Welcome to the e-commerce marketing podcast everyone. I am your host, Arlen Robinson, and today we have a very special guest, Ajit Ghuman, who is currently Head of Product Marketing at Narvar, an enterprise-grade customer engagement platform that helps retailers inspire loyalty beyond reason by enabling seamless post-purchase experiences. He has a Masters in Management Science from Stanford University and a Bachelor in Electronics and Communication Engineering from Delhi University.
Ajit is an expert in software pricing as well as an avid writer, and his upcoming book, Price to Scale, covers an end-to-end approach to packaging & pricing for high growth technology companies. He is also an executive member at Revenue Collective, the leading network of commercial leaders working in the fastest growing companies worldwide. Welcome to the podcast.
Thank you so much for having me. Ireland has no problem.
Yes. And thank you for joining. I’m really excited to talk to you today because we’re going to be covering some subjects that I know a certain set of our listeners are in, and that is with regards to marketing software company, e-commerce software company, whether it’s a SAS company or just on any other type of software company, because that really is your bread and butter and that’s really what you’ve had the success with. So I’m super excited to dig into that.
But before we do get into all of that, why don’t you tell us a little bit more about your background and specifically how you got into what you’re doing today.
Right. So actually, Ireland, thank you for mentioning some of the bits and pieces of my Bible. I work at Navar, which is we have a SAS platform that caters to e-commerce retailers as well as brick and mortar retailers. And my job is to evangelize Nawas products to its customer base, understand the customers, and basically bring products to market. So a little bit about what I’ve been doing this year has been changing our whole pricing and packaging. And one of the things I realized when I came into the company and I started doing this project was there was not enough guidance to how to go about this for software companies.
Overall, target managers generally tend to think of pricing as something that’s a little bit arcane. Maybe it’s tough to do. So they kind of leave it by the wayside. Oftentimes it’s a need fulfilled by consultancy companies that charge a lot of money for this, yet they don’t have that much of a direct link with the product or the market. I wanted to write something that catered more to product managers and product marketers and give them a ready framework that they can adopt and also includes a lot of case studies from other software companies and how they do price.
But that’s basically what I’ve been up to over the last six months doing it, and especially the pandemic is to get my writing done right.
I got definitely a good time to do writing as the majority of the world has been able to do is a lot more indoor time, a lot more time to yourself. And that is also a great time to write and kind of be reflective on various subjects. So I’m glad it’s been a benefit for you. Now, really, where I want to kind of start with this whole subject of today is really a subject that I know is difficult. And it’s ironic that I’m talking to you today about this, because I do, of course, on a SaaS.
Companies on. As a service company known as Odissi affiliate software and ironically just had a discussion earlier, as we wrap up the year, we’re recording this actually December 31st, twenty twenty as a company, we always revisit our product pricing and our structure. And so that’s something that we’re going to be looking to do at the beginning of the year to see what changes or tweaks that we need to come up with. And so what I see a lot of times is that there’s a lot of times there’s really no rhyme or reason.
Sometimes when companies come up with their pricing and I’m sure you’ve seen this and you can see the holes in a lot of these things. So what do you think is really the number one thing that most software companies get wrong when they come up with their pricing?
Right. Yeah, it’s a good question, Arlen. And in writing the book, I spoke with nine software, pretty well-known companies in the space, including mixed panel inside Citrix and so on. And one of the things that was a hypothesis that’s kind of been validated is that software companies generally disconnect pricing from the product development process. They don’t think about pricing in the domain of product management. And then more often what happens is it becomes a siloed function in smaller companies.
It’s mostly an afterthought. Maybe it’s kind of the salesperson figures it out and you find something and stick to it. In larger companies, there is a function but is almost a number crunching function versus being a strategic function. And what that leads to is smaller companies. It’s about the pricing. They leave money on the table and that can actually jeopardize the success of their products and at larger companies because pricing is still many of their names, it leaves them open to competitive pressures based on your income and is able to better cater to a better value metric with customers and maybe even undercut them.
