing your market share as it is about growing your revenue.
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Why you have to check out today’s podcast:
- Learn how to make CFOs favor Value-Based Pricing more than Cost-Plus Pricing
- Find out one strategic action to encourage sales teams to communicate better a products’ value
- Learn how to turn sales conversations with sales teams to value conversations
“Number one is listen. Go around as you’re joining an organization, go talk to everybody and listen to what their problems are. And then the second part is, go add value there. They’re going to tell you where the problems are, and where the problems are it’s usually where the money is. Go solve that problem, that’s worth money to you and the organization.”
– Jason Covitz
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Topics Covered:
01:32 – What brought Jason to Pricing
01:58 – What is his analytics work all about
02:57 – How his work in the competitive intelligence area relate to his being VP of Pricing
04:02 – How Pricing touch every part of the company
05:25 – How do CFOs look at Pricing
06:46 – How scared or excited are CFOs to get involve in Pricing
08:03 – How to get CFOs to think more about the Value Pricing and less of Cost-Plus Pricing
09:48 – Taking a look at the dispersion chart
13:18 – How to get around to stop the notion of Pricing people as ‘sales prevention’
15:39 – How to help the sales team sell value better
18:41 – Understanding the win rate and communicating it to sales teams
20:06 – Looking at win rate as true measure of whether pricing is doing well or not
21:35 – How win rates are often calculated
22:48 – What’s the right win rate
23:50 – How to tell when you’ve reached the right win rate
25:56 – What is a ‘Deal Desk’
27:47 – Why are ‘Deal Desk’ can be very transactional
30:16 – What percentage of deals should you be approving
31:34 – Seeing different approval rates by different people
32:29 – Pricing advice that helps impact your business
Key Takeaways:
“Once you understand what’s going on in the market, what drives value, it’s very easy to say, hey, I want to price it this way to win. And I want to win it, price it this way to maximize profit.” – Jason Covitz
“My experience with sales teams are 5, 10 percent of sales teams get the value story. My experience is usually, find a champion, find the sales guy who is the value seller and find out a way to call out his achievements. And I call positive peer pressure, ‘Hey, look what Bob’s doing. Bob just did this. And as a result, he made all this extra money.’” – Jason Covitz
“I think about pricing with a capital P, which means it should be doing price setting, it should be deal management, it should be doing the analytics, you know, if you’re not doing all those pieces, as a price organization, you’re missing your calling at every opportunity to drive impact.” – Jason Covitz
“You want to understand win rate and you want to communicate that to sales teams. And you can cut that in multiple different ways. It doesn’t have to be an overall win rate. It can be by size segment, geo, salesperson, just to kind of you know, push it a little further.” – Jason Covitz
“Where you do interviews and go through the whole nine yards, people make decisions on four things, they make it on price, they make it on sales experience, they make it on operational experience, and they make it on product or solution capabilities. Those are the four, time and time again.” – Jason Covitz
“I look at win rate, as kind of one of my true measures of whether my pricing is doing well or not.” – Jason Covitz
Resources / People Mentioned:
- Manage for Profit, Not for Market Share: A Guide to Greater Profits in Highly Contested Markets by Hermann Simon
- Cardinal Health
Connect with Jason Covitz:
Connect with Mark Stiving:
- Email: [email protected]
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.)
Jason Covitz
Number one is listen, go around as you’re joining an organization, go talk to everybody and listen to what their problems are. And then the second part is, go add value there. They’re going to tell you where the problems are and where the problems are, it’s usually where the money is. Go solve that problem, that’s worth money to you. and the organization.
[Intro]
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the multifaceted relationship between them. I’m Mark Stiving. Today, our guest is Jason Covitz. And here are three things you want to know about Jason, before we start. Number one, like me, he is a recovering engineer. Number two, he has been a VP of pricing at some pretty fascinating companies like LexisNexis, First Data, Cardinal Health, Safelite Autoglass. Number three, he graduated from Michigan. So, I may have to talk slowly today just so he can understand me. Welcome, Jason.
