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The Science of Trust: How Brands Can Build Lasting Customer Loyalty

February 25, 2025 by Megan Esposito Leave a Comment

The Questions That Drive Trust

  1. Why do we instinctively trust certain people and organizations?
  2. How can brands earn the trust of customers they’ve never met?
  3. And what strategies can they use to turn that trust into lasting loyalty?

These questions captivate me. As a fractional Chief Marketing Officer with a deep passion for neuroscience and psychology, I find the dynamics of trust—especially in today’s digital age—both fascinating and complex.

The Trust Gap: Perception vs. Reality

The trust gap is real. According to  PCW, while 90% of executives believe their customers highly trust their companies, only 30% of consumers agree. That’s a staggering 60-percentage-point gap—a disconnect that highlights how unpredictable and elusive trust can be.

The Personal Nature of Trust

Trust is deeply personal. It’s shaped by a complex mix of internal beliefs and external influences.

Consider Apple’s TV series Franklin. In it, Edward Bancroft betrays Benjamin Franklin, yet Franklin defends their friendship to John Adams, focusing on their shared history and Bancroft’s likability. Despite the betrayal, Franklin values the deeper connection—an example of how trust can transcend logic and be rooted in emotional and instinctual ties.

This hidden layer of trust is what brands need to tap into. It goes beyond product features and benefits, living in the emotional and subconscious spaces where true loyalty is born.

The Three Pillars of Trust

At its core, trust is built at the intersection of:

  • Logic: Demonstrating competence and consistency.
  • Emotion: Building connection and empathy.
  • Instinct: Appealing to intuition and subconscious cues.

Brands that balance these pillars create a trust that feels authentic and lasting.

How Brands Can Build and Activate Trust

In this guide, we’ll dive into:

  • The Psychology of Trust: Why we trust certain people and brands.
  • Neuroscience Insights: How our brains process trust signals.
  • Evolutionary Roots: Understanding trust’s role in human survival.
  • Proven Strategies: How brands can cultivate trust and turn customers into loyal advocates.

👉 Click here to download the guide

A BRAND’S HOLY GRAIL – ebook Virginie Glaenzer

Connect with Virginie Glaenzer to explore how your brand and organization can increase customers’ trust.

 

Filed Under: Revenue Growth Tagged With: CMO, CRO, ebook, Popular

Reducing Your Risk of Business Failure in 2025

January 9, 2025 by Megan Esposito Leave a Comment

As we step into 2025, it’s natural to focus on ambitious goals and growth strategies. 

However, my European background and six years as a Fractional CMO have taught me that I serve my clients best through honesty and direct feedback. This year, let’s take a moment to address the hidden risks that could threaten business success.

For leaders, minimizing the chances of failure is just as crucial as pursuing bold visions. 

Here are four key areas to remember and avoid:

Failure to Effectively Communicate the Vision and Mission

Your company’s vision and mission are the guiding stars that should align teams, inspire action, and shape decision-making. Yet, many businesses struggle when these core elements are unclear or not consistently reinforced.

Why it matters: Without a clear and shared understanding of the organization’s purpose, employees lack direction, and stakeholders lose confidence. This misalignment can erode trust, dilute efforts, and stall progress.

Solution: Leaders must communicate the vision and mission consistently and authentically. Integrate these principles into team meetings, strategic plans, and even casual conversations. When everyone—from executives to front-line employees—can articulate your mission, you’ve built a resilient foundation.

Zinier, led by CEO Prateek Chakravarty, a former client, is a Field Service Management SaaS that exemplifies well-defined departmental objectives aligned with the company’s overall goals, thoughtfully integrating insights from both sales and research. I had the opportunity to witness firsthand how they effectively communicate their vision and mission, ensuring clarity and alignment across the organization.

2. Overcrowding with Multiple Decision-Makers

Collaboration is valuable, but when too many decision-makers are involved, the result is confusion and inefficiency. Overcrowded leadership structures can create unclear roles, competing priorities, and slower responses to challenges.

Why it matters: When responsibilities blur, accountability diminishes, and execution falters. Decision-making becomes a bottleneck instead of a catalyst for progress.

Solution: You can simplify and clarify processes by clearly defining roles and responsibilities for decision-making. You should delegate authority when appropriate and ensure everyone understands their specific accountability. With streamlined governance, you’ll enable faster and more effective actions.

While working with another client, LARVOL, a Pharmaceutical SaaS company, I observed their CEO, Bruno Larvol, lead the launch of a new product offering with a strong focus on seamless interdepartmental communication. His approach resembled a growth hacking team, effectively integrating efforts across product, marketing, and data. Moreover, his process clearly defined roles and responsibilities, which enabled the team to take faster and more effective actions.

3. Forcing Employees Back to the Office

For many organizations, the debate around remote work continues. However, mandating a full return to the office without considering employee preferences often signals an inability to trust or delegate.

Don’t let your company fall into the “Coffee Badging” trap!

Why it matters: Forcing employees back can lead to resentment, reduced productivity, and higher turnover. Modern teams thrive on autonomy and flexibility, not rigid controls.

Solution: Instead of rigid mandates, focus on outcomes and empower employees to work in ways that optimize their performance. Build trust through delegation, invest in tools that support hybrid work models, and prioritize results over presenteeism.

4. Not Having an AI Project

AI is no longer a future technology; it’s a present-day necessity. Businesses that fail to adopt and leverage AI risk falling behind competitors who are reaping its benefits in efficiency, personalization, and decision-making.

Why it matters: Ignoring AI leaves businesses vulnerable to inefficiencies and lost opportunities. From automating routine tasks to enhancing customer experiences, AI can be a game-changer.

Solution: Start small. Identify areas where AI can deliver immediate value—streamlining operations, improving customer engagement, or analyzing data. Launching even a modest AI project can position your business as forward-thinking and innovative. 

At TechCXO, we have put a team together to help our clients embrace AI, from an introduction workshop, a team training to full AI organization transformation.

Book a time, and we’ll help you get started.

Looking Ahead

Unlike traditional executives, as Fractional Executives, we avoid drinking the Kool-Aid or playing politics. This unique positioning allows us to address critical risks head-on and share honest insights about customer needs and market opportunities.

2025 doesn’t have to focus solely on lofty goals. You can build a stronger, more resilient business by proactively addressing these critical risks I’ve listed.

Success isn’t just about hitting ambitious targets—it’s about creating the conditions to sustain those successes.

Let this year be about building a lasting legacy—by reducing risk, fortifying your organization against failure, and strengthening the foundation for long-term success.

Filed Under: Revenue Growth Tagged With: Popular

Subscription Fatigue: How to Evolve Pricing from Product Transactions to Relationships

November 24, 2024 by Megan Esposito

Lately, I’ve noticed something interesting during my client engagements: people are getting tired of subscription models. If you’re in the SaaS or media entertainment sector, you might be feeling it too—this growing “subscription fatigue” that’s making customers second-guess that monthly charge.

