Lee Rehwinkel: As a pricing analyst, they really wanted to have deep insights into all the various things that go into deriving that optimized price. This is really important because they were interacting with the sales reps and they need to be able to defend where that price came from and explain why that price is set the way it's set.
Ultimately that sales rep needs to be able to trust that price. Because if they don't trust it, they're not going to use it.
Lindsay Duran: Welcome to B2B. Reimagined. My name is Lindsay Duran, and I'll be your host for this episode. I'm joined today by Lee Rehwinkel, Zilliant Vice President of Science and Analytics. Lee, welcome to the podcast.
Lee Rehwinkel: Great to be here.
Lindsay Duran: So Lee, our listeners, I'm sure, want to know a bit more about you. Why don't you tell us something surprising about yourself that doesn't necessarily come through on your LinkedIn profile?
Lee Rehwinkel: Yeah. So I think one thing that people may not know about me is that I am an avid rower. So I've been rowing for probably 20 years now, ever since high school. And so if you're [00:02:00] ever in Austin at beautiful Lady Bird Lake, roughly around 6:00 AM in the morning, you might have a good chance to see me out there.
Lindsay Duran: Now people know where to find you. So that's great. Before we dive in to our topic, why don't you tell us a bit more about your role at Zilliant? What exactly is a Vice President of Science?
Lee Rehwinkel: I manage the data science team here at Zilliant. I also oversee the product development of Price IQ, which is our price optimization software.
Lindsay Duran: Excellent. Well then you are the best person that we could have on the podcast today. Some of our listeners might not be familiar with Price IQ or even the concept of price optimization. And today we're going to be talking about the new release of our next generation of Price IQ, which is our flagship product.
Before we dive into what's new about the product. Why don't we level set with the audience first and explain the concept [00:03:00] of price optimization and why Price IQ is really so unique in the market?
Lee Rehwinkel: Yeah. So I like to use an example to help explain what price optimization is. We provide price optimization to B2B companies.
And a great example would be, pretend you’re a food services company. And every week you deliver food to a bunch of restaurants so that they can prepare meals and serve their customers. So say one of these products you provide are jalapenos. So you sell those jalapenos to a bunch of different restaurants.
You can imagine selling that to a TexMex restaurant. Where they buy a ton of jalapenos, they're in everything they produce and how they know exactly what they want to pay for those. And it's typically probably a pretty competitive price. Versus you may also sell jalapenos to some burger joint. They might buy a couple for a burger occasionally, but it's not the main thing they buy.
So, if you think about these two different restaurants, you're selling these jalapenos to some are [00:04:00] going to be more willing to pay more for those jalapenos. Some are going to be more willing to pay less for those jalapenos. And so what Price IQ does is a product. We use data science methods. To estimate the sensitivity of those different customers, to the prices of those jalapenos.
We also incorporate some other, scientific technologies like a mathematical solver, but ultimately we're trying to figure out what the most financially beneficial price that you can offer when you sell those jalapenos to those two different customers.
Lindsay Duran: That's great Lee. And I think a lot of people can identify with that food example that you gave.
Other factors that might come into play might also be how competitive your geography that you're selling into is maybe how much someone orders of a given product. But really there are a number of factors that can be included in. One good way to think about it is what are the factors that really good sales person is thinking [00:05:00] about when they go to price a product.
That's really what we're trying to get the model to know and understand so that it can give that consistent, good price output so that it wins the business. But it's also meeting the goals of the company. So Lee, now that we have a good baseline for what Price IQ is and the concept of price optimization, I know I'm very excited about this next generation offering of Price IQ.
Why don't you tell us a little bit more about what has changed.
Lee Rehwinkel: Yeah. So this is we've had Price IQ as an offering for more than a decade as our flagship price optimization software. It's obviously continued to evolve over that time. As data science has evolved as different price optimization techniques have evolved.
And so in this latest iteration, sort of took a step back and spent a lot of time interviewing current customers, trying to understand what things they [00:06:00] liked about it, what things they thought we could improve and really spent a good amount of time. So through that process a couple of things were highlighted to us that really bubbled to the top. But the first being was really just the transparency that our customers craved to just know more about the optimization process, the inputs and the outputs, and just the things that were going into the various steps. And the second one was just the overall performance of the optimization engine.
So our customers have long been able to create different sort of what-if scenarios to explore what the financial impact would be from different settings to the optimizer. And they love that feature and they want to take advantage of it even more. And one way of doing that is to make sure things just run faster so they can create even more scenarios than they were doing.
Lindsay Duran: On the transparency point. Can you explain more about what crystal box optimization means and how that [00:07:00] helps salespeople be more confident in the prices that they see as an output from price?
Lee Rehwinkel: Yeah. Great question. So this is the number one thing that came back from our customers. So as a pricing analyst, if someone that is interacting with the price optimization engine, but they really wanted to have as much or deep insights into all the various things that go into deriving that optimized price.