Jason Covitz
Hey, thanks for having me, Mark. If you notice I’ve got my Michigan pictures in the background just for you.
Mark Stiving
I do, well, hang on, I’m going to make sure everybody sees my Ohio State sweatshirt, if you’re watching on YouTube. So, Jason, how’d you get into Pricing?
Jason Covitz
You know, honestly, Mark, I came from analytics, you know, I started at cap one, and analytics, doing a lot of risk pricing work. And it just blended over. And it was just an interesting area that I really hadn’t explored. I had known a little bit about it. But it really kind of started there. And it just it took off. It was just something I really enjoyed. And I’ve made most of my career out of it.
Mark Stiving
When you say analytics then, what you were you actually doing?
Jason Covitz
So, we were in a cap one does, in addition to credit cards, they actually do different portfolios, they do home loans, they do subprime car loans. And we were basically trying to figure out, when do customers pay us back. And you know, in subprime auto loans, it can be 35, 40% of people don’t pay you back the amount of money you lend them. So, if you don’t know who they are, and how to effectively price them, then you’re going to lose a lot of money. So, it was really an interesting blend as you kind of went from, you know, the analytics to say, ‘Well, how should I price these people?’, and then understanding as I priced them at different levels that drives profitability. So, it all kind of tied together.
Mark Stiving
Nice. One of the things I noticed when I was on your LinkedIn page, is, you went from competitive intelligence at HP, directly into a VP, a pricing role. Now, what that means to me is the competitive intelligence was almost like pricing to you. Is that a true statement? And can you describe that transition?
Jason Covitz
Yeah, honestly, my experience across pricing for 15 years is, you’re always doing pricing plus something else, you’re doing pricing plus competitive intelligence, pricing plus analytics, pricing plus deal management, pricing, plus product management. And in this case, we’re basically building pricing models from a competitive intelligence data set that we’re feeding into our deal teams. And effectively, we just became a clean mix. Because once you understand what’s going on in the market, what drives value, it’s very easy to say, hey, I want to price it this way to win. And I want to win it price it this way to maximize profit. So, you can tell that story to recruiter very cleanly. Does that make sense?
Mark Stiving
It makes all the sense in the world. First thought is, when you said it’s always pricing and something I created a rule for myself, never eat at a restaurant that is sushi and something. I just don’t do that. But in the world of Pricing that feels very different, because Pricing seems to touch every single department inside a company. And it’s really a matter of where you’re going to put pricing in that company.
Jason Covitz
Yeah, and I’ve seen it, you know, I worked for CFO that own pricing. I’ve actually worked for multiple CFOs, that own pricing. I worked for a chief sales officer then on pricing. I’ve worked for CMOS about pricing. So, you’re absolutely right. And it gives you additional perspective, right? Like you learn to say, hey, what does that person want out of this job? And what are they focused on and what’s going to help drive them, but then you’ve got to also deal with the other two. So, if you’re working in Finance, you got to work with the CMO, you got to work with the chief sales officer like that’s just part of the gig. And understanding that a lot of prices maybe missed that. And it’s probably the most important part of the job.
Mark Stiving
Yeah, what I find interesting about the pricing role is my background is I’ve been in marketing, I’ve been in sales, I’ve been in. I taught product management for a long time, so had to learn all that. And it’s so obvious how pricing or value ties into every one of those, but it really isn’t obvious until you’ve been in it and until you’ve really focused on that role. Now I can say that I’ve never been in Finance, but I can actually see how pricing might relate to Finance. Yeah, pretty well, especially with the models and everything they’re putting together. Let’s talk about Finance for a little while. And tell me about CFOs. How do CFOs think about Pricing? What should they be thinking about pricing?