According to woop, approximately 39% of global subscribers plan to cancel at least one subscription within the next year, citing content issues (54%) and high costs (43%) as primary reasons

As a fractional CMO and CRO, I help organizations rethink their pricing models to address this very issue. The goal? Combat fatigue and rebuild trust with our customers. I’m seeing an exciting new era in pricing, one that’s all about relationships rather than just transactions. Digital transformation and changing customer expectations are pushing us to rethink the old ways.

The Evolution of Pricing Models

Historically, pricing was simple: supply, demand, a little markup, and done. But that world has changed. Today’s market is abundant and open, with digital access and global connectivity totally reshaping how we perceive value.

What was once a simple “cost-plus” transaction has grown into a variety of sophisticated models that respond to different needs, behaviors, and expectations.

For those of you in the C-suite—whether you’re a CEO, CMO, CRO, or VP of Marketing—understanding these shifts is critical for navigating your business through today’s complex market.

In this post, I’ll walk you through some of these modern pricing strategies, share real-world examples, and introduce some unconventional ideas that might just challenge how you think about pricing.

From Cost-Plus to Dynamic Relationships

Traditionally, pricing was straightforward: take the cost of producing a product, add a markup, and sell it. This “cost-plus” approach was reliable for physical products but often missed out on the customer connection—it was purely transactional.

However, as the competitive landscape evolved, more dynamic models started taking over. Think of it like a shift from a simple product purchase (like a limited-time clothing sale) to a relationship-based transaction, where the price can adapt to the customer’s needs, actions, or loyalty.

Two newer approaches embody this evolution:

  • Dynamic and Action-Based Pricing: Leveraging data, companies like Uber and Amazon dynamically adjust their prices based on real-time factors—such as demand surges or inventory levels—to optimize profits and align with customer behavior.
  • Licensing and Royalty Models: Content creators and technology firms, like software providers and entertainment companies, are moving towards royalty-based pricing. Used by companies like Substack, YouTube, Patreon and Apple Music, this model rewards stakeholders continuously, whether it’s for every stream of a song or per use of licensed software.

Tried & True Models Still in Play

Before jumping into the really out-there ideas, let’s review some existing pricing models that have worked well over the past decade.

1. Customer Usage and Value-Oriented Pricing Models

We find these pricing models align cost to answer perceived value, offering flexibility, reducing waste, and tailoring pricing to customer behavior, which fosters stronger relationships.

  • Usage-Based (Pay-As-You-Go) Pricing: Often seen in cloud computing (e.g., Amazon Web Services) and telecommunications, this model ensures customers only pay for what they use, providing flexibility and minimizing waste.
  • Freemium and Paywall Pricing: In the software and media industries, freemium models lure users in with basic free services (e.g., Spotify) while encouraging upgrades. Similarly, paywalls on news sites like The New York Times provide a taste of the content before requiring commitment.
  • Outcome-Based Pricing: Industries like legal services and advertising sometimes base fees on performance or specific outcomes. This results-oriented model aligns incentives for both the client and provider, creating a win-win situation when objectives are met.

2. Segmentation and Differentiation Pricing Models

Not all customers are the same, so why should pricing be? Segmentation pricing helps growing businesses understand customer needs and tailor pricing to capture more market segments and drive growth.

  • Tiered Pricing: SaaS companies, such as Slack or Salesforce, effectively use tiered pricing to cater to different customer segments, ranging from startups to large enterprises, each receiving features tailored to their specific needs.
  • Geographic and Regional Pricing: Netflix adjusts subscription fees across various countries to reflect purchasing power, cost structures, and local competition.
  • Loyalty Pricing: Airlines have mastered loyalty pricing, creating recurring customer engagement through miles programs that encourage repeat bookings and higher lifetime customer value.

3. Product and Service Bundling Models

Bundling can also help companies upsell by encouraging customers to opt for higher-value packages that include additional services or features.

  • Subscription-Based Pricing: Industries like streaming (Netflix) and software (Microsoft Office 365) use subscriptions to ensure predictable revenue while offering ongoing value to consumers. Microsoft relies on licensing agreements for its software offerings, such as Microsoft 365, enabling steady, predictable revenue through a subscription-based approach.
  • Bundling and Unbundling: Telecom companies often bundle internet, TV, and phone services to increase perceived value, while SaaS products might unbundle services to attract new users at a lower entry point.

4. Market Entry and Promotional Pricing

These pricing models can help companies quickly gain market share by offering competitive rates and incentives that attract a large number of customers in a short time.

  • Penetration Pricing: Spotify used low-cost introductory offers to quickly capture a large user base, relying on customers’ later transition to higher-paying plans for revenue growth.
  • Seasonal Pricing: Hotels and airlines use seasonal pricing strategies to adjust rates during holidays or peak travel seasons, optimizing both occupancy and profit margins. Uber employs action-based dynamic pricing to adjust ride costs during peak hours or bad weather, optimizing driver supply and passenger demand.

5. Psychological and Perception-Based Pricing

  • Psychological Pricing: The classic $9.99 vs. $10 psychological trick is alive and well across retail—a small adjustment in price often leads to outsized changes in consumer perception.

Finding New Pricing Ideas

Innovation in pricing is about more than optimizing what’s already there; it’s about creating new connections between cost, value, and trust.

I recently worked with a client in the energy sector, and we considered shifting from a pay-per-use model to a membership-based one, adding extra services to boost customer loyalty.

Let’s look at some bold new ideas for pricing—some are a bit unconventional, but innovation often starts with thinking outside the box.

1. Hybrid Pricing Models

  • Reverse Auctions for Services: Consulting firms could adopt reverse auctions, where service providers bid downwards to win projects, combining competitive pricing with quality assurance.
  • Community Investment Pricing: A model where part of the customer payment goes into a community fund, creating value beyond the product itself.

2. Dynamic Charity Contributions

  • Dynamic Charity Contributions: Fitness equipment companies could allow customers to choose part of their payment for charity, providing a deeper emotional connection.
  • Ad-Based Subsidized Pricing: Clothing retailers could offer discounts for customers who watch ads or share promotions on social media.

3. Behavior-Driven Pricing

  • Health-Driven Dynamic Pricing: Fitness centers could use wearable data to offer discounts for customers achieving health milestones, promoting healthier habits.
  • Behavior-Driven Discounts: Tech companies could reward customers with discounts for helping in product development or sharing feedback.

4. Social and Group Dynamics

  • Group Solidarity Pricing: A digital product where prices decrease as more people purchase, encouraging group buying and social sharing.
  • Time-Based Devaluation Pricing: A model where service prices decrease over time, rewarding those who are willing to wait while incentivizing early adoption.

5. Experience-Based Models

  • Emotional Pay-As-You-Feel: Entertainment venues could allow customers to set their price after the experience, aligning value with personal satisfaction.
  • Pay-Per-Mood Pricing: Aligns pricing with how much perceived value or comfort customers expect at different emotional states. A spa could base its pricing on customer mood—offering discounts to stressed customers while charging premiums to those already relaxed.
  • Karma-Based Pricing: Restaurants or cafes could implement pay-what-you-feel pricing, creating an emotional connection and community-driven value through customer fairness.

