In this episode of the Sales Hacker podcast, we have Ajit Ghuman, Head of Product Marketing at Narvar and author of Price To Scale. Join us for a conversation about Ajit’s pricing philosophy, the effect that price has on customer satisfaction, and why the truth is better than feeling good.
If you missed episode 175, check it out here: Protecting Migrant Children: International Social Service
What You’ll Learn
- The role of product marketing, perfectly summarized
- Why pricing is too often an afterthought
- How to make pricing decisions upstream
- The importance of truth-telling
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Show Agenda and Timestamps
- About Ajit Ghuman & Narvar [3:40]
- The role of product marketing [5:30]
- A pricing philosophy that works [8:55]
- The relationship between price & customer satisfaction [14:15]
- Why truth trumps feeling good [22:28]
- Paying it forward: shout-outs [27:16]
- Sam’s Corner [29:40]
About Ajit Ghuman & Narvar [3:40]
Sam Jacobs: Hey, everybody. Welcome to the SalesHacker Podcast. Today on the show, we’ve got Ajit Ghuman. Ajit is a product marketing expert and he’ll tell us what is product marketing, which I frankly really appreciated, because nobody had given me such a concise and effective answer before. He’s also written a book called Price To Scale. He’s a pricing expert as well. It’s a great conversation, we go into pricing strategy and theory, and I really enjoyed it.
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Ajit, welcome to the show. We like to start with a baseball card, which helps us contextualize your expertise, understand where you work, and what the company does. So you’re head of product marketing for Narvar. What does Narvar do?
Ajit: Narvar is a customer engagement platform for post-purchase e-commerce, and actually many of the top brands like Bed Bath and Beyond will use Narvar on their post-purchase side of the e-commerce journey, to communicate with customers as to the status of their orders. It’s where customers can build a closer relationship with the brands, and also then use Narvar as sort of an easy plugin to get access to a lot of convenient return methods on the way back.
Sam Jacobs: How big is the company, from an AR perspective, from a funding perspective, from a full-time employee perspective, how big should we think about Narvar being?
Ajit: Narvar is series C, between 50 to a hundred million in revenue and roughly 300 employees across America, Europe, and Japan.
The role of product marketing [5:30]
Sam Jacobs: What is product marketing to other people, how do you describe it? What are the specific activities that go into being the head of product marketing?
Ajit: It’s the responsibility for owning product differentiation in the market, and making the differentiation more clear. That, in a nutshell, is product marketing, but as you double-click into it, for a B2B organization, it would be things like training the sales team on being competitive. It’s about differentiation and how they can use the unique value of the product and convey the value in context to the market. There are activities like positioning, that’s more up the value chain, strategy, packaging the product, pricing the product, all of that is in context of how the buyer will receive the product in context of other offerings. It’s making it evident to the buyer about the value of the product in context of the market.
Sam Jacobs: That is the most helpful explanation anyone’s ever given me. I appreciate it, very clear. Tell us a little bit about your background. How did you get into product marketing and also, you went to Delhi University, so how’d you grow up, how’d you end up in the Bay Area? Walk us through a little bit about your personal history.
Ajit: I’m a military brat, I grew up in 12 different cities in India, I saw a lot of variety. India itself is a pretty diverse country from one state to the next. In 2008, a year after graduating from my undergrad college, I read the book, Crossing the Chasm, and that really got me excited about Silicon Valley. And I really wanted to bring new products to market, I wanted to be in the weeds, and now I’m here. I came to Stanford, I was lucky after Stanford to get a job at Medallia, which is now a post-IPO company with close to 5B in valuation. That’s where I saw the churning of a company going from 100 employees to 1000.
I believe it was bootstrapped for a long time, and then quickly, we got around 250 million in revenue from Sequoia, and we got a very unique enterprise sales team that would say “This is the Olympics of sales.” I got to be part of an opportunity to join a product marketing team, to enable that team, and work on the positioning of the product. That was the genesis of my product marketing career in the valley. And then, I’ve been at a few other startups, including Feedzai, Reputation.com, Helpshift, and now Narvar.
A pricing philosophy that works [8:55]
Sam Jacobs: You mentioned that part of product marketing is differentiation and pricing and packaging, and you wrote a book all about pricing. So walk us through, from a high-level perspective, what your philosophy or perspective is on pricing. Then of course, the obvious question is, what are the common mistakes that you see companies make when it comes to pricing?