Jason Covitz
So, think about the mentality of kind of your classic CFO, right, they’re generally an accounting background, they’ve got a business or an MBA degree, you know, they’ve kind of come up the Finance chain. So, they think about Pricing more from a governance angle, you know, how do I make sure things are rigorous, you know, because other parts of their job are that, right risk, you know, FMA, you know, consolidations, all that stuff. It’s a very rigorous process. So, they’re looking for pricing people that are very rigorous, that focus on profit. And then the other thing is, think about ROI, right? Like every conversation I have with the Finance leader, or a CFO, I focus on, ‘Hey, we’re going to spend this or do this to get this’, pricings perfectly set up for that, you know. I’ve been a big believer, every pricing person that walks in the door should be worth three to $5 million. And that’s something that ROI that resonates really well with CFOs. And the same thing comes if you ever want a pie, you know, pricing systems, right? ‘Hey, I’m going to spend 3 million to make 20.’ That’s a very clean conversation. The thing you’ve got to do though, is you’ve got to prove it. Because every CFO has been burned by this, by people that aren’t as rigorous. And so, you’ve got to make sure that you kind of walk them into the conversation, you don’t just jump in and beat or head first.
Mark Stiving
And so, are CFOs excited about doing this? Are they scared about doing this?
Jason Covitz
It’s both honestly, most CFOs don’t have background in this area. So, this is something that and you see this in other indexes too. But like they want somebody that can come in and lead this type of an organization for them. They’re not used to hardcore analytics; they’re not used to hardcore pricing. They haven’t done a good job of negotiating with sales teams, right? Like, I mean, think classic CFO, that’s not their background. So, they’re looking for somebody that can do it for them. At the same time, they recognize the value, right? They’ve been on, you know, they hosted a podcast like this, right? They have conversations with other CFOs CEOs that ‘Hey, Pricing is this huge lever, how do we take advantage?’ So, when you think about having that discussion with CFOs, that’s something I always recommend is, you know, emphasize a thesis.
Mark Stiving
You’ve been a VP of pricing at a bunch of different companies. Now, in my mind, I picture CFOs as a cost-plus mentality, where they don’t understand the value of the product, they want to make sure we’re covering our costs. And this is how we’re going to think about Pricing. Now, is that a bad way to think about CFOs? And if so, how do we get them to think more about value or value-based pricing, and less about cost or cost-plus pricing,
Jason Covitz
It comes up, you see that, you know, having worked in different industries, manufacturing is a good example of that, distribution’s a good example of that, where it is more of a cost-plus mentality. And it’s because CFOs in those businesses have been so focused on the coast line, right, the margins are so slim, it just becomes kind of a second nature. In other industries, you know, financial services, as an example, some of your higher tech, you know, FinTech, etc., there is the opportunity where they recognize the value more. And it’s again, they just have more room, right, so they have more room to operate. I think it is a mentality that you want to make sure you address with CFOs as well as, you know, Chief Product officers, Marketing officer, Sales officers. And the second piece there is focus on, if the value doesn’t get them there, focus on the dispersion, right. You know, if you’ve ever once seen a pricing scatter, I’m sure that’s been on this call, like think about, ‘Hey, this customer pays this for this portfolio, this customer pays this, you know, for the same portfolio pays this. That delta is really what gets people out of bed when you’re CFO, because they’re like, ‘Well, we just need to have that guy pay that and we’re good.’ So, you’re really trying to think about that from a messaging perspective.
Mark Stiving
Yeah, so look… I want to make sure that we’re on the same page with the dispersion chart or the scatter plot. I tend to think scatter plots are good things, not the plot, but the dispersion is a good thing. Because in a way you’re saying I’m charging different customers based on their willingness to pay. So, I think this is price segmentation. But on the other hand, it could also very well be poor sales behavior or mistakes we’ve made and margin we gave up that we didn’t have to give up.