Steps to Reevaluate Your Pricing Strategy

If you’re considering shaking things up, here are a few practical steps:

  1. Understand Customer Behavior: Use analytics to figure out when and why customers buy. This might lead to dynamic pricing that fits fluctuating demand.
  2. Segment Your Market: Identify distinct groups and create tiered offerings that cater to different needs—perfect for SaaS and services.
  3. Focus on Relationships, Not Transactions: Moving away from one-off sales to something deeper. Subscriptions, royalties, and loyalty pricing can turn customers into long-term partners.

Final Thoughts

Ultimately, pricing is about trust, loyalty, and creating value—growth follows naturally.

Customers today have endless choices and are driving how they perceive value, making adaptability key. Remember, a brand is all about the experience it offers in the mind of the customer, and pricing should align with their beliefs and desires.

Using tools like AI and analytics, we can offer dynamic subscription pricing based on needs, seasons, or lifestyles. Whether you want to grow your market, sustain growth, or optimize profit, a fresh look at your pricing model might be the answer.

Start by experimenting—look at what’s working in other industries and focus on building relationships, not just transactions. And if you want to dive deeper into innovative pricing models, here are some excellent reads:

  • Price Discrimination: Types, Examples, and Implications
  • The role of AI in enhancing competitor pricing strategies
  • Understanding customer willingness to pay: A Key to profitable pricing 

Filed Under: Revenue Growth Tagged With: Popular

TechCXO Returns to Inc 5000 List

August 28, 2024 by Megan Esposito Leave a Comment

TechCXO, the pioneer of on-demand executive leadership services, returns to the Inc. 5000 list of Fastest Growing Private Companies. The company has been on the list for 15 of the last 16 years.

ATLANTA, AUGUST 28, 2024 – In an outstanding affirmation of its enduring excellence and growth, TechCXO, the pioneer in providing on-demand executive leadership, proudly announced its return to the Inc. 5000 list of America’s fastest-growing private companies for 2024. TechCXO’s consistent presence on the Inc. 5000 list for 15 out of the last 16 years is a testament to its unwavering commitment to empowering clients and fueling their growth. The firm appears on other Inc. lists: #199 in Georgia, #500 in Business Products & Services, and #187 in Atlanta.

TechCXO was founded in 2003 on the premise that companies can benefit from having the best executive talent available to serve as their CFOs, CTOs, CSOs, CMOs, CROs, COOs, CHROs and other executives on a fractional, part-time, or project basis. Companies might not otherwise be able to access the talent and experience level of a TechCXO partner and teams due to cost or availability.

Kent Elmer, Managing Partner of TechCXO, expressed his enthusiasm for the company’s latest accomplishment, “Being recognized once again on the Inc. 5000 list is a testament to the hard work and dedication of our team to excellent client service. Over the past 20 years, we’ve been committed to changing the game in fractional executive leadership, and our repeated inclusion in the Inc. 5000 underscores our success in this arena.”

Read Full Press Release

Filed Under: Executive Operations, Finance, Human Capital, News, Product and Technology, Revenue Growth Tagged With: News, Popular

Signs Your Business Needs a Chief Marketing Officer (CMO)

July 23, 2024 by Megan Esposito Leave a Comment

Signs Your Business Needs a Chief Marketing Officer

Most companies have a CEO — the person who drives the direction of the company and makes the important decisions. They also likely have a CFO, COO, CTO, and even possibly a Chief Product Officer or Chief Revenue Officer.

But what about Chief Marketing Officer? Many companies choose to go without one, full-time or fractionally, for a number of reasons.

First, marketing is a “fuzzier” function than, say, technology or finance. It’s a little harder to be specific about what a CMO does or adds. “If I have junior marketers doing work, what does a CMO add?” they may ask themselves. In addition, senior businesspeople often believe they know enough about marketing to do the work of oversight.

But the biggest reason companies go without a CMO is, they have gotten used to what it’s like without a true marketing leader. Like homeowners who forego rehabbing their house for so long that they stop noticing the peeling paint, leaky faucets, and outdated look and feel, these companies can’t seem to prioritize what real marketing can do for them.

So here are a few signs that your marketing may not be delivering enough value for your company — and that you might need some experienced marketing leadership to get you over the hump.

You’ve been saying, “We need a website update,” for so long you’ve lost count. Websites get old. However, there’s nothing more important for your business. And letting it molder is a sure sign you’ve lost the ability to recognize the business lost by giving prospects the wrong first impression about your company and its offering.

The marketing you do is a series of tactics and one-offs. No customer ever sees your strategy. So, at the end of the day, marketing is actually a series of activities and behaviors you perform in the world. However, your strategy is what helps connect your execution across time, channel, and customer. Without strategic leadership and the rigor that comes from it, you may be pushing out mere transactional messaging, transitory promotions, and random product news.

And because no one has built a holistic plan, nothing is adding up over time in the customer’s mind. As I’ve written here before, great marketing is a “system,” working together as “connective tissue” to add value to an organization.

Your brand’s story is all about what you do, but not why. A clear purpose is a sign of a strong strategy – and it helps frame your narrative around the value you provide, vs. the attributes of your products and services.

Buyers buy solutions that promise to solve their problems and challenges; product attributes are the reasons to believe your promises, not the main message you tell.

You aren’t obsessed with your customer. When marketing is strategically led, it is always developed in the service of its customers. But without a CMO driving it, it’s likely that your company’s efforts are focused on “push-based” marketing, vs. insight-based marketing built around customer need.

Every good marketer at your company leaves. The thing about good marketers is that they love marketing. They want to do strategic, interesting, big things. Without a leader in marketing, their work instead ends up being completing a long to-do list, spinning plates, and working on putting out the latest fire. Good marketers don’t feel fulfilled by this type of work.

No one is setting objectives, developing goals, or measuring your results. When marketing is focused on today’s fire drill, it’s likely there’s no long-range planning. And, importantly, you’re more than likely not tracking, or optimizing your efforts on an ongoing basis.

A CMO — full-time or fractional — may seem like an indulgence or luxury, especially for an early-stage or startup company. But if you know how to spot the signs, you’ll realize that without one, your marketing is likely to not leave a mark at all.

Email | LinkedIn | Download CV

Filed Under: Revenue Growth

TechCXO Reports Full-Year Revenue Growth for 2023; 20th Straight Year of Top-Line Growth

March 12, 2024 by Megan Esposito Leave a Comment

ATLANTA, MARCH 12, 2024 – TechCXO, a pioneer in providing industry-relevant, on-demand executives delivering fractional and interim professional services, reported an increase in annual service fees in 2023 over 2022 to $56 million. TechCXO has increased revenue every year since its inception in 2003.

“TechCXO is in the strongest position in our history. We now have more than 120 partners – the most ever. Our partners love our collegial environment and how our model enables them to impact their clients directly and positively,” said J. Kent Elmer, TechCXO’s Managing Partner.

