July 14, 2019

About Neural Impact’s Packaging and Pricing Strategy Workshop

The demand for cloud services and offerings is disrupting the market. Yet, not many companies are changing their selling approach to meet the needs of Buyer 3.0. Neural Impact’s two-day workshop will allow you to take advantage of this new gap. 

You can immediately develop new pricing strategies that will boost your revenue margins! You will also learn how to connect with consumers on an internal, emotional level. This is regardless of your target industry. 

Just as importantly, you will review your current offerings, implement proven strategies, and, consequently, increase your sales. These methods will differentiate you from your competitors and allow you to tap into new revenue opportunities, such as AppSource. 

The workshop is hosted by Sharka Chobot, the creator of the CRM product category and the Chief Transformation Officer at Neural Impact. Sharka also works with Microsoft partners across the world. She helps them optimize their strategies and quickly acquire new customers. 

Capture the