Jason Covitz
Yep. same thought process. I usually start with dispersion is bad. You know, if there is a reason like ‘Hey, this customer buys more, I should get a better deal’, or they buy a bundled product they should get better deal, or they’re in a given segment that’s more sensitive, okay, then I understand it should get a better deal. The problem is when you first start those scatters, there is no reasoning for it, it is just, the sales guy negotiated better than the sales guy. So, you know, I usually start with, you know, think of it as the classic onion example. I’m going to just look at a scatter versus volume, price versus volume, and see who stands out. And then if you can start to identify, well, there is a different level of segmentation, then you start to dig a little deeper, right, you get to that next level with the onion. So, the first one, though, is usually the one gets their attention. Usually, it actually usually funds the whole project from a pricing perspective, because they’re like, well, that’s worth $20 million. I can spend three to put pricing guys in place to go get it, you know, let’s go do that. So, you know, you do learn as you get deeper, you know, over the first you know, called six months, but kind of right out of the gate, it’s usually in my experience more of a sales conversation.
Mark Stiving
Okay, well, let’s talk about sales a little bit, then. How do we get sales people to, I mean, I don’t even know what the right word is, I would say behave better, I would say negotiate better. But in truth, what I really want them to do is communicate the value of my product better.
Jason Covitz
It’s hard. My experience with sales teams are 5, 10 percent of sales teams get the value story. Most of them are operating just 20 years ago, they’re not focused on the value, it’s a cost-plus mentality, ‘Hey, I’m just going to win no matter what I need to do.’ My experience is usually, find a champion, right? Find a champion, find the sales guy who is the value seller, and find out a way to call out his achievements. And I call positive peer pressure, ‘Hey, look what Bob’s doing. Bob just did this. And as a result, he made all this extra money.’ And then what you can start to do is do two things. One is you can start to track it, you know, show people ‘Hey, you know, sales teams never want to be at the bottom of the list.’ Right? And if you start to do deal scores, I’m sure you guys have talked about deal scores before, you know, deal scores, hey, these are blue deals, which are at the top, and these are red deals, no one wants to have all the red deals. And then the second part is, you can actually throw compensation about against it. I’m a big believer that I walk into a chief sales officer’s desk and say, ‘Hey, look, I’m going to throw $3 million into your sales budget.’ And they’re like, ‘What do you mean?’ ‘Like, well, here’s what I’m going to do, I’m going to give you guidance. If people are able to sell at the top of the guidance, I’m actually going to pay them a lot more, not a little bit more, a lot more.’ And then you find, you go back to the your champion and say, hey, look, this guy’s doing it, I’m going to start paying him a lot more. And then, you know, sales teams, what do they love to do? They love to talk. Well, they talk to each other. And all of a sudden, Bob’s like, ‘Hey, I just got a new pool, because I sold this deal at a higher rate.’ That’s what you want, right? Like you don’t want to the pricing guy do the training? You want the sales guys doing the training for you? Because it just resonates better?
Mark Stiving
Yeah, absolutely. Now, I don’t know if you’ve ever heard this before. But I’ve heard sales people refer to pricing people as the sales prevention team. Now, why does that happen? And how do we get away from that?
Jason Covitz
Yeah, it happens all the time. Honestly, it’s probably one of your top concerns as a pricing team working with sales organizations, because you’re seen as ‘Hey, I want to raise price.’ And truly, anytime you raise price, there’s a bigger chance or larger chance, I guess, that you’re going to lose a deal. And sales teams don’t want to have any risk inserted in any of their deals. So, the way I get around it is do a couple things. One is show them it can be done. Right, wherever you can say, ‘Hey, look, I’ll use Bob again, Bob did this deal, and he sold it at this price, you’ve got the same deal, you know, same customer segment, etc.’ Are you saying Bob’s better sales guy than you? So, you kind of want to get into their ego a little bit. The second part I say is sitting on the negotiations, if every pricing person worth their weight in salt, right? Should be in on deals. When they’re dealing with it. They should be talking to sales teams, ‘Hey, where do you start? Where are you starting the negotiation? Where are you going to end? When the customer says this? What are you going to do?’ And then get on the call, like, talk through it, show them how it’s done with the actual customer. It’s hard. Sometimes you’re like, ‘Well, I don’t trust you, you can’t sit down.’ But building that rapport and that trust. And all you got to show them it’s done once. And then you just go back to it because sales teams are really big on anecdotes. If you can show examples of that. You can get it done. So, you have to build a momentum, and you’ve got to stay on it because as soon as you lose a deal, it goes back to that same kind of quote process. You’ve got to just kind of stay after it.