“Today, we’re seeing staffing and search companies, consultants, and business coaches claim to provide fractional executive services. That’s a testament to the success of our model,” Elmer added. “However, we know after two decades in business that the depth of partners’ expertise – every one of whom has been in multiple c-suite roles – and the team of professionals supporting them is a big differentiator.”

TechCXO was founded in 2003 on the premise that companies can benefit from having the best executive talent available and serving as their CFOs, CTOs, CSOs, CMOs, CROs, COOs, CHROs and other executives on a part-time or project basis. Companies might not otherwise be able to access the talent and experience level of a TechCXO partner and teams due to cost or availability.

Read Full Press Release

TechCXO has assisted thousands of start-up and growth-stage clients in its history. In addition to executive support, companies can also outsource their entire Finance, Sales & Marketing, IT, HR, and Operations functions to TechCXO for 50-75% less than it costs to staff full-time, loaded salaries. All TechCXO partners and staff are U.S. and U.K.-based.

About TechCXO

TechCXO is a pioneer in providing high potential companies across the country with industry-relevant interim and part-time executives on-demand. More than 5,000 companies, from startups to the Global 1000, have entrusted TechCXO to help with their critical functions by calling on TechCXO executives and teams as their CFOs, COOs, CSO, CTOs, CMOs, CHROs and other executive roles. TechCXO has appeared on the Inc. 500/5000 Fastest Growing Private list every year since 2008. For more information about the firm, please visit https://www.techcxo.com.

Filed Under: Executive Operations, Finance, Human Capital, News, Product and Technology, Revenue Growth Tagged With: News

The Strategic Imperative: Why CFOs Should Care about Revenue Operations

July 31, 2023 by Megan Esposito Leave a Comment

In my 35-year career in a variety of revenue-generating roles, I have rarely found 2 corporate functions with less mutual understanding than sales and finance.  Much has been made over the last 20 years about the need to bring sales and marketing together, and today those two engines for customer acquisition seem (generally) to be getting along much better.  But the friction between sales and marketing was always rooted in competition, not a lack of appreciation for what each group does.  The gulf between sales (or sales and marketing collectively) and the finance function is different.  In my view, the two groups often have a deep misunderstanding of one another and what each function is charged with accomplishing on behalf of the company.

Obviously, these are extreme examples of what sales and finance professionals would actually say about the other, but I believe the sentiments are broadly accurate.  The good news is that the growing field of Revenue Operations (or “RevOps”) can help bridge the chasm. 

First, a brief description of Revenue Operations.  It is a strategic approach that integrates the sales, marketing, and customer success functions to streamline processes and improve overall revenue performance.  It typically focuses on data interpretation, process and methodology, training and enablement, and management of the tech stack used by the revenue functions.  In a nutshell, RevOps provides an infrastructure that allows for easier creation of new revenue.  

Done properly, a RevOps function can benefit the office of the CFO in a number of ways: 

1. A 360-degree view of the entire revenue cycle

RevOps will enable CFOs to understand how different departments contribute to revenue generation and identify areas for improvement. By taking a holistic view of revenue, CFOs can align financial goals with the company’s overall growth objectives, ensuring that each department is working cohesively towards the same targets.

2. Enhanced Data-Driven Decision Making

Revenue Operations team leverage data analytics and technology to gain insights into customer behavior, market trends, and sales performance. This work is additive to the extensive work that CFOs do around bookings and revenue performance and can further enhance the CFO’s ability to make informed decisions about resource allocation, investment opportunities, and revenue forecasts. 

3. Improved Forecasting Accuracy

One of the critical challenges for CFOs is providing accurate revenue forecasts. Revenue Operations implements standardized processes and metrics across sales, marketing, and customer success, providing a consistent and accurate picture of revenue generation. 

4. Enhanced Cost Efficiency

Revenue Operations is responsible for reducing friction points in the revenue generation process.  To do that involves optimizing marketing and sales tools, raising the efficiency of sellers, and minimizing customer attrition.  While these activities will increase revenue, they will also provide opportunities for  cost-saving measures that can be implemented without compromising revenue growth. 

5. Scalable Growth Strategy

For any company aiming for sustainable growth, scalability is a crucial consideration. Revenue Operations ensures that growth is both manageable and sustainable by providing a clear roadmap for expansion. CFOs can use Revenue Operations insights to understand how growth will impacts different elements of the revenue generation engine. 

Revenue Operations is a critical component of successful and sustainable business growth. As the custodian of a company’s financial well-being, CFOs can’t afford to overlook the potential benefits that Revenue Operations brings to the table. By taking a proactive interest in Revenue Operations, CFOs can drive strategic decision-making, enhance forecasting accuracy, and foster financial success for their organizations. 

If you are a finance leader who would like to know more about Revenue operations, or if your organization needs assistance in building or developing a robust Revenue Operations function, please click the link below to schedule a free 30-minute call with a Revenue Operations expert from TechCXO.

Email Bert | LinkedIn | Download Bert’s CV (PDF)

Filed Under: Revenue Growth Tagged With: Revenue Operations

Harness the Momentum of Revenue Operations: Unify Marketing, Sales, and Customer Success

July 31, 2023 by Megan Esposito Leave a Comment

Fostering revenue growth is now a team effort rather than the sole job of the sales team. It’s helpful to visualize revenue growth as a bucket – marketing opens the tap,  sales fill it up, and customer success ensures no leaks from the bottom. It’s a balanced process, a harmonious symphony.  

Progressive organizations have reimagined their revenue-generating functions – Marketing, Sales, and Customer Success – as a coordinated, cohesive powerhouse. Moving beyond the age-old attempts to “align the sales and marketing teams,” companies increasingly understand that the best way to drive revenue is to improve every aspect of a customer’s journey. How a company attracts prospective customers (marketing), wins over new customers (sales), and then enables and ultimately retains customers (customer success) is the ultimate formula for growing revenue.

For validation of this approach, look no further than your television. Subscription services like Netflix have rocketed to growth by understanding that getting a customer’s interest is only the beginning of the revenue journey. Gaining a subscription and keeping that customer from unsubscribing are crucial pieces of the revenue puzzle. With B2B firms now focusing on the total revenue picture in much the same way, a new function has emerged—Revenue Operations (RevOps). RevOps aligns the revenue functions, fostering collaboration and optimizing the overall revenue-generating journey. 

In this blog post, the first of a series, we will serve you a triple treat – the consolidated wisdom of three veterans of the essential revenue functions. With over 50 years of collective experience leading Marketing, Sales and Customer Success organizations, our authors are now collaborating with dozens of clients to build and improve their RevOps functionalities. Through the prism of each revenue function, we’ll unveil how to morph these historically siloed organizations into a dynamic, high-performing RevOps entity. To start off, let’s outline what we believe to be the six key areas of focus for any great RevOps team.  

1. Metrics: The North Star of Revenue Operations

At the heart of RevOps lies the use of comprehensive and meaningful metrics. By establishing shared key performance indicators (KPIs) across marketing, sales, and customer success teams, RevOps instills a unified vision of success. These metrics include revenue, customer acquisition cost (CAC), customer lifetime value (CLTV), conversion rates, and other performance indicators that provide actionable insights for informed decision-making.

