Episode Transcript
[00:00:00] Speaker A: Going out there and talking to our customers and testing it as is this something that you would be interested? Does this make a lot more sense going to those people that were saying, hey, you're nickel and diming me, and having them say, hey, this actually feels a lot better.
[00:00:12] Speaker B: Yo, Mike check. What's up everybody? You're listening to the street pricing podcast, the only show where proven SaaS leaders share their mindsets and mistakes in pricing. So we can all stop guessing and start growing. Enjoy. Subscribe and tell a friend. Now let's break it down with your host and sought after Slayer of bad pricing, Marcos Rivera.
[00:00:34] Speaker C: What's up? And welcome to the Street Pricing podcast. I'm Marcos Rivera, author, founder and pricing coach, and today's guest is going to give us a little bit of sales perspective on pricing. I have with me today Rob Merklener. How are you doing today, man?
[00:00:48] Speaker A: Marcos, it's great to be with you. Thanks for having me on.
[00:00:51] Speaker D: Excellent, man.
[00:00:51] Speaker C: Now, I know you're the CRO and SVP at influitive, but can you tell the folks a little bit about you and what you do?
[00:00:57] Speaker A: Absolutely. I lead up our sales and customer success and account management and services team at know really ensuring that we're providing a holistic approach, servicing our customers. And intluuitive is a customer engagement platform. So we work with large companies, helping them engage their customers to drive the right outcomes. If it's reviews, references, referrals, or finding a speaker for an event inclusive helps you engage your customers and get those outcomes, that's phenomenal.
[00:01:24] Speaker C: And I think a lot of folks are thinking about customer engagement, especially in this day and age and environment. So I wanted a couple of things right. Let's walk through a little bit of the format and the roadmap we're going to go into today. I think people are really going to love to hear a bit more from a CRO and sales side of things, but the format of this show is based on the book street pricing. Right? So first we're going to go into rewind and let's take a look in the past of a pricing change that you made, and let's walk through that, let's understand the good, the bad, what happened, so that way folks can understand it and see what it really takes from someone who's done it and walked in those shoes. Then we'll bring it back to play, which is present day, what's working in the pricing model and what's really something that's producing a lot of results. And then fast forward so what's happening in the future? Where do you think the next change is or what's going to really influence the model? And then I have my one special question. I'm going to wrap up at the end with, I'll hit you at the end, but does that sound good to you?
[00:02:22] Speaker D: Let's go. All right, man.
[00:02:23] Speaker C: Let's get straight for it. So first, start off with a pricing story. Let's get into a pricing change in the past and just walk us through it.
[00:02:30] Speaker D: Sure.
[00:02:31] Speaker A: So I'll take you all the way back to four and a half years ago when I first started here at influutive. And we spent a lot of time talking, obviously, to our customers in the first quarter and really trying to understand why do they use influent, the value they're getting in it and what's working and what's not. And a common theme coming out of those conversations was, we feel that inclusive, it's a great product. We get value out of it. But you're constantly nickeling and diming us for additional features that we're exposed to. And so I think that got us really talking about, well, do we have the right pricing model in place? Is it allowing us to actually upsell and cross sell effectively? Is it helping out with retention? Are we losing people because they feel like they are overpaying and not getting the right value for us? And that's where we decided that we definitely have a pricing issue and we need to kind of redesign our pricing and really simplify it and make it easier for our customers to digest. And I think also put us in a position where we could land and expand. Let's show them value, demonstrate that value, and then show you how we can expand over time.
[00:03:31] Speaker D: I love that, too.
[00:03:31] Speaker C: The nickel and diamond thing, by the way, Rob, is not.
[00:03:37] Speaker A: I mean, when you're in the room and you're hearing that from a CMO, it's really painful. Or when they're telling you, hey, yeah, you're the number two line item on my budget, just under a HubSpot. That's a challenge, right? And you get a little squirmy being in those meetings.