Mark Stiving
So, although I love what you’re saying, I got to say that it feels hard to me in the following sense. I think a lot of companies, the pricing people don’t really know the value of the product, right? It’s usually product management, product marketing, that really understand the value deeply of the product. And I always thought of pricing departments as being there to guide or hold the hands of other departments. And most pricing people don’t actually set prices, right. They’re actually doing monitoring and guidance throughout the company. And so how does a pricing person go into a deal with a salesperson, and help them figure out how to sell value?
Jason Covitz
Well, I’ll start with the sales conversation, then we can work upstream because they should be involved in setting the price point. I think about pricing with a capital P, which means it should be doing price setting, it should be deal management, it should be doing the analytics, you know, if you’re not doing all those pieces, as a price organization, you’re missing your calling at every opportunity to drive impact. From a sales perspective, value is obviously critical. And you can pull, you know, from the product team, whatever the latest talking points are, right, and emphasize that. But the other part is, and this is a little bit more just purely analytical, ‘Hey, what is that product selling for and other customers that look like this?’ Same size, same portfolio, same geography, same segment. That’s effectively all the rationale you need to price something. It does skip some of the value conversation which you want to get into. But the value conversation can take a little bit longer, right? Whereas if I can start cleaning up deals right away, I can make millions of dollars. So, you want to start that conversation with the sales team, get them on board with that, show them who’s performing well, and then rewarding those people. And then you want to get into the conversation with the product team, right? Like, you want to help set prices, because that’s really where the value, strategic, that comes into play.
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Mark Stiving
What I just heard you say was, if we have enough data, if we have enough results that we’ve seen in the past, and we can use those as examples, or we could use analytics to say, look, this is what the average is, or this is what Bob’s doing. That in and of itself will give sales people although you didn’t say this, I’ll interpret it as, this give salespeople the confidence that they can win at higher prices, and therefore they’re more likely to go after higher prices.
Jason Covitz
Yeah, and I show winners, I actually will show, I’m a big believer, for sales teams, what they care about is win rate, you know, on 100 jobs or 100 deals, I won 35%. And we didn’t talk about this a little bit, but just to think about it, your win rate, because people always say, ‘Well, what’s too high of a win rate, or what’s too low of a win rate?’ And so, you know, my argument is your win rate should be your market share, your current market share, plus five points. Right, that should be your win rate. So, let’s say your number, you know, there’s three players, you’re 33% of the market, your target should be between 33 and 38. If you’re winning 90% of the jobs, or 90% of the deals, there’s clearly something wrong. It might be pricing, it could be something else, pricing is probably a part of it. Same thing on the other side, if you’re only winning 10% of jobs, and your market shares 30, 35%, that tells you the other thing, ‘Hey, something’s going on. Something’s wrong.’ So, you want to understand win rate and you want to communicate that to sales teams. And you can cut that multiple different ways. It doesn’t have to be an overall win rate. It can be by size segment, geo, salesperson, just to kind of you know, push it a little further.
Mark Stiving
I can certainly see the win rate below market share is a problem. Where do you get the 5% on above market share?
Jason Covitz
It’s more of a rule of thumb than anything. Because you know, I’ve read a lot of books and seen a lot of talks where people like, well, you should look at market share or win rate. But they don’t ever tell you how you should look at win rate and understand whether it’s good or bad. And, you know, I’ve done research with clients on this. And you know, where you do interviews and go through the whole nine yards, people make decisions on four things, they make it on price, they make it on sales experience, they make it on operational experience, and they make it on product or solution capabilities. Those are the four time and time again. And it’s pretty well split between the four of those, it’s about 20 to 25%, for each one of those on how they make decisions. So again, if your way high win rate or way low, one of those four is driving it, the salesperson will generally tell you it’s pricing, it’s not, it’s going to be one of those four. So, you really want to understand that. And, you know, I look at win rate, as kind of one of my true measures of whether my pricing is doing well or not.