2. Process & Methodologies

RevOps advocates for the standardization and optimization of revenue-generating processes. It involves mapping the buyer’s journey, identifying friction points, and implementing streamlined workflows to enhance efficiency and collaboration. By aligning processes, such as lead management, opportunity tracking, and customer onboarding, RevOps eliminates silos and ensures a seamless experience for customers across all touchpoints.

3. The Revenue Tech Stack

RevOps leverages technology to empower teams and drive revenue growth. The revenue tech stack comprises a suite of tools, such as customer relationship management (CRM) systems, marketing automation platforms, sales enablement software, analytics, customer engagement tools, and more. Integrating these technologies enables data-driven decision-making, automates repetitive tasks, and provides the overall revenue organization with vital insights to propel revenue.

4. Training & Enablement

RevOps recognizes the importance of equipping teams with the right skills and knowledge to excel in their roles. Training and enablement programs ensure that marketing, sales, and customer success professionals have a thorough understanding of their customers, products, processes, and the tools at their disposal, fostering collaboration,  adaptability, and consistent value delivery to customers.

5. Customer Messaging Alignment

Synchronizing customer messaging across marketing, sales, and customer success teams ensures a cohesive and seamless experience for customers at every touchpoint. This alignment enables teams to deliver targeted and personalized content, understand customer needs, and address pain points effectively, resulting in increased customer satisfaction and loyalty.

6. Continuous Improvement Programs

Mature RevOps teams emphasize a culture of continuous improvement. By anchoring on key metrics, organizations can identify areas for enhancement, iterate on processes, and experiment with new strategies. Continuous improvement programs encourage cross-functional collaboration and empower teams to test and implement innovative ideas that optimize revenue generation and customer experiences.

By focusing on the six key elements—Metrics, Process & Methodologies, the Revenue Tech Stack, Training & Enablement, Customer Messaging Alignment, and Continuous Improvement Programs—businesses can unlock greater synergy, improved customer experiences, and accelerated revenue growth. Embracing Revenue Operations is a strategic game-changer that propels companies to the forefront of today’s competitive landscape, enabling them to flourish in an increasingly customer-centric and data-driven world.

At TechCXO, we boast the expertise and experience to guide you in building or enhancing your RevOps functionality.  If you’re intrigued to learn more about our approach and service offerings, please click here to schedule a 30-minute discussion with one of our experts.  We’re excited to connect with you!

Filed Under: Revenue Growth Tagged With: Revenue Operations

SBLI of Massachusetts

June 13, 2023 by Megan Esposito Leave a Comment

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 SBLI of Massachusetts

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THE CHALLENGE

Following the acquisition, Jim Morgan, the CEO of SBLI, approached Lewis Goldman, a fractional Chief Revenue Officer at TechCXO, to develop a go-to-market strategy to best leverage the new asset for SBLI of Massachusetts. Three objectives were established for 2022:

Stabilize the business and integrate it into SBLI

Develop a plan to break even or better for the first year

Integrate LegacyShield features and functionalities with SBLI’s platform for existing policyholders to support retention, cross-sell, and differentiate SBLI’s Term Life policy offering from competitors selling directly to policyholders.

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THE SITUATION

SBLI needed a business plan quickly to leverage LegacyShield’s capabilities while not negatively impacting SBLI’s overall financials.

With the acquisition, only a handful of LegacyShield employees joined SBLI of Massachusetts, leaving SBLI with a skeletal staff during the pivotal period of integrating into a new company.

A unique new product opportunity arose early in 2022, providing significant growth opportunities in 2023 and beyond. Due to limited staff, the company needed help to execute the deal and launch the new product, especially in marketing/business development, as SBLI didn’t have a Chief Marketing Officer at the time.

LegacyShield’s lockbox vault feature was a valuable and beneficial product offered in conjunction with a life insurance policy. SBLI needed help to best leverage its uniqueness to drive policy retention and growth, given the lack of a CMO.

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TECHCXO INTERVENTION

•For the previous two years, Lewis Goldman of TechCXO assisted with a variety of new product and marketing projects at SBLI, including mentorship of various marketing personnel until a permanent VP of Marketing was hired in late 2022.

•TechCXO worked closely with the CEO and SBLI management to create a comprehensive business plan and go-to-market strategy to support LegacyShield’s business and marketing objectives for 2022, including presenting the plan for approval by the Board of Directors following the acquisition in Q3 of 2021.

•Create a business and financial plan for LegacyShield to support the remainder of Q4 in 2021 through the end of 2022.

•Negotiated and executed distribution opportunities leading to the growth of third-party revenue for LegacyShield.

•Spearheaded a task team consisting of the technology department at SBLI to establish and implement an integration strategy for LegacyShield and SBLI’s core servicing platform (MySBLI.com), as well as on the SBLI.com website.

•Assisted in hiring a new sales representative to work with the key 3rd party distribution partner to stabilize the distribution channel and revenue stream.

•Created a financial model following a new partnership with LegacyShield Provider Network (LSPN), where SBLI would offer an enhanced LegacyShield product along with other services provided through advisors to end customers.

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THE OUTCOME

Acting as a fractional business leader, Lewis Goldman solved the revenue growth concerns following the acquisition of LegacyShield with go-to-market strategies, business, and financial models. As a result, the company exceeded its renewal goals, adding numerous new advisors to its distribution channel, and soft launched the new product in Q4 2022 with significant marketing support and expansion planned for early 2023. The company projects to increase revenue from LegacyShield by 50% in 2023 vs. 2022.

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“Lewis has been an asset following our acquisition of LegacyShield. His expertise in innovative go-to-market strategies and establishing appropriate business structure has accelerated our revenue growth and allowed us to expand our market offerings in 2023.”

– CEO, Jim Morgan

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For more information, contact TechCXO Partner Lewis Goldman.

[/fusion_title][/fusion_builder_column][fusion_builder_column type=”1_1″ layout=”1_1″ align_self=”auto” content_layout=”column” align_content=”flex-start” valign_content=”flex-start” content_wrap=”wrap” center_content=”no” column_tag=”div” target=”_self” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” order_medium=”0″ order_small=”0″ padding_top=”0px” padding_bottom=”0px” hover_type=”none” border_style=”solid” box_shadow=”no” box_shadow_blur=”0″ box_shadow_spread=”0″ z_index_subgroup=”regular” background_type=”single” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ lazy_load=”avada” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” sticky=”off” sticky_devices=”small-visibility,medium-visibility,large-visibility” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ transform_type=”regular” transform_scale_x=”1″ transform_scale_y=”1″ transform_translate_x=”0″ transform_translate_y=”0″ transform_rotate=”0″ transform_skew_x=”0″ transform_skew_y=”0″ transform_scale_x_hover=”1″ transform_scale_y_hover=”1″ transform_translate_x_hover=”0″ transform_translate_y_hover=”0″ transform_rotate_hover=”0″ transform_skew_x_hover=”0″ transform_skew_y_hover=”0″ animation_direction=”left” animation_speed=”0.3″ last=”true” border_position=”all” first=”true” min_height=”” link=””][fusion_person name=”Lewis Goldman” title=”Partner – Chief Growth Officer, Fractional CMO” picture=”https://www.techcxo.com/wp-content/uploads/2020/06/lewis_goldman_200x200.jpg” picture_id=”2028|full” linktarget=”_self” show_custom=”no” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” pic_style=”none” pic_bordersize=”7″ pic_bordercolor=”var(–awb-color1)” pic_borderradius=”20″ hover_type=”none” content_alignment=”center” animation_direction=”left” animation_speed=”0.3″ /][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