So we're talking about inputs and parameters and being able to decompose that price along the various steps of the process. This is really because they’re interacting with the sales reps and they need to be able to defend where that price came from and explain why that price is set the way it's set.
Ultimately that sales rep needs to be able to trust that. Because if they don't trust it, they're not going to use it.
Lindsay Duran: That's so true Lee, I understand that even beyond the speed and transparency benefits that you talked about, that this new version of Price [00:08:00] IQ has some user interface improvements as well.
Can you talk a little bit about that?
Lee Rehwinkel:Absolutely. So Price IQ now has a unified look and feel with our other price management applications. So there's one look and feel across all our different pricing products. And one of the great things about that interface is that it has a very spreadsheet-like look and feel.
So if you know how to use a spreadsheet, you'll know how to use Price IQ.
Lindsay Duran: Excellent. Well, I'm sure all of the pricing folks out there listening are very well versed in how to use it a spreadsheet if nothing else. So let's switch gears a little bit. Price IQ is really helping companies solve for profitable growth in their business and that's the high level view of it.
But I think there's some short-term trends that are happening in B2B and some long-term trends that really Price IQ addresses as well. Can you talk a little bit about that?
Lee Rehwinkel: Yeah. So one of the [00:09:00] short-term trends that is definitely top of mind for a lot of businesses right now is inflation. A lot of their costs are going up.
And one of the things that Price IQ helps them handle is essentially adjusting their prices in a very optimal way. To maintain their margins. So on the flip side of one of the longer-term trends that we see here at Zilliant is a lot of companies are building out advanced analytics teams in-house.
These are very data and model savvy people, and they want to interact and understand other price optimization models at a very deep level. So Zilliant providing that crystal box insights really helps us engage and interact with these advanced analytics teams. And gives them the ability to take ownership of these price optimization models.
Lindsay Duran: That's great. And I think one of the other trends that I might highlight here is really just around companies trying to overall make better use of their data. I think we see that data is probably the, one of the most [00:10:00] valuable assets that companies have. And not using that in order to make better commercial decisions, improve commercial execution is really a miss.
And so as companies are looking to make better use of that data and use more artificial intelligence and data science in their business pricing is a very pragmatic, practical, and profitable way to go about getting started doing that. So to that end, Lee. If our listeners are considering a price optimization solution, what should they keep in mind?
Lee Rehwinkel: Yeah. So being able to measure price elasticity is a critical component to price optimization. This helps customers understand what the impact from those price changes are going to be before they go and put them into market so that they're not flying blind.
Lindsay Duran: So some of our listeners, Lee are probably wondering what's the difference between price optimization and price management.
And is there really a difference? Can you talk a little bit [00:11:00] about how those two approaches are different in practice?
Lee Rehwinkel: Yeah. So I would say the key difference between price optimization and price management has to do with the amount of data science that goes into setting that price. So in price optimization, using price elasticity and a mathematical solver, as well as a sort of robust history of either order or quote data all goes into setting that price versus in price management those prices can be set often by rules or formulas.
Lindsay Duran: And I think there's a place for both price optimization and price management in many businesses. Certainly price optimization has a lot of value for businesses that have a fair amount of decision complexity, high transaction volume businesses, large customer counts or product counts where just coming up with a price for all of those different segments of the business can be really challenging.
Price management is very useful, especially in businesses where you're simply trying to do [00:12:00] straight cost pass throughs to a price as you get new cost data in for example, or you really are trying to take a more declarative approach to how you want us to set your prices. So there's really value in both. And many of our customers use our price optimization solution and our price management solution in conjunction with each other to, to really get the full benefit of pricing software and cover all the ways in which they price in a business.
Lee. Do you have anything else that you'd like to share with our audience today or talk about how they can learn more about this next generation Price IQ release?
Lee Rehwinkel: Yeah. So if anything, we talked about interests, you, we just did a live webinar that you can watch on demand where we demo the product. So we've talked about a lot of topics today, but this would be your chance to actually see the price optimization in action and really get a good feel for how our customers interact with prices.[00:13:00]
Lindsay Duran: That's great. Thanks Lee. And to take a look at that on demand webinar, you can go to zilliant.com/events to find it. And we will also include a link in the show notes. Lee I really want to thank you for taking the time to join us on this episode, to talk about Price IQ. And I'd like to thank each of our podcast listeners for being with us.
Be sure to check out the link in the show notes to the first entry of what will be a multi-part blog series on Next-Gen Price IQ. And if you'd like more information to learn more about how price optimization might apply to your business, please visit us@zilliant.com. And if you're enjoying the podcast, Please take a moment to rate and review the show as it helps us to continue to put out great free content.
We hope that you will join us on the next episode of B2B Reiimagined [00:14:00] .