Mark Stiving
Yep, I can see that. The reason plus five doesn’t feel comfortable to me. Yeah, is I could imagine, there are lots of deals out there happening that I’m not even involved in. And so, in order for me to keep my market share, I need way more than 5% more market share and my win rates.
Jason Covitz
Yes, it can. But I mean, think about how your win rates are often calculated, right? You normally have a win rate on existing business, which you actually normally win about 80% of the time. And then you also have win rate, on new business where you’re winning less than, you know, you’re winning in less than a third, maybe you’re winning 10 to 20% of the time, so that you want to look at both. And as you get deeper into it. Usually you want to understand how many deals, your point, like how many deals, what percentage of deals are you actually in on? Which ones are you competitive? Most organizations I’ve worked in, you’re part of the bidding process. And if you’re not, that’s all that’s actually probably a whole another reflection of how are we not and under bidding process? I think that’s effectively what a sales teams job is, it’s a lead gen discussion. So, it’s a fair call out. I usually go in with the market share plus 5%, because most sales teams and product teams are focused on growth. And that usually kind of gets people past that discussion. So, I think totally a fair point.
Mark Stiving
Yeah, if anything, I would say five is low, but I’m okay with that. Right? I mean, at least we’re trying to grow, we’re trying to do better than we are.
Jason Covitz
Well, and you don’t want to be a 9, right? Like, because I mean, you’ll have so you I mean, if you ask somebody, if I probably should have led you with this question like, Mark, what’s the right win rate? Right? And I will hear this from sales teams, I want to win every single deal. Right? And then so number two, is that the right target? And I guess the other part of that is, you know, what happens when we lose? And it’s not a realistic number. And so, you know, it’s about how do you come up with something that makes sense. And that you can, you know, logically back up with some thought process.
Mark Stiving
Yeah, I love this. And in fact, the question itself, once you ask me the question, it struck me as really hard to answer. Right? What’s the right win rate? Because it isn’t 100%? It isn’t 90%? Right, we’re leaving way too much money on the table. And how do you tell when you’ve reached the right win rate? Right, because my first answer was going to be 2% higher than yesterday’s win rates.
Jason Covitz
Yeah. But then you’re effectively right, it never ends. And we’re going to get to 90. Well, and yeah, exactly. And I guess the other part is, think about the other side, what I should have, I should throw a slide together for this one these days. But, you know, think about what what’s the competitor landscape look like? If you’re a third of the market, and they’re at 60? Let’s say they’re 65% of the market, just make the math plain. And all of a sudden, they’re only at 50%. Right there. Because if your rates going up, there’s going down, right? So, it’s somewhat a zero-sum game here. What are they going to do? Right? You know, again, assuming the sales teams are not that focused, they don’t have a great pricing leader. More or less, they’re going to throw a price for it. So, you want it to be enough that it’s growing without triggering a massive response.
Mark Stiving
Yeah, I think given what you’re saying, one of the rules that I often teach people is never use price to win market share.
Jason Covitz
Yes. And there’s a great book. I mean, it’s 15 years old now. You know, focus on profit, not market share. I can’t remember who writes it, but I’ve got it somewhere. My book shelves over here. It’s a great book that focuses on that. And it does go back to your original point of value for like, how do I measure value? How do I focus on making sure I get paid for value? And, honestly, because market share, a lot of people grow market share, really because they just want more revenue. And as an organization for profit, that’s not your goal. Right? your goal is actually to grow profit. And people think, well, if I grow revenue or grow profit, by extension, that’s actually usually not the case.
Mark Stiving
So not always the case. Yeah. You brought up the word wants today. And, and I’ve had the pleasure of working with a deal desk in the past. But I think a lot of my clients don’t have deal desks. So, would you start by telling us what a deal desk is? And then let’s talk about when a company should have a deal to ask for when it makes sense, when it doesn’t make sense.