Filed Under: Revenue Growth Tagged With: Case Studies

Focus On Your MVA: Minimum Viable AUDIENCE

May 17, 2023 by Megan Esposito Leave a Comment

Founders and product leaders at startups and early-stage companies know all about the need to build MVPs — minimum viable products — at the beginning stages of their company trajectories. Before loading on additional benefits and use cases, start with a version of your product with just enough features to be attractive to and usable by a specific early customer. This helps validate your product, create initial revenue, and develop a feedback loop for insights to guide future product evolution opportunities. Focus your efforts on the MVP, make it successful, and then start building and scaling.

So why do so many of these early-stage companies take the opposite approach to the segmentation and marketing of their products? I can’t tell you how many times I have seen companies in these early phases targeting their product to multiple disparate audiences. They throw them all against the wall and see what sticks, adding varied audiences to their pitch decks, their website, and their collateral.

For example, I’ve worked with healthcare start-ups that target providers, patients, payors, employers, and beyond — all at once. It’s almost easier to identify whoM they don’t target vs. who they do.

Now, you might think it makes sense to appeal to as many different types of customers as you can at first to keep your options open and to see what works. Or that excluding anyone who might be interested in your product would mean losing a potential sale.

But the truth is, this un-focused approach creates a number of big problems.

Firstly, to put it bluntly, it’s a lazy approach to strategy. Being strategic is all about making choices about your actions. As economic theorist Michael Porter says, the essence of strategy is choosing what not to do. By choosing not to choose, you’re not being strategic.

Secondly, different audiences will have different needs, preferences, and customer journeys — so a one-size-fits-all approach will fail.

It’s unlikely that early-stage companies can take the time to fully understand these different consumers. But it’s especially unlikely they can create different types of messaging and offerings to get all these different types of consumers to consider and buy from them.

Which leads to the last, and most important problem this unfocused targeting approach creates: It diffuses a company’s already limited and strained resources. Because both time and money are especially scant, developing strategies and assets for multiple audiences is likely unaffordable.

Instead, startups should begin by focusing on MVAs: minimum viable audiences. Identify the best target for your product who can help you begin to build your business. This is the group that represents the most attractive segment, which can be accessed most easily with your current product and company, and that offers enough revenue to grow the business.

Then ruthlessly learn about, understand, and build a marketing system to engage your MVA. And for now, disregard the multiple different audiences who could also be targeted, just as you have the myriad other attributes you could have added to your MVP. With this strategic prioritization, you are ready to drive more powerful and effective marketing and revenue generation.

Email Michael | LinkedIn | Download Michael’s CV (PDF)

Filed Under: Revenue Growth

Navigating the Complexities of Mergers & Acquisitions with Fractional Executives

March 10, 2023 by Megan Esposito Leave a Comment

 

Mergers and acquisitions (M&A) are complex transactions that involve the combining of two companies. While increasing market share is often cited as a primary reason for M&A activities, these transactions can sometimes fall short of this goal. Mergers and acquisitions fail for a variety of reasons, including cultural difference, integration issues, and strategic misalignment.

Cultural Differences

When two companies merge, there may be significant differences in the corporate cultures and values of the organizations. This can lead to conflicts and difficulty in integrating the two entities, resulting in a lack of collaboration and a failure to achieve the desired synergies.

For example, consider Google’s acquisition of Nest. Nest had a culture that was top-down driven with a visionary and vocal CEO. Google’s culture is more product-centric and bottom-up. It is known for giving engineers autonomy to experiment. To further complicate matters, Nest’s acquisition of Dropcam also resulted in cultural clashes. Ultimately, these culture issues led to the departure of Nest’s CEO.

Fractional C-suite executives are both insiders and outsiders at the same time. They are fully on board with the client’s executive team and leading their functional area of expertise. In this way, they are insiders. But, as newbies to an organization, they bring a fresh outside perspective to team dynamics. Fractional CXOs do not bring preconceived expectations from either side of a company merger, so their outside perspective allows them to identify concerns, drive collaborative solutions and head off cultural team derailments.

Integration Issues

Merging two companies requires significant effort and resources to integrate the operations, systems, processes and people of the two organizations. If the integration process is poorly managed, it can result in disruptions to business operations and customer service, leading to dissatisfaction among employees, customers, and shareholders.

A third-party assessment used to either derive or review an M&A integration plan can help fuel desired business outcomes. Business leaders, such as fractional C-suite executives, who have “been there, done that” offer an informed viewpoint and add value from due diligence to post-merger integration.

Strategic Misalignment

M&A activities require careful consideration of the strategic goals and objectives of both companies. If the strategic goals and objectives of the two companies are not aligned, it can result in a failure to achieve the desired synergies and increased market share between the two organizations.

Consider, for example, Unilever’s acquisition of Dollar Shave Club. Dollar Shave Club had sales of $152 million before Unilever paid $1 billion to purchase the company. Unilever did not have knowledge of the category before buying the company as it did not have a razor product. As the acquiring company, Unilever expected to sell more of its products direct-to-consumer, based on Dollar Shave Club’s success in the channel. The company also expected to sell more of its non-razor products to Dollar Shave Club customers. Neither of these things happened at the pace Unilever anticipated.

Experienced fractional executives can help evaluate sourcing goals and mitigate strategic misalignment. Such leaders often bring a perspective from multiple industries and can provide a vision on the future of each. It is safe to say that Unilever would have benefit from a stronger DTC business leader’s perspective that did not come from inside Dollar Shave Club. Such knowledge could have aided Unilever in setting expectations and informing its acquisition price.

Overall, M&A activities can be complex and require careful planning, execution, and integration to achieve the desired benefits. Failure to address the challenges and risks associated with M&A activities can result in significant financial losses and a failure to achieve the intended strategic objectives. Fortunately, fractional C-level executives are accessible to lower middle market and larger companies to help navigate the complexities of M&A from sourcing to post-merge integration.

Email Katherine  | LinkedIN | 626-344-8730 | Download Katherine’s CV (PDF) | Twitter

Filed Under: Revenue Growth Tagged With: M&A, Mergers and Acquisitions

Calling Your Content ‘Thought Leadership’ Doesn’t Make It So

October 21, 2022 by Megan Esposito Leave a Comment

Content marketing became a powerful marketing approach over a decade ago, with the maturation of the internet, the commensurate explosion of online content, and the evolution of digital and social media marketing. This has given rise to an evolved customer journey, with customers doing most of their research online and relying on various forms of content to keep them up-to-date and aid in decision-making.