[00:03:51] Speaker C: It's uncomfortable. I'm really interested in now. You got me perked up. I'm thinking, how do you get moved away from this nickel and diming sensation? Because I know folks feel it out there. And a way to solve this is going to create a bit more of the, how can I put this? Desire to buy. When you feel nickel and dime, you actually kind of don't want to buy anything. You're just like, you know what? I shouldn't be paying for that or another fee or something else. And it just kind of reduces not just willingness to pay, but just overall desire to even buy anything even before that. Yeah, keep going.
[00:04:23] Speaker A: It also creates a relationship problem, too, with whoever's handling that renewal or crossover upsell. Your customer doesn't trust you, right? And so they're not going to have that real conversation with you.
[00:04:34] Speaker C: That's the truth, man. And so if you're thinking of a lot of upselling and cross selling, you got to figure out how to remove the nickel and diming sensation, or at least make it feel like they're paying fair for what they're getting because it's going to be a heck of a hard time to sell them something else.
[00:04:48] Speaker A: Yeah.
[00:04:49] Speaker D: All right, man, keep going.
[00:04:50] Speaker C: Let's keep unpacking.
[00:04:51] Speaker D: So you found out.
[00:04:53] Speaker A: Yeah, we found out. That's where we found your team and we decided that we were going to go down this path. And I think for us, we really believe that a simplified kind of three packages good, better, best made a lot of sense for us. And really the goal for us was, well, how can we do this but also do it in a way where it's revenue neutral? We don't want to be in a position where we're going to go create additional churn for us. And so I think that this took us a little bit of time to kind of go through this. It was definitely not something that we did in a quarter. It was probably six to nine months of analyzing the different features, how we would package them up. And I think the best part for us going through this process, it was very collaborative inside our organization. We brought people from our product team, our marketing team, CS sales, to work through this process. And then going out there and talking to our customers and testing it as, is this something that you would be interested? Does this make a lot more sense going to those people that were saying, hey, you're nickel and diming me, and having them say, hey, this actually feels a lot better. And I can understand why you guys would go down this path that was really rewarding to get that you guys.
[00:05:59] Speaker C: Were not afraid to do the diligence right and get in there and also face some hard truths in that, because you have to understand where your value is and where it's not right at the end of the day. But you said something really important a second ago, Rob, like when you said that the collaboration across the company. Right. So sales is talking to CS is talking to product, it's talking to ops, it's talking to finance. And that is so important in pricing. I have this saying and it goes, silos kill scale. And if folks are operating in silos, it's really hard to get together and really scale the business. So now that is a big ingredient in this whole thing. Absolutely. And I was glad I was witnessing some of that too, from my angle. But let's keep plowing forward. So you're collaborating, you're getting some data, you're figuring out what features make sense. You get the good, better, best structure.
[00:06:42] Speaker A: Testing it out, really analyzing those customers that are going to have a price increase, how are you going to position that or anchor them in over time? And how are you going to train either the sales team or the renewal team to go have those conversations as well and give them the tools to support them while we're increasing the price? There were some customers where we were overpaying us. And again, in order to prevent that Downsell, what we tried to do was offer them additional products so more users or additional services that we could leverage to help them drive their inclusive program. And that really worked out well for us. I'm not going to say every customer that was supposed to get a Downsell took us up on those free services, additional products, but the majority did on that.
[00:07:30] Speaker C: Hard conversations is what pops in my head when you were saying that. Right?
Listen, you're not going to avoid hard conversations in business, in growth, in anything like that. All these things kind of come in front of you along the way and you have to have a plan, have a strategy, and then just walk the path right at the end of the day. And so when you said arming sales or helping train sales with having conversations about a price increase, that is a tough conversation. And I'd love to. If you had to just rewind back to that time, what were you able to tell the sales reps or to get them kind of behind you? Because it's very natural for a salesperson to say, look, you're just making it harder for me to hit quota now. Like, damn, I had a tough time before, I barely made it. Now you're making me go out the door. We got these increased prices, what the hell am I supposed to do? And I could feel pushback coming from sales naturally. And everybody listening probably knows what I'm talking about. Walk me through, how did you get sales to be like, okay, we can do this or we can have these conversations?