Jason Covitz
Yeah, and it’s more of a B2B concept than, you know, a retail concept, although it does come into play, you know, even in retail environments. But a deal desk is simply who determines the price for a given deal. And it can be a small deal, like a transaction, you know, like, you know, at Safelite example, what’s the price for a given job, it can be a big deal, you know, at Cardinal Health as an example, where it was previously, it can be billions of dollars. So, who determines the price for that, and deal desk usually come in a couple different forms, you know, on the smaller side, when they’re more transactional, your kind of your small and medium deals. That’s somebody where a salesperson can call in, you know, and ask somebody for guidance, help them think about what’s the right offering that I should put in from this client? How should I price it, you know, how does business terms come into play? So that’s kind of the small version of that. And you know, you can have people that sit there and take 10 deals a day, on my desk. You can also have, some people use the term deal management, which are your large deals, you know, your billion-dollar, 100-million-dollar deals, these can take weeks to put them together. And you know, they can go in front of review boards. So, you can have a deal desk that actually does those large deals as well. And I personally believe you should have them for if you’re in pricing, and your sales teams are doing any level of negotiation, you should have a deal desk, and they should be partnered up against you with your pricing team, or your sales teams
Mark Stiving
The deal desk that I’ve worked for. We’re in the semiconductor business, I saw that you were at TI for a while. And those deal desks tend to be very transactionally oriented, very rules based, we’ve given you a set of guidance that says never go below this point. And if you need a bigger discount than that, you’re going to call someone else and escalate that inside the company.
Jason Covitz
Yep. And that was me. I so at TI I took that call. So you know, and it was very interesting, because what I would measure, I would measure two things when I joined that team, I would measure for my boss. ‘Hey, what’s our average unit price erosion?’ Right? Like, because we’ve been, our erosion had been slipping at 10 to 15% annually. So, and I said that, and then what you’re basically, the sales teams are calling for an approval, and I use the air quotes, because they’re just assuming you’re going to say yes, yes. Right. Coz I got a customer in line, they want to pay 25 cents for this. It’s normally 30. I want you to say yes, Jason. And that was, you know, and I got calls from the President of Japan, back when I was at TI? And I would actually say no. And, you know, basically, what I would do is I’d spend 15, 20 minutes on every deal that came in, and I’d say, who’s the competitor? What’s the volume? Have we seen this price point? Does this make sense in the given this segment, we have an alternative that we can offer instead? So, my approval rate went from the guy before me was approving at about 70%, my approval rate went down to about 30%. And my boss called me because he was tracking that I was tracking it too. But he called me like, ‘Well, Jason, what’s going on? You’re not approving deals?’ I’m like, ‘Hey, Dan, look what happened to my average unit price erosion, effectively, I killed it. Like it went from 10% annually to 1% annually.’ And I’m like, ‘You want me to tell you how much money that’s worth? That’s worth $10 million.’ And I never got a call on that question. So, you’re right, it can be very transactional. As you get into bigger deals, you want that deal desk to be more upstream, you know, as the initial price has been determined, as the initial offer, as you think about RFPs as an example, that field team should be helping craft that for sales teams, because a sales team might only see in, you know, five, RFPs, 10 RFPs a year. These deal teams might see 10 a week. So, you want the people that are doing it every day to be helping in the process.
Mark Stiving
Yeah, and having people that understand the data, where to go find the data, how to look it up. Huge, huge advantage and coming with these deals and these prices, so yeah, quick realization that I heard, which I thought was fascinating is your people went from 70 to 10, 70% to 10%. approvals. What happens when you’re approving everything, then all the deal desk is doing is slowing down the process?