However, lately, there’s been a dramatic rise in the term “thought leadership,” which marketers have used interchangeably with content marketing. The problem is – just because you’re creating and sharing content on relevant topics doesn’t mean you’re engaged in “thought leadership.”

While content marketing and thought leadership are involved with developing content to ultimately drive inbound interest, thought leadership goes beyond its ability to provide a greater sense of authority, expertise, and trust. Simply stated, content marketing isn’t bad; it’s just that thought leadership is more powerful.

So, what are some key elements that differentiate thought leadership from basic content marketing?

It’s audience-focused not company-focused. As I’ve written before, it’s more important to write content about what your customer cares about than what you do. Rather than using content to promote one’s products and services, thought leadership is consumed with answering its audience’s fundamental questions. It demonstrates an understanding of the worlds, challenges, and needs of its customers and uses the language of the industry and its practitioners. Because of this, its primary goal is to be helpful – which is why customers view it as more valuable.

It’s novel and original. There’s a fairly common playbook for most content marketers, consisting of similar types of summaries, e-books, and product comparisons.

Thought leadership aims to be more original, with next-level insights, unique takeaways, and creative twists on the standard fare. This is what provides the leadership part of thought leadership. In addition, thought leadership has a distinctive “voice” that gives it personality and attitude, which helps it stand out as worthy of attention. 

It demonstrates relevant experience and expertise. This may be the most important aspect of thought leadership: it showcases the writer’s (and, hence, the brand’s) pointed relevance for solving its users’ problems. It demonstrates an applicable set of experience and learning that sets the brand’s offering apart from its competition. This level of experience projects overarching expertise — which leads to trust. And trust is the one thing most desired in the buying process.

It’s two-way, not just one-way. While content marketing tends to aim to push out its one-way story, true thought leadership invites input and even sparks debate. This can add a layer of authoritativeness to the writing by demonstrating an openness for dialogue and opposing views that evince confidence and substance.

So next time you or your marketing colleagues discuss moving forward with a thought leadership effort on behalf of your brand, recognize that you’re speaking about something beyond content marketing — thus requiring an effort beyond it as well. But the impact and results you’ll achieve will be beyond it, too.

Email Michael | LinkedIn | Download Michael’s CV (PDF)

Filed Under: Revenue Growth

Building Brand is Paramount for a Sustainable Marketplace

October 3, 2022 by Megan Esposito Leave a Comment

Building a marketplace brand is no easy feat.

Marketplace executives may be tempted to consider whether they or their sellers “own” the relationship with the customer. In truth, neither the company nor the seller does. The customer determines the terms of engagement. Both the company and the sellers serve the customer, albeit in different capacities. The company’s brand and the seller’s brand must coexist in this environment.

Many early-stage marketplaces focus on driving buyers to their website or app. While this is a critical step in validating product-market fit, building a brand is as important for the longer-term viability of the marketplace. Without a strong brand, the marketplace has no chance of remaining top-of-mind and will be relegated to a perpetual cycle of spending heavily to acquire customers.

Take these steps to begin to strengthen the brand and break the cycle.

Implement a Seller Vetting Process

One role the company plays is that of a scout. Potential buyers often come to a marketplace because they will be presented with several options to choose from. Like sports scouts, marketplace leaders have to go to the game, see how the player plays and how they interact with others. Essentially, they watch how the seller performs outside the marketplace before they are invited to join the team. If the seller meets expectations, they’re in.

This vetting process is important because the individual activity of each seller reflects on the company’s brand. It is important for the marketplace to define and screen for seller criteria that align with the brand they wish to embody.

Expand the Supplier Base

In addition to having vetted sellers, marketplaces must curate a sufficient number of suppliers. A wide supplier base not only gives buyers more options but also reduces the company’s reliance on individual suppliers.

A more substantial supplier base can reduce the need for the buyer to look elsewhere. It can also mitigate damage to the company brand if a rogue supplier does not meet customer care expectations. Essentially, having more suppliers reduces the impact of any single supplier’s untoward actions on the platform.

Mitigate Communication Barriers

It is practical for marketplaces to want to limit communication between buyers and sellers before any transaction has taken place. Doing so keeps opportunities for disintermediation in check. However, it also can breed distrust. Blatantly blocking communication between buyer and seller will be brand damaging.

Marketplaces should mitigate communication barriers so that their brand can be seen as one that is trustworthy. So, share critical information between buyer and seller in a timely fashion. If it is prudent to do so, transmit contact information after the purchase transaction. The product should enable communication to commence immediately after payment is made. Marketplace leaders can also prioritize product features that enable communication through a secure (perhaps monitored) channel.

Satisfy Buyers to Retain Sellers

Remember that building a strong brand with suppliers is as important as building a brand with buyers. For some platforms, it is more important.

Suppliers will remain active on the platform if a steady flow of buyers is available to them. Encourage loyalty in the buyer community. Invest in data systems that allow for dynamic learning of buyer behavior. Use this knowledge to make personal recommendations that add value to the buyer’s experience.

Introduce options in products, devices, and payments that allow buyers to interact on their terms. A concierge-level of service for frequent buyers can further strengthen loyalty. In fact, preferred tools should be made available to both volume buyers and volume sellers.

Key takeaways for marketplace leaders:

  • The brand voice of the marketplace becomes more significant as the supplier base grows. The larger supplier base reduces the ascendancy of any individual supplier brand.
  • The supplier’s delivery of service is a reflection of the marketplace brand. Therefore, the marketplace must select sellers who align with its brand values.
  • Communication between buyer and seller before the purchase can be perceived as an opportunity to remove the marketplace from the transaction. However, it is a critical part of building trust within the community and one that the marketplace must astutely navigate to build a viable brand.

Email Katherine  | LinkedIn | 626-344-8730 | Download Katherine’s CV (PDF) | Twitter

Filed Under: Revenue Growth Tagged With: Leadership, Marketing, Operations, Technology

Define Your Ideal Customer or Be Magnetic To No One

September 16, 2022 by Megan Esposito Leave a Comment

It’s obvious that knowing your target customer is a critical part of operating and growing any business. Defining your ideal prospect drives all aspects of sales and marketing but also provides direction for the entire enterprise, from developing products and services, creating positioning, developing sales enablement programming, and building the organization, from people to tech stack to processes.

Unfortunately, in too many companies, a target is viewed as “anyone willing to pay money.” In that case, being deliberate and targeting specific customers feels like missing out on opportunities. I’ve literally seen food brands targeting anyone with a mouth.

However, if your business is for everybody, then it’s likely to have a very generic offering that isn’t really the perfect fit for anybody.

Pointedly defining your ideal customer also helps a company discover where to spend its resources. Because your company’s resources are finite, giving attention to one type of customer means giving shorter shrift to others — including those who are empirically more valuable.

So how do you identify your ideal customer? To begin with, leverage all accessible data to better understand your current customers and why they chose you over your competition – e.g., CRM data, sales intel, customer satisfaction surveys, interviews with customers and non-customers, and beyond. Dig into what you know about them, what their goals and challenges are, and how they make their decisions/what their path to purchase is.

Having this information, here are some steps to improve your ideal customer definition, from good to better to best. Good

Define your current BEST customer

You may have various of types of customers, but focus on those driving the greatest value for you. Perhaps they are repeat users, are most appreciative of your product/services, or provide recommendations.

If you are a B2B business, identify your customers’ category and size, how long they’ve been in business, if they’re growing or have stalled, etc. All this will be helpful for your marketing and sales efforts. For example, imagine the difference it might make to realize that you tend to help turnarounds vs. early-stage startups and scale-ups. Better (add this to the above)

What types of people hire you/use your product/services?

Remember that, even for B2B organizations, it is people who make decisions. What are your customers’ goals and fears? What are their values? What is important to them?

Consider the difference it makes in your sales pitches and storytelling to determine whether your customer is the kind of person who seeks bold, innovative solutions that drive big change or are more risk-averse and want to maintain control and the status quo. Best (add this to the above)

When do you and your team do your best work? 

This is a critical determination, especially for service-based companies. Think about when your company is performing at its best and when the teams are most energized – is there a type of client, a type of engagement, a type of solution that brings out the best in them? This is the type of information that helps you truly define your company’s differentiation.

As you can see, these types of definitions and attributes can make a big difference in your company’s offering — and are most likely to drive resonance with and create magnetism for your ideal customers.

Email Michael | LinkedIn | Download Michael’s CV (PDF)

Filed Under: Revenue Growth

Beat the Heat with Machine Learning to Optimize your Pricing

September 7, 2022 by Megan Esposito Leave a Comment

It is hot everywhere these days. In fact, record breaking temperatures throughout the US and Europe.  So, what impact does this have on the supply and more importantly… the price of air conditioners. 

In contrast, there is the recent flooding which is creating havoc with supply chains and humanitarian assistance with food, medical supplies, and housing. Setting the right price for a good or service in times of crisis is an old problem in economic theory. With supply challenges and demand through the roof, the time for price optimization synced with supply chain planning is helping companies deal with pricing these days. 

Manufacturers and distributors are taking advantage of the tremendous power of Machine Learning technology to build effective pricing solutions to address the crisis. There is a multitude of pricing strategies that depend on the company’s overall objective. While one company looks to maximize profitability on units sold, another company needs to access a new market. Different scenarios coexist in the same company for different goods or customer segments is a reality.

These are some of the crucial questions that companies face:

  • What price should we set if we want to make the sale in less than a week?
  • What is the fair price of this product, given the current state of the market, the period of the year, the competition, or the fact that it is a rare product?

Given that these days it is easy for a customer to compare prices thanks to online catalogs, specialized search tools or collaborative platforms, companies must pay close attention to several variables when setting prices. Attributes such as competition, market positioning, supply chain production and distribution costs, play a key role for companies to make the right move. 

Price Optimization and Demand Forecasting with Machine Learning During a Crisis

During a crisis, the market does not behave normally, historical insights typically will be of limited value in predicting future sales. Therefore, companies need to increase the importance of shorter-term information such as daily sales to predict the future. 

Additionally, demand forecasting requires incorporating more near-term real-time market data than before. This means frequent updates on sales data, customer churn, sales intent, and competitors’ prices. On a broader scope, data on consumer spending, unemployment, GDP and even cities/regions may be considered for modeling future demand. Machine Learning as part of pricing optimization is being greatly leveraged to build accurate demand forecasts and optimize pricing strategies these days by accounting for nearer-term lags vs. historical data in the models. 

Bottom line is that Machine Learning in pricing optimization has an enormous impact. Its strength is tied to the developed algorithms that detect and learn patterns from the data. Machine Learning models continuously integrate new information and detect emerging trends or new demands that tie back to supply planning optimization. Instead of using aggressive markdowns or promotions, companies benefit from predictive models that allow them to determine the best price for each product or service in balancing supply with demand.

What Machine Learning Does for Price Optimization

With more targeted data into the model, a price automation solution with Machine Learning will automatically price items the way they would be priced by a human expert. Machine Learning is a tremendous tool for insights:

  • In what way is the sale of air conditioners impacted when fans’ prices are drastically cut?
  • When efforts are made to sell more car batteries, are the related products, such as battery cables, recharger units, automotive tools impacted?
  • Are customers who buy certain pet foods more or less likely to buy new eating bowls the following month?
  • Are clients inactive in the last year sensitive to a promotion campaign?

Machine Learning models consider a huge number of products and optimize prices globally. The number and nature of parameters and their multiple sources and channels allow them to make decisions using fine criteria. This is an overwhelming activity if companies attempt to do it manually, or even use Excel spreadsheets.

By analyzing a large amount of past and current data, Machine Learning can anticipate trends early enough. This key value allows companies to make appropriate decisions to adjust prices. Finally, in the case of a competitive pricing strategy, Machine Learning solutions benefit from systems that continuously crawl the web and social media to gather valuable information about prices of competitors for the same or similar products, what customers say about products and competitors, and a competitor’s deals for certain products, their price history over the last number of days or weeks.

It seems natural to apply Machine Learning in the case omni-channel companies that take advantage from this technology. Though price changes are less performed in brick-and-mortar companies there is plenty of room to improve and adjust to current demand. Digital price tags now are enabling brick-and-mortar retailers to do as many price changes as e-commerce sites to match the current demand and maximize profit.

Companies using Machine Learning for Price Optimization

Price optimization has been used, with significant success, in industries such as hospitality, airline, car rental, and e-commerce retail. The hotel industry continues to employ dynamic pricing strategies, based entirely on Machine Learning. The current computational power allows prices to change practically in real time. 

Airbnb proposes a dynamic price tool that recommends prices to its hosts, considering parameters such as seasonality, the day of the week or special events, and more sophisticated factors such as photos of the property to be rented or the prices applied in the neighborhood. Other companies such as eBay and Uber have adopted similar approaches. Changing prices in such a dynamic way is informally known as the Amazon effect. 

Companies like Ralph Lauren and Michael Kors use Machine Learning to offer fewer markdowns and optimize their inventory in an integrated manner to increase profit margins, even at the risk of losing a little revenue. Another use case is Zara, which uses Machine Learning to minimize promotions and adapt quickly to the changing trends in demand and supply. There are many other success stories, such as Morrisons which is taking advantage of the power of Machine Learning to increase their revenues and improve operations.

Final Cooling Thoughts

Nowadays companies are changing prices more often and using state-of-the-art data driven pricing strategies to do it. Top performers across industries are nearly twice as likely to price dynamically. Whether it’s a manufacturer, distributor, or retail company, all are embracing the benefits of dynamic pricing and price optimization.

Price optimization helps understand how customers will react to different price strategies for products and services and set the best prices. Machine Learning models take key pricing variables into account to find the best prices to achieve the end goal.

The question is no longer whether to apply optimized pricing or not. But the question is how to do so to remain profitable. 

Email David | Linkedin | Download David’s CV

Filed Under: Revenue Growth Tagged With: machine learning, pricing

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