Ajit: I wrote the book when I couldn’t really find enough literature on the topic of software pricing. I found a lot of general content. What I realized at the time was that we learn a lot of things in grad school or in undergrad, which is very analytical. You think that pricing is going to be very complex, but the number one philosophical thing that I’ve really learned on pricing is that it’s really not the price point that’s important, at least as far as B2B, SaaS products. It’s more about how the value is made apparent. Because in many of these products, the value is not immediately clear. The upfront work of positioning and packaging makes the pricing a lot easier to justify.
It’s really up to the value chain where the price justification happens and not the analytical approaches. The most common mistakes I would say are two. One is, even product marketers will think that this is a complex activity, but it’s really not. There’s so much content out there, with the five strategies for pricing, the 10 strategies to do this. It kind of becomes overwhelming and isn’t really cohesively put together. That was one of my goals. Because of that, there’s a mental block between organizations.
Take for example a feature launch or a product launch. Most of the time, people will be discussing, what is the value to the buyer? What is the value to a user? How do we position the product? But we never really discuss the monetization upfront and often leave this decision to either the rep, who’s the first time rep selling a product, or a sales operation person, which leaves money on the table. There’s also often a decision that’s not revisited. So we tend to make very default-ish decisions like, “Salesforce sells per user, so we’ll also sell per user.” And that leaves a lot of money on the table too. A lot of businesses are not able to do this exercise from a first principle’s perspective.
Sam Jacobs: I have so many different questions because I run a business and think about pricing all the time. The first question is, how should we come up with a price for a piece of software?
Ajit: I would say that’s still a little bit downstream, the pricing structure itself. That’s called a two-part tariff, where you have something fixed and a variable on top. But I would say the value is created even earlier at the packaging stage. At the packaging stage is where you’re looking at “Hey, I have an enterprise segment. I have a commercial segment, and these are my different packages for these segments.” Sometimes for an enterprise segment, you may further make a menu of your product list, and you might want to unbundle your product further to attach value to different things that enable a much better upsell or cross-sell motion. I think once the value is defined clearly and mapped to the buyer after that is when you will look at these two decisions.
One is the pricing structure, which is what you were referring to. The second crucial metric is the pricing metric itself, especially in SaaS. Many companies will have user-based pricing. Then three, it becomes really important to align that with the customer. These are three main decisions I would say are very important. The fourth main decision is the price point, but that’s almost the last decision I would say is important. In the pricing metric, I’ll give you an example.
At a company I worked at before Helpshift, the head of revenue there made a decision earlier on to price the product based on monthly active users for a customer service platform, rather than on a per agent basis. That simple change, that he started selling that customer service platform to gaming companies, got him 10X more revenue than the default way of saying “Oh, it’s just $90 per user.” There are some decisions that are made up the chain that is so much more important, than the decision of the pricing structure, or the pricing point.
The relationship between price & customer satisfaction [14:15]
Sam Jacobs: Generally speaking, what is your perspective on the relationship of price to customer satisfaction? Have you seen that higher prices upset people more or are people indifferent?
Ajit: There is a little bit of a dance that happens in SaaS companies or software companies in general. First, you are a small company, you don’t have a brand, and you try to create a pricing that you think will not annoy customers, as to your point. Even then you sometimes realize they like your product and they aren’t really bothered by a higher price. Enterprise customers may actually be suspicious of very low prices. They’re undercutting anchor prices in the industry.
You may have anchor prices based on what Salesforce sells or Zendesk sells or any other key player in the industry. If you see a price that’s much cheaper, that also causes suspicion. As the brand becomes bigger, it becomes so much easier to justify the price. It’s almost detrimental to an important brand to be underpriced. Popular brands like Apple in a software environment, B2B environment, you would not price it the same as your competitors. You become a premium brand.
There’s a dynamic between the strength of the brand and which phase of the startup you’re in. The early phase, mid-phase, late-stage, as to how that interplays with the price itself. I would say having a lower price point is more of a detriment than a higher price point, because, especially in certain segments like enterprise, they may not even consider your solution if it’s too low of a price point. Think about segments like financial services, healthcare, and government. The price points there are even higher than let’s say retail or hospitality, which have more price-competitive segments.
Sam Jacobs: That makes a lot of sense. You’ve talked a lot about moving upstream and not being downstream when it comes to pricing strategy or packaging strategy. Talk to us a little bit about the basic foundational principles that we have to have correctly in place.
Ajit: The decisions made upstream are always “who is our customer? What do they care about?” and basically refining that to an ideal customer profile. This is mostly marketing and sales 101, but I’m surprised how many companies don’t do this work. They don’t have a clear idea of who their customer segments are going to be. They don’t have it clear what their unique value proposition for each of those segments is and how they differentiate. Having that goes such a long way into making sure that you’re going to mail the right packages for them. Then you’re going to be able to package it the right way because you have a sense of value. Having a product and immediately saying “oh, I’m going to create a good, better, best model for the pricing, without necessarily understanding my segments” can be problematic.
Why truth trumps feeling good [22:28]
Sam Jacobs: This is a question about your philosophy. You’ve talked a lot about how it’s better to be honest than to feel good, that truth trumps feeling good. Talk to us a little bit about this perspective and how it’s helped or hurt you over the course of your career.
Ajit: This is a life philosophy-based question, but it also goes into personalities a little bit. I say there is a five personality spectrum. I’m probably more on the spectrum that’s called agreeableness versus disagreeableness. I don’t easily buy into what I hear. I have to analyze something from the first principles to see if I really believe it or not, which goes to the truth versus feeling good. The facts of the situation are so important to figure out what to do next.
The fieldwork portion can tell you “it’s fine, most people are like this.” But at the back of your mind, you know what the truth is, you know what the cause of your situation is. That’s one basic example everybody can relate to. But as companies grow, the truth can be hard to gauge. Maybe at the founder level, it’s easier to gauge, but other motivations take over that can hold the company back, when it was always focused on doing the right thing for the business at any given time.
It’s detrimental to a professional individual in business to buck convention all the time. Here’s an example I would say that hurt me, but unfortunately I ended up being right. I won’t name the company I worked with a few years ago. Our CEO came from a much bigger environment. We’re having a discussion about how to position the company. Their point was “Well, we are just like CRM.” And we were nothing like CRM, we were completely different software. We were trying to make the argument that we should go by what we do well and try to position and anchor ourselves based on that.
I did speak so-called “truth to power.” It didn’t go well for me, the company didn’t change its strategy or positioning for a long time. As a product marketer, I felt ham-fisted for the next year and a half. I was there because the company did not define its ICP properly. As a result, we had an enterprise sales team that did not know who to go after, did not know what the value proposition was, and we stopped making any money after a certain period of time. There was a whole year we made $0 in revenue from new account growth. We didn’t realize that we had made a pivot, so our strategy was all over the place. Eventually, after I left, that CEO got removed, the CEO after that got removed. Now the investors are having a hard time deciding what to make of that company.
Paying it forward: shout-outs [27:16]
Sam Jacobs: The last part before we go is we like to pay it forward a little bit. We like to hear about one or two or three people that you think are really important. Maybe because they’ve had a big influence on you, maybe because they were your old boss or mentor. Who are some people that you think we should know about?
Ajit: Some of the folks that have molded me into my career, the way I operate, whether they know it or not, one is my first boss in broader marketing, Sam Keninger. He works for a company called Simpplr now, he’s their head of marketing. I learned a lot from him when I joined, how to work in the US. I was young and coming from India, I had a chip on my shoulder at the time, and he used to keep telling me, you have a chip on your shoulder. I think I finally understood what he was saying now. But I’m really grateful to have a person who was able to give me a shot.
Another boss was Michelle in the same company, a really great person if anybody in the valley gets to work with her, an amazing person.
I can’t use this opportunity and not call my dad out. Everything I do as a professional is modeled from my childhood, based on how I’ve seen my own dad. He was a technical person in the army and became a major general. I’ve learned the value of professional competence more than anything else from him. If anything is not working out, basically I default to “let’s just do the best work possible and let everything else go, we’ll figure it out.” Whenever I’m confused, I just make sure I learn my subject well, and I try to deliver quality work. I’ve modeled it based on how my dad has taught me.
Sam Jacobs: If folks want to reach out to you, what’s the best way to get in touch?
Ajit: LinkedIn is great, just find me.
Sam’s Corner [29:40]
Sam Jacobs: Hey everybody, it’s Sam’s corner. I loved that conversation with Ajit.
Here’s the big takeaway. First of all, what is product marketing? I love that product marketing is how you position and differentiate your product in the marketplace. Maybe that’s obvious to you, it’s not obvious to me. It’s about the things that set you apart from your competitors, the things that set you apart and make you unique in the market. And that includes pricing and packaging. Ajit’s point is that pricing is too often an afterthought and needs to be considered upstream. Think about who the persona is, who the buyer is, how you talk to that buyer, how you segment your market, what’s important to the buyer.
Thinking about pricing — it’s part of a strategic decision around where your product sits in an ecosystem. I think that’s important to think about. I really liked the conversation, and the book is called Price To Scale, so look it up on Amazon.
The other thing we talked about is the importance of truth-telling and starting from first principles, and not assuming that you’re going to do whatever conventional wisdom tells you to do.
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