So that’s basically what I see. Gotcha. When you say, Stael, are you talking about a war in a company just doesn’t revisit their whole pricing structure and what’s included across the plans for like a long time, they just leave it as is. Is that what you mean? Exactly.
You know, this was one of the case studies from Citrix where the person who used to lead pricing that I mentioned after a certain point, it is possible that you your some of your features may start to get commodities. And if that starts to happen, you may want to think about adding more premium features, adding different premium plans. And if you don’t move when the market moves, then somebody else like Zoome is going to come in and take your legs, which they have.
Right. That is definitely so true. And yeah, what I see just from being in the in this space myself is, you know, a lot of times the pricing structure, it’s an afterthought. And it’s also can be a touchy subject not only for the executives of the company, but for the product managers, because a lot of times it’s touchy because you don’t want to really, I guess you could say, kind of upset the balance of things with your current customers as well as people that have that are in your sales funnel already that may have already been exposed to a certain pricing structure.
Certain plans that you have, if you’re considering switching that, then it is a process where your people are going to see the new structure. And I think a lot of times as a company, you’re a little leery to make changes because if you go up or you change what’s included across your packages, I think there’s a little bit of fear there that you could lose some people that are in the funnel. Do you experience that when you’re been dealing with companies?
Is that a kind of a trend? I have experienced that myself as well with software companies. A lot of our future valuation is tied to renewals, is cycle to upset and expansions. And after a certain point, the growth of a software company is more from existing customers than it is from new customers. It is a pivot point, and it makes sense that a company becomes more risk averse in terms of introducing new features and the challenge becomes tougher.
It’s project management hurdle. It’s in alignment harder. Yet the risk aversion is has to be balanced by the cost of not doing anything right. And that’s where if you come up with plans and you address them, this is really a first principles problem. You think about what are we going to do with our existing customers? What would make sense for them? How do we come up with the hypothesis tested so that if you roll it out, it would not upset the cart yet make improvements.
It can help from more painful things much later down the road. That definitely makes sense. It’s something that shouldn’t be an afterthought. It should really be a fourth thought year over year where you stand as a company in the marketplace against your competitors. How competitive are you? What features do you have? And so it kind of brings you to the next question as a product manager. If you’re in charge of managing the different products that you have and rolling them out, would do you really need to know if you’re thinking about doing any type of change or even coming up with a new product line when it comes to pricing?
What should product managers really know? Is there some type of science behind it?
That’s a good word, science, because one of the things I realized and I believe is that this is not rocket science at all and this is not necessarily have to be a very complex market research, MBA type conjoint analysis problem, which oftentimes, if you’re coming from a business school background, that’s the kind of techniques that you are trained in. And in reality, it’s really just about finding some tools and techniques to get market feedback and incorporate that in your product rollout process.
That’s really the long and short of it. Now, you can expand that with some sort of surveys that give you more concrete data. You can expand that could conjoint analysis when Mr. Dornsife analysis, however, even basic market feedback testing with life in person calls and getting some sort of feedback from customers is better than not. So I feel like we sometimes let the perfect come in the way of the good, especially in product management. And nowadays, product managers are so busy they’re focused on feature requests all the time.
They’re focused with engineering and they would rather say, hey, OK, you know, like my business counterpart kind of figured this out or if they haven’t maybe had that much experience with pricing. So they tend not to mess with it. And I feel like that’s an opportunity area for product managers in general to be more involved in these parts. Right. That makes a lot of sense because you really do need the product managers involved because they’re the ones that are really controlling the feature set behind your product lines or your pricing plans.
They’re the ones that can really dictate the value behind each of these. And, you know, what are the costs where that went into the development of it and how much value do they think each of these different features can bring to the customer?
Exactly. If you think about it, they’re the best positioned to do this work.
Definitely, yeah. I think a lot of companies don’t don’t really realize that now. Alluded earlier that a lot of times software company, those that kind of wait around and don’t do anything in their kind of plans and their prices go stale, a lot of times they may think, OK, I really have to just look at my competitors. I got to see what they’re doing. I got to try to match things up, compare apples to apples and that type of thing, and to see how they can kind of one up them.