[00:08:30] Speaker A: Yeah, well, I think giving them full transparency on helping them understand why we're doing this, the benefit of to the business. But a lot of it was, how do we practice this? So we role played it quite a bit. We had our talk tracks, we understood what objections would happen. And then a lot of it was also having leadership get involved and be a part of those conversations early on and drive those conversations. And from there, the team kind of fell in place and became more natural to our operating rhythm.
[00:09:00] Speaker C: Cool. So it's really about, hey, let's lay it all out there, right? Make sure everybody's clear and transparent. The role playing thing is nice, I like. So you basically just sat down and actually went through, here's a potential objection. Right. And the hard ones.
[00:09:11] Speaker A: Right.
[00:09:12] Speaker C: Which is, I don't want to pay this higher price or just this is too expensive. No. Right. And walking through a lot of those things with them, getting them comfortable. And then of course the full leadership push, like, hey, we are all behind you, we're backing you up, we're all behind these prices and so on. So that is, I think, three really smart ways, Rob, to help. So let's keep going. Right? So you got the new packaging, you got sales up and running. They're good, yeah.
[00:09:35] Speaker A: And then I think for us, we really believe that this was the path we wanted to take. So as an organization, we set out kind of a North Star goal of what do we want to see happen each quarter? How much of our renewals do we want to be on the new contract or the new pricing? And then new businesses as well. Let's quickly get new customers that were already in our pipeline over to this. And the reason for that is that our hypothesis was that this was also going to allow us to do a few things in our new business sales cycles. One, it was going to allow us to move faster because we were a land and expand, so it shouldn't have 100 to 120 day sales cycle. Can we actually get this down to a 60 day sales cycle? The other thing we looked at too is that, well, if we're asking people to do this land and expand right now, do we have the opportunity to get multi year deals done both on the new business side and on our renewal side? It was something that influenced, really wasn't doing back then.
[00:10:33] Speaker C: And it was unbelievable to see very.
[00:10:36] Speaker A: Quickly the new business team we started to see 50% of our business was signing up for multi year deals, which, you know, that has a tremendous impact on the business when you do that and takes off a lot of pressures too. And then what we saw too was on the renewal side. A third of our renewals were coming back with multi year deals on this. Where we saw was a bit of a challenge in the first phase was on the enterprise side. A lot of those enterprise accounts were like, well, look, if you move us to new pricing, we got to go back through procurement. It's not something we really want to do right now. And so the path we took there was, okay, that's fine, but then at least let's start.
Can we agree mutually that we will work to move over to the new pricing through the next renewal and let's start six months earlier on that and we'll support it together. And we found that to be beneficial.
[00:11:28] Speaker D: Got it.
[00:11:28] Speaker C: So you really kind of helped out. You gave them a path in India. Look, we're not going to move now. Let's create a path. Let's agree to this and start the path over next time. And now that they know what's coming and they understand, then you can start building those steps in. And sometimes it's okay, we'll go part of the way there, then the other part, or we'll do whatever works for that account. Super interesting. But you just said. I'm not going to ignore that. You just said 50% of those deals were coming in multi year. And that predictability, the trust, like all those things, that is where I think a lot of enterprise value goes up when you see a nice, long, predictable stream of revenue coming in. And so 50% is a really big jump for multi year deals, which means that they were comfortable signing up for that. But do you remember what the hook was that made them go, okay, yeah, that makes sense. Let me sign up for two years or three years. Do you remember what that was?
[00:12:21] Speaker D: Well, I think a lot of it.
[00:12:22] Speaker A: Was coming around that when we start talking about coming in and using an influence, this is a partnership where we're going to work with you and it takes time to build up these customer engagement platforms.
[00:12:33] Speaker D: Right.
[00:12:33] Speaker A: And so I think, one, we're focused on this long term and so we kind of talk about what it's going to take over one year, two year to get to these goals. And we also put a little pricing incentive in there too to get the 10%, but I think to get that multi year discount. But also when we share pricing, we start with a multi year deal.
We don't show an annual contract to start with. It's always positioning the multi year deal, and then they can come back and ask for a one year deal if they need it.
[00:13:00] Speaker D: Got it.
[00:13:01] Speaker C: So you went, this is the default. Right. We're starting with multi year. There's a little psychology play in there too.
[00:13:06] Speaker A: Right.
[00:13:06] Speaker C: Where you start that way, in that deviation. Right? Yeah.
[00:13:10] Speaker A: It's also how you got to set the table that everything we're talking about here, the way our contract is structured, our pricing is all based off of doing this multi year deal.
[00:13:20] Speaker C: Very good. So that sets the structure from the get go. So now if you deviate from that, if you want to go annual, and by the way, you already set the stage that this thing takes time to grow and to grow that base and the engagement that if you deviate from this now, we're going to have to do something more custom or something different. And folks, I think would more likely just kind of want to move along and say, okay, yes, this takes time. Yes, all these parameters makes sense. Let's do it. Idea.
[00:13:45] Speaker A: Yeah. That's what happens when procurement will come in involved and they'll say, well, we're only doing one year. And you go back and forth and say, look, we'll talk to our business owner over here. They want this, they've agreed on this. And the business owner can normally tell procurement, let's move forward with that.
[00:13:58] Speaker C: Cool. Yeah. On that one here. Because you're right, most folks either, I'm not down for multi year. I think I'm seeing even more nowadays. Right. It's probably going to be even tougher this environment than maybe a couple of years back. But if the business owner has bought in and they can go back and say, hey, look, we're good with a couple of years or three or whatever it is, let's just keep going. We don't want to unpack this, unwind this and so on and so forth. A year goes by pretty fast. I'll tell you what, we're in 2024, I'm like, what the hell just happened? Right? We're already moving through this thing and moving quickly. So now that you got that and all rolled out, tell me a little bit about maybe some results. Right, because 50%, a multi year deal and a good chunk of renewals all going in that direction probably helped. What, like gross retention out or something else? Anything?
[00:14:42] Speaker A: The other thing it did, it also shrank our sales cycle. So we did get closer to that 60 to 70 day window. But then on the retention side, we saw a really nice turnaround, I would say. I think pricing was a big part of it, too. I think there were some other things. The customer success team did really well, too executing. But we saw renewal rates move from the low seventy s up to the mid 80s through this.
[00:15:06] Speaker D: Wow.
[00:15:07] Speaker A: And then I think personally, what was nice for me after being in those heated meetings and my first full quarter here was that customers actually reaching out to you and saying, hey, I really appreciate the direction you're taking this. Thank you for listening to us. And again, it was a team effort. Everyone was going out there talking to our customers and getting this feedback. But that is so rewarding when you.
[00:15:27] Speaker C: Get that, it is because you're changing the structure. So here's the thing. Whenever you position a pricing change, I always love it when you take some voice of the customer into account, and it's part of creating alignment, making sure there's psychological safety in buying, making sure it feels fair, addressing those things. And so in the new model, even if you are charging more or even if you added some add ons or whatever that is or limits, you took the feedback to heart and you brought it into the model. And I think people appreciate that, listening and so forth. Like, look, value is value and you got to align and pay for that value. We get that. But as long as they feel like they were heard and it's fair and you're moving in the right direction, they usually appreciate the transparency, they appreciate being heard, and they appreciate just predictability going forward of what this thing looks like, what's going to happen. So it's not as scary as you may think. But let me throw a scary scenario at you. Maybe a customer that was overpaying and now talking about, hey, this new pricing model, you're actually going to pay less, maybe substantially less. Now you may think, well, why is that so scary, Marcos? Because the customer doesn't. Don't they want to pay less? Well, no, because maybe they felt like you were taking them all that time when they were paying the old fees. Right? So a little bit of a weird scenario, right? Like, uh oh, we do have customers that are overpaying today based on the new model. How did you talk to those folks? How did you get them over?
[00:16:45] Speaker D: Yeah.
[00:16:46] Speaker A: So we prepared for that by what we want to do is say, look, we did not want to take that downsell. So we showed them what the new pricing was, but we said, we're also including these additional services that you could use to generate content, or they could use them as managed services, or we would give away additional product. So if they wanted more users or there was another, we have a mobile app that was priced out, we would include that for them. So we tried to tuck in additional things for them on that.
[00:17:17] Speaker D: Got it.
[00:17:18] Speaker C: That makes a lot of sense. That's pretty smart. You tuck in extra stuff, stuff that they want, not just anything, right?
[00:17:24] Speaker A: Stuff that we know was going to add value. And I think the brilliance behind that, though, too, was that including services on some of those actually improved our relationships with the customers, too, because now we were even closer to our customers.
[00:17:36] Speaker C: Ooh, that's a ninja move right there. That's a ninja move, right? Because you slick that in there, you're a little closer. Your finger is more on the pulse. You know what's going on. And then you can also find, by the way, not just avenues to upsell and cross sell, et cetera, but now you've also added a little bit more certainty to that renewal, more that relationship feel. So ninja move on that. I love it. I love it. I love the journey. I love everything you learned. I mean, what you did took a really bold stance. It took conviction. It took clarity and confidence. All those things, right? And I think, I really love to hear all those results that you had with the fantastic reduction in sales cycle, with the improvement in just retention and all those things, right? So what do you want to give everyone here on this storyline? Like the one takeaway to remember from everything you all did? What's the one takeaway you give them?
[00:18:23] Speaker A: Well, I think it goes back to your siloed comment, right? Everyone's got to be all in and behind this. So making sure that all the organizations or departments are aligned on it, because this is not just about the customer. It affects finances, contracts, comp plans, your go to market messaging, what it's going to go on your website, how much of your pricing, because that was the other thing, too, right. We wanted to be transparent with our pricing, so we wanted to put our pricing on the website and be comfortable and competent around that. Right? So making sure that marketing is on board there, I think to me that is the biggest thing.
[00:18:54] Speaker C: I love it. You guys really walk the walk. So I take that one to heart. You have to break down those silos, do it together, do it on purpose, do it with conviction. Now, let's move us to today, like this day and age, right? What do you think is working best in the pricing model?
[00:19:08] Speaker A: So I still think that the pricing model we have today is still the one that we rolled out to the market a couple of years ago. We've added some new features, and one of the things that we're paying close attention to now is some of these features are allowing us to integrate into other ecosystems and we're putting a price tag on that as we go into beta and start testing that out. But we believe that that will be another angle where we will be able to generate cross sells and upsells. And then I would say the other lesson learned for us, especially on the per user pricing, was that we have looked at other segments to go into. Perhaps Mountain Dew is a big customer of ours. Are there other consumer product goods that we could go after? And how does that pricing compare to like a b to b pricing? The user of a Cisco end user is much different than a mountain dew drinking end user.
[00:19:56] Speaker C: Right.
[00:19:57] Speaker A: So that's something that we're working on today, as well as figuring out those technical integration upsells and crosssells that we can do.
[00:20:05] Speaker C: I love that because there are lots of benefits into working yourself into different ecosystems. And also having that data pass back and forth that makes you more valuable increases the value of the product itself. I love that. And now thinking about fast forward into the future, right, as you're now building out these integrations, et cetera, which I know it takes time, it's a process, and so on and so forth. Anything else on the horizon where you're thinking on the model? I'm thinking of anything on the AI front might be coming, which nine out of ten companies I talk to have something going on on the AI front.
[00:20:37] Speaker A: There's definitely an opportunity for that. And then the other piece, probably, well, actually I didn't share this, but I think the other thing that was really cool about this pricing, getting our trust back of our customers. We're now in a position every year where we're able to raise our prices. So we now have a little bit of a price increase in our contract as well. And that's something that customers are not pushing back on in terms for other upsell across opportunities, probably on the AI, the integration side. And then there's a few other newer products that are coming down the pipeline too, later this year that will help support that as well. And that's more around a loyalty offering.
[00:21:17] Speaker D: I love it.
[00:21:18] Speaker C: In the end, to grow these accounts, really, you need more customers or either buy more stuff or do more stuff. Right? That's kind of how it goes. I really want to double click a little bit on that last piece here because you said, when I think about the use end user, the Mountain Dew user versus the other, I was thinking like the end user, right. I don't think a lot of folks think about that when they're looking at their customer base and they're breaking them up, they usually think, hey, there's a small customer and I have a medium sized customer and I have a large customer and they just kind of go with that. But if you think about the customer's customer in the industries they serve and their deal cycles and their end customers and that entire way they deliver value, I think that's a really good unlock in how you can relook at your customer base to really double click and serve them well. And if you serve them well, you build trust and you build trust, then you can have things like those price increases you talked about, which I think a lot of companies right now are like with your sword and shield, trying to fight to get any clause in there for a price increase. It's not easy, especially with procurement having the upper hand these days. But Jeff, you could share, what do you think that the most common price increase you guys get in the contract? Is it the old CPI plus two? Is it 5%?
[00:22:35] Speaker D: Yeah.
[00:22:35] Speaker A: So we're not trying to be greedy or anything like that. Costs are going up for everyone. So we do CPI and then if we have to negotiate it, it's like two or 3%.
[00:22:45] Speaker D: Cool.
[00:22:46] Speaker C: You heard it here first, right? So CPI, but if you have the trust, they usually don't push back on that, right? So that's a really big lesson and takeaway as well, man. So you came today. I mean, you walked the path and you did it and you've got the results to prove it. I couldn't be happier with some of the lessons today because I think a lot of SaaS operators are either thinking about it or in the middle of it and they're not sure how this stuff's going to work out. So getting a line, breaking down those silos, having that conviction and marching that along, prepping sales, role playing, going through all that, making the customers feel like they were part of the decision, like all those key things I think are major, major takeaways for our audience today, our SaaS leaders today. But I do have one more question for you, man. I got one more question. My favorite question of all, what was your favorite jam growing up? It doesn't have to be 90s hip hop, that's a bonus. But let's learn about Rob. What was your favorite jam?
[00:23:38] Speaker A: All right, so I'm taking us all the way back to 94.
[00:23:40] Speaker C: It's biggie juicy. Speaking to my heart, man.
[00:23:45] Speaker A: With my kids the other day, we were cranking it and I looked at my wife and I said, can you believe that this is 30 years old? It's like our parents listening to the man.
[00:23:55] Speaker C: That is wild for a number of ways. One is now I feel really old. Yeah, I know. But it brings me back when I was in my old, I had a little Toyota Corolla and I had a pull out stereo. Some of you may not even know.
[00:24:07] Speaker A: What the hell this is, right?
[00:24:08] Speaker C: But I had a pull out stereo system in my old Toyota Corolla, and I was bumping biggie in that song juicy. Back then, I think I had just had the cassette tape. I just popped it in, and then I upgraded the cds. Later, folks are probably scratching their heads, you know, it I'm hiding under my seat and all that, right?
Those were the days, man. Thank you for bringing me back. That's one of my favorite jams as well. And thank you for dropping.
[00:24:38] Speaker A: Absolutely on, too. And more importantly, thank you for your team's help with this. All pricing changes we made, too.
[00:24:44] Speaker C: I love it. It was impactful, and you guys brought a game all the way. So thank you. Thanks for coming in here. Ladies and gentlemen, Rob. Mark Lehner. And here's the thing, you have to take these lessons to heart, everyone, and please stop guessing and start growing. Until next time, thank you and much.
[00:25:02] Speaker B: Love for listening to the street pricing podcast with Marcos Rivera. We hope you enjoyed this episode, and don't forget to like and subscribe. If you want to learn more about capturing value. Pick up a copy of street pricing on Amazon. Until next time.