Jason Covitz
And that’s exactly right. And, again, rule of thumb here, if you’re a best in class deal desk, you’re approving about 20% of deals. So, I mean, I’m a big believer in tracking that measure as well, what percentage of deals are you approving? It can tell you, by the way, you know, if your win rate is dropping, then that tells you maybe you need to approve a few more, right, that you’re getting. You’re trying to use these metrics in coordination with each other. But you know, there would be times when, you know, go back to TI, the guy called me said, ‘Hey, Jason, I need this price.’ I’m like, ‘No, actually, you can’t offer that you can only offer 35 cents.’ And he’s like, ‘Well, there’s no way I’m going to win.’ I’m like, ‘I understand. Tell me what happens. And we’ll do a debrief if it doesn’t work out. He would then call me back the next day and say, ‘Hey, I won.’ Yeah, right. So, you want to measure both, you know, again, its win rate, in this case, and then you feel approval rate, it should be in the 20%. Right? Because you don’t want rubber stamping, if pricing people, all you’re doing is pushing paper and rubber stamping, you’re not adding any value. That’s not good use of your time.
Mark Stiving
Yeah. So, there should be a metric for and maybe there’s a name for this. But the metric for the win rate on deals where we didn’t approve the discount?
Jason Covitz
Yes, it’s a good idea. It’s a tough question. But yes, it’s that type of thought process. And you kind of see how these things work in tandem, right, what your win rate looks like what your approval rate looks like. And what’s interesting is you’ll see different approval rates by different people. So just like sales teams, or sales people are better or worse, you’ll have different pricers that are, you know, I’m going to call, you know, I’m going to call John. I’ll use different name, because John’s easy to get a price by, right. And if he approves that, then I’m good to go. So, you’ll actually see sales teams that will look for kind of a weak link in the process to try to, you know, again, get something approved.
Mark Stiving
Yeah, awesome. Jason, we’re going to have to wrap this up. But let’s finish with final question. What’s one piece of pricing advice that you would give our listeners that you think could have a big impact on their business?
Jason Covitz
I’ll give you two. Number one is to listen, right? Go around as you’re joining an organization, go talk to everybody. I always get like almost t-shirts made up with like, I like the old concert tours, all the people you talk to and listen to what their problems are. Right? Is it, is it deals? Is it analytics? Is it customers? Is it competitive intelligence? And then the second part is, go add value there. Right? They’re going to tell you the answer. And they’re going to tell you where the problems are, and where the problems are usually where the money is. Go solve that problem, because that’s worth money to you and your organization. And that, especially as a new somebody walking in, that’s really going to build momentum for you.
Mark Stiving
I could not agree with that comment any more. Many people have heard me talk about one of my best mentors. He came in and was so successful after I’d failed so many times. And I watched him and what he did was he went around and talk to everybody in the company. And he understood what their issues were, what their problems were. And now anything you want to propose, it’s here’s how I’m going to help you solve your problem. And it was just incredible. I agree with that completely. So, Jason, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Jason Covitz
Yeah, obviously, LinkedIn, I’m always on LinkedIn. So, feel free to reach out there. And then my email is [email protected]. Always willing to help people network if you’re looking for a new role, or you just want to bounce ideas off me, or you just want to connect to somebody, you know, I’m always, especially now that we’re in COVID. And we’re all sitting around our home offices. I’d love to connect and chat a little bit.
Mark Stiving
Awesome. Thank you so much. Believe it or not, that was Episode Number 99. Woohoo. To our listeners, please leave us a review. I promise that I’m going to read them all online as they come in, and Vignesh left us a review that says, Leader and Content:
Mark is one of the best in the field of pricing. Podcasts truly dive deep in each sector and provides actionable insights and takeaways every business can learn and operationalize. Highly recommend the podcast and appreciate the team’s efforts. Kudos!
Well, thank you very much Vignesh. That was awesome. And don’t forget to join our free community at championsofvalue.com. That’s where you’re going to find all of the content I put out for free. You’ll find our memes or blogs or videos or podcasts or at least links to all of those. You’ll go there, go to community.championsofvalue.com As always, if you have any questions or comments about the podcast or pricing in general, feel free to email me markatimpactpricing.com. Now, go make an impact!
Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy
