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Execute a Winning Pricing Strategy with Artificial Intelligence (AI)
The document discusses the implementation of an AI-driven pricing strategy by Apttus to enhance sales operations and improve quote quality for clients like Wolters Kluwer. It highlights the challenges in pricing management such as rogue discounting and lack of visibility, and outlines the benefits achieved, including significant increases in quote quality and subscription revenue. The roadmap for future improvements and the importance of cross-functional collaboration and continuous refinement in pricing strategies are also emphasized.
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Execute a Winning Pricing Strategy with Artificial Intelligence (AI)
- 1. © 2018 ApttusCorporation #AccelerateMO Execute a Winning Pricing Strategy with AI Jack Borland – Sales Operations Manager, Legal & Regulatory US– Wolters Kluwer Elliott Yama – AVP, Artificial Intelligence – Apttus Rahul Choudhry – Senior Data Scientist - Apttus
- 2. © 2018 ApttusCorporation Senior Manager Salesforce & Marketing Operations Jack Borland AVP, Artificial Intelligence Elliott Yama Senior Data Scientist Rahul Choudhry
- 3. © 2018 ApttusCorporation The 4Ps of Marketing 1. PRODUCT 2. PLACE 3. PROMOTION 4. PRICE
- 4. © 2018 ApttusCorporation The 4Ps of Marketing PRODUCT PLACE PROMOTION PRICE
- 5. © 2018 ApttusCorporation The Middle Office is Where Business Model Success is Determined; Pricing is the Top Factor for Profitable Growth Finance Insufficient data to make decisions on pricing Profitability of revenue streams unclear Inadequate line-of-site into sellers/partners Sales Ops Lost sales and deal slippage due to price Too much back and forth with quotes Rogue discounting is widespread Growth Profit Deal Desk Increasing difficulty in defending margins Handle savvy, repeat customers Lack guidance on market dynamics Product Mgmt. Price elasticity of offerings unclear Multiple channels cannibalizing offers Too hard to update pricing for all channels
- 6. © 2018 ApttusCorporation INCREASINGROI Reinvent the Enterprise with Artificial Intelligence Automated Recommendations Guide and prompt sellers, buyers and agents to drive outcomes High-Value Selling & Pricing Trusted context-sensitive insights and action Proactive Conversational Interface Simplify and speed selling, buying, contracting Data Capture & Consolidation Intelligent acquisition & management End-to-end automation on a single platform with unified data model for selling, contracting, ordering, billing and renewals. Federate and curate structured and unstructured data for pricing, marketing and selling strategies. Maximize Value Deliver Consistent Quality Achieve Complete Customer Visibility Streamline End-to-End Commercial Processes Consolidate Business Data Deliver valuable, trusted insights at each stage of the buying process across all channels. Combine customer insight with buying patterns and outcomes – keenly understand who buys what and when. Intelligently bring to bear the resources needed to drive optimal business outcomes including revenue, margin, market share, and customer satisfaction. Apttus Quote-to-Cash Maturity Model to Drive Commercial Excellence and Accelerate Growth
- 7. © 2018 ApttusCorporation We are a global company that provides information, software, and services. Our customers are legal, business, tax, accounting, finance, audit, risk, compliance, and healthcare professionals.
- 8. © 2018 ApttusCorporation Wolters Kluwer Increased New Revenue Opportunities with AI “After we implemented Apttus CPQ, the functionality of our quotes for our sales reps was dramatically improved. The ability to take a quote and present it with the appropriate legal terms and conditions relevant to a customer, buying in specific fashion, was one of the key benefits that we got out of the project.” Jack Borland, Sales Operations Manager Challenges Losses in subscription revenue, rogue discounting, and no visibility into bookings forecast. Required a solution for compliant subscription auto- renewal that performed complex pricing rules. Solution They deployed Apttus Omni Middle Office Platform to accelerate their quoting process, provide their reps with a Amazon like CPQ experience, and maximize their compliance. Outcomes • 25% improvement in quote quality • 18% decrease in customer returns • 50% increase in ‘opt in’ to auto- renewal programs • 3 months advance pipeline visibility • Automation and intelligence to grow subscription revenue © 2018 Apttus Corporation
- 9. © 2018 ApttusCorporation Roadmap Current Product Cross Sell Recommendations In Progress Whitespace / Territory Coverage Recommendations Automated Agent- Opportunity Quote Creation Mid Term Price Optimization + Usage Data Automated Agent- What Would You Like to Do App Long Term Best Rep Quote Recommendations
- 10. © 2018 ApttusCorporation DEMO
- 11. © 2018 ApttusCorporation Top 10 Discount Drivers Product Category Sales Org Channel Existing Customer Selling Tenure Customer Segment Month End 20% 40% 60% 80%
- 12. © 2018 ApttusCorporation Transition from Legacy to Optimization Actual Distribution of Discount Estimated Distribution with Machine Learning Model Bias Variance Variance Bias Illustrative Current State Target State
- 13. © 2018 ApttusCorporation Sales Behavior Analysis
- 14. © 2018 ApttusCorporation Leading Analysts and Consultancies Long Recognized the Value of Pricing: This Isn’t Theory Increases in revenue of 1% to 5% Increases in margins of 2% to 10% Eliminating 80% of discount approvals Increases in customer lifetime value of 20% 1% price rise = 8% increase in operating profits 46% of companies investing in optimizing prices with Big Data saw visible topline impact
- 15. © 2018 ApttusCorporation How to Move Forward and Exploit this Advantage • Cross Functional Platform: Stakeholders of pricing span the middle office; effective communication and collaboration is key to success • The New Price Optimization: Artificial Intelligence/Machine Learning opens up new avenues for discovery and distilling insights that meaningfully impact the business – More transparent; easier to convey – More comprehensible/credible – More prescriptive – More democratic • Process-Centric: Need to tie strategies to processes to capture context, fully exploit data, refine insights, & demonstrably impact key decision points in buyer/sales cycles • Continuous Improvement: Pricing is a journey, not a project, with refinement a way of life
Editor's Notes
- #7 In our 10+ years of experience delivering Quote-to-Cash (QTC), business transformation for mid-sized organizations and the who’s who of the Global 1000, we’ve developed five stages of QTC maturity. As customers move up the maturity model, return on investment increases. The stages are: Streamline the Sales Process. Here is focus is on streamlining the sales process and “stopping the bleeding” with process automation and approval workflows from Quote-to-Contract. Results include reduced risk and revenue leakage. This comes from improved contract compliance via contract standardization through automated contract authoring, and increased use of templates and a pre-approved clause library. This also applies to the creation and evolution of Configure Price Quotes (CPQ), rules. The first rules you put in place, are constraint rules to prevent bad configurations and bad pricing. Consolidate End-to-End Commercial Processes. Here the focus is on adding ordering, invoicing and renewals capabilities for a fully integrated QTC process. It provides for flexible pricing and packaging enabling new monetization models (e.g., solution configuration and invoicing for blended business models of physical goods, subscriptions, and professional services) and a consistent and predictable revenue stream. Achieve Complete Customer Visibility. In this stage, enabled via a single integrated data model across the complete customer footprint – products, pricing, contracts and assets – data from one interaction with a customer is immediately available in other interactions, regardless of channel, resulting in a comprehensive revenue view of the customer, actionable in real time. As a result, departments across the enterprise are equally well-informed and have the commercial insights needed to drive revenue optimization. Deliver Consistent Quality Experiences. The goal for this stage is the delivery of high-value, quality digital and conversational experiences across customer self-service, direct sales, and channel partner sales to provide a better, more streamlined purchase experience. The B2B E-Commerce capabilities and Max, the applied artificial intelligence capabilities of our platform, are critical in providing digital and conversational user experiences that complement how we work in today’s social, mobile, virtual world. Maximize Value with AI. In final state QTC maturity, the machine learning capabilities of Max are leveraged to proactively uncover new opportunities and relationships not visible without the use of our platform. As a result of these new actionable insights and information, users are able to see and take action. Examples include intelligent cross-sell/upsell guidance, pricing optimization, quote scoring / conversion probability, purchase propensity, potential customer value, and renewal projection.