But what if a company really wants to be kind of totally out of the box and just create a whole separate category within itself as far as even if they are in the space of other companies, what will be that process of just coming up with a whole separate product category that really nobody else has ever touched? Is that a worthwhile doing or is that something too risky these days? I think it’s definitely worthwhile doing. Let me introduce a small formula for you here, then use that to extrapolate how it can be done.
So the formula uses old problem, plus new way to solve this problem. Plus market evangelization equals new category. So most often if you look at a lot of different cases where new categories have been established, that’s often a place where there is a legacy way of doing things that it’s legacy software or it’s a legacy approach to solving a problem where a new player comes in and says, hey, let’s start to do this differently. Maybe the focus on the buyer persona, they focus on a different type of user.
They have a different lens. So that’s kind of a qualification criteria that I put the words, do you have something that’s new or do you have something that’s just incrementally better? Incrementally better is not bad either, but that’s less suited to create a category. So now let’s assume that you have something that’s brand new, right? In a world of physical toothbrushes. Now, use the first time you came up with the electric toothbrush. I’m just like spit balling it.
But that is potentially something that’s new in an existing place where people brush their teeth. Normally, as soon as this is used and it has positive customer momentum, it focuses on the problem more. And then soon enough, other players start to engage. You kind of cross the traditional crossing the chasm term. Customers start to become recognized as a different entity. Now, you can accelerate that in B2B software. You can accelerate that by having a better analyst relations program.
You can accelerate by making sure you create more events that evangelize the problem. So the acceleration and marketing can do a lot there. And it is a lot like positioning a new product. It takes longer investment. The. I think the Ottoway on such efforts that only obtained after a few years of solid investment without much tangible results. I think that’s what businesses need to be prepared for because many businesses want to do that. Their boards are telling them, hey, we know we need to go.
We need to create a new category. And the market, on the other hand, says, well, then I need more budget to do this. But the board says, no, no, we won’t give you more budget. This is the only way that you have. That’s one thing that has to be couched when you know you have something new. It will take much more capital investments, especially as you’re thinking of being the next X of something.
I appreciate that. It makes a lot of sense. You know, there’s definitely a lot more behind it as far as positioning yourself to really be to kind of a leader when the software tech arena. But aside from kind of positioning yourself correctly, doing your market research, coming up with really the most effective product pricing plans and structures, aside from doing all of that, what role do you feel that the actual product marketing really, as in creating some of these kind of unicorn companies like the LinkedIn that Netflix is and all of that the Silicon Valley IPO companies, how much of it is, you know, I guess, pure luck or how much of it is their product marketing and how they’re getting to market?
Yeah, it’s a tough question.
And to be honest, because I think broader market, it’s really a sum of the parts you win. Sometimes when you sum the parts, they become more than the whole. I kind of think that’s what happens when a company becomes an IPO blockbuster, especially the types of LinkedIn or Facebook or even an older company I used to work at, which I learned a lot of lessons from, which is Battalia, we’ve got a good product marketing team. We named products.
Well, we made sure that the product aligned to value and of course, if you don’t do it, there is a problem. However, the product really has to the whole business has to support the problem that it’s trying to solve for the customers. But the implementations customer support team need to create raving fans. The product needs to be very usable. People must want to use it every day for whatever you voted for. And once all of that comes together, marketing becomes easier.
Then you create this virtuous cycle, then you get more customers. As you get more customers, everybody in the market recognizes that. Yes, you know what you’re doing. They’re going to go with you. Right. And that’s kind of a traditional model of becoming a successful company. While I would love to save our marketing has a big role to play, I would say in the context of creating a large IPO, it’s one function or any one function isn’t the end all.
But what I can say is, on the flip side, as few as companies, as they succeed, we get four or five million IPOs every year. For every each one of those, there are probably 10 or 30 or 50 companies that feared much earlier they were not even reasonably successful. And there is weird product marketing can play a big role because I’ve seen so many really good products fall by the wayside because they were not targeting correctly to the right customer segment.
Customer feedback was not properly implemented. Some other operational piece was missed. And what you can do with good product marketing is have a decent product and still make it successful as long as you do the basics right. So that’s the value of having this function in your company. Yeah, those are definitely good things to know. And for a company that, you know, is really kind of out there looking for somebody to help really grow and market their company.
Yeah, those are definitely some things to look for as far as if a particular person is a product market. Those what are those key areas that they were able to either grow other companies or what plans have they been able to put in place prior that have been successful? You know, now as we get ready to wrap things up, well, one of the really kind of ask you is how much, when and when we’re talking about a software company and depending on the particular industry that you’re in and it can be pretty wide open.
But what when we’re thinking about determining how much time that you need to spend on structuring your products and your plans, how much emphasis should a company really be placing on their pricing as opposed to other activities such as other marketing channels and just really other activities? What would you say if it’s like a percentage wise or what is it? How important is it?
I wouldn’t say it’s too much. I honestly don’t think pricing needs to be in my time, month long project at all times, which is often what these. Certain teams will offer you they’ll come in and they will charge you upwards of 30, 40 K, sometimes millions of dollars will be more demand. Big project. I don’t think it needs to be that all it can be a regular part of their business processes. Maybe it requires you to hire.
Let’s an extra analyst as you once you’ve grown beyond a certain point, and I’ve managed it with low headcount at my current company, so I know it can be done. I think it’s more important to look at it as a regular part of your watermarked cycle, and as long as you can think about it, you’ll be a little bit of time to do it. You’ll make sure you check the right boxes, you make sure everybody’s aligned internally. And yeah, I really don’t think it beyond that.
It should not be more than 10 percent of what somebody is already doing.
Gotcha. That helps out. And I appreciate that. It makes a lot of sense. It’s it sounds like really the emphasis is as long as it’s something that you have down that you’re going to do and revisit on a consistent basis, whether it’s annually, whether it’s twice a year or however, as long as it’s something that’s done and it’s not really an afterthought, that’s the most important thing. You always want to at least revisit it once or twice a year at least, or even more often, just depending on the space that you’re in.
And that’s kind of one of the main things, is as long as you’re looking at it and it’s not going stale. So it sounds like that’s really the best thing to kind of take away from that. Well, it’s definitely been a pleasure speaking with you. I know I learned a lot because this is definitely a timely discussion. I know for us as a company and I know for any other software companies that are out there that are in the e-commerce space.
This is a subject that, like we said, is definitely something that should always be addressed at some point within their activities as a business. So I know I’ve definitely learned a lot, but one of the things I always like to do, just to switch gears here and as we close things out, just so our audience can get to know you just a little bit better, if you don’t mind sharing one fun fact with us that you think our audience members may be interested to know about you.
Oh, yeah, I’m outside of software and in all of this stuff, I am a little bit of a biohacking. I love especially with the pandemic. I’m always researching all the things coming in, the same with medicine and supplements and things like that. So following the ketogenic diet for a little, I love what I do. Very nice to do it. What? OK, and that’s one piece that I just throw out to our friends, family, family members as decorator.
Mindy and I know you’re out in Florida, so I’m sure you’re getting a lawyer, right?
Right. Definitely. Thank you for sharing that. Yeah. I’ve heard so much about the keto diet. It’s really been the kind of the craze this past few years. And yeah, I guess now definitely is the time to explore different types of dietary plans when I know it’s been effective for a lot of people. So, yeah, that’s awesome. Thank you for sharing that. Lastly, before we let you go, if any of our listeners want to reach out to you and pick your brain any more about product pricing and for a software company or, you know, any marketing tactic at all, or if they just want to reach out to you, what is the best way for them to get in touch with you?
Yep. My website is ajitghuman.com. If you just log on to my website, you’ll find the tab for the pricing book. Sign up for it. The book is coming out mid January, so I’ll put you on my list and make sure I give you a discount code when it comes out and feel free to ask me any other questions there as well.
That is awesome. And thank you for sharing that. And I definitely encourage all of our listeners to reach out to you and take advantage of that. And thank you once again for joining us today on the e-commerce marketing podcast.
Thank you, Arlen. Thank you for listening to the E Commerce marketing podcast,
Head of Product Marketing at Narvar