- #8 Elliott to introduce Jack before this slide 1. Tell us about WK and your role 2. Tell us about your work toward being a data-driven company 3. What’s your plan for pricing strategy with AI? 4. What excites you about becoming more data-driven? 5. What are some things you’ve learned from the work? Data foundation, organizational alignment 6. What is advice for those in the audience who are moving toward data-driven
- #9 Wolters Kluwer Location: Riverwoods, IL Company Size: 10,000+ Employees Industry: Information Services Customer Since: 7/1/2014 Apttus Solutions: Configure Price Quote, Contract Management, X-Author, eSignature About: Wolters Kluwer is a trusted source for expert content and solutions in the areas of law, corporate compliance, health compliance and reimbursement, and legal education. Its authoritative expertise is unparalleled, bringing the insight customers need to interpret today’s complex rules and regulations in the way that is most relevant to them. Its markets include health care organizations, law firms, law schools, corporate counsel and professionals requiring legal and compliance information. Before Apttus: - Before XA: no visibility into the pipeline for the team, very manual - Offline spreadsheets on: price manipulation, products at risk, contracts that were being renewed Challenges/Business Drivers: Two Key Drivers: Compliance and Auto- renewing subscriptions - Dealt with compliance issues - Subscription business with specific rules about when you can and cannot have automatic renewal - Required a solution that provided an easier way for the Sales team to set up the automatic renewals and to be compliant - Address Complex pricing rules (global company - serving many markets) for various pricing models: tiered pricing, quantity pricing, user based segmentation pricing - Required a tool that would allow reps to update the quote in front of the customer with the correct price Why Apttus: - Built on SFDC platform - Lower overhead in terms of admin requirements - Flexibility and speed to address all pricing rules - Out of the Box functionality: use some aspects of renewal management, asset management - take files from their ERP system and put them into the Apttus object - Apttus as a partner provided a clear vision of where it was going and provided confidence in WK to join - SAP and SFDC could not alone provide the required pricing guidance, WK would have to completely re-configure and the cost was not worth it. Future Ops: CLM Machine Learning Implementation: - X-Author implemented 2016 - 9 months (originally scheduled for 6 months - delays were on WK side) - Brought in on budget Use Case: X-Author for Excel - Required a way to manipulate existing contracts to reflect the starting point, ending point and load back into Apttus. - Ability to move across multiple objects to manipulate the data and place back into salesforce - Ability to have Account Managers pull down all of the contracts involved in a single renewal agreement and manipulate them to identify what is going to change, prices being dropped, items being added, price modifications. - Manipulation of price across groups of products by categorizing them in Excel, apply percentages to that category and load back up into sfdc - Visibility into all pricing within the pipeline, beyond order submission Benefits: ABO: - Subscription based business with customers that can request a modification for their subscription, line change, time period extension, or product change - Ability to bring selected lines into the shopping cart and make modifications then push that data to entry team CPQ: - Similar experience to amazon.com from rep perspective - Provides confidence to the rep when quoting a customer - Ease of maintenance and overhead requirements E-Signature - Decrease in the amount of returns due to e-signature (no # value) Metrics (from DF video): - Compliance with new rules in place went from 40-50% to 98.5% - This metric/benefit paid for the Apttus project itself - Quote quality improvement by over 25% - XA provides visibility into pipeline 3 months in advance rather than at point of sale
- #11 Demo 1: WKL Cross Sell Recommender Demo 2: Whitespace Opportunity Finder Demo 3: Price Prediction and Rule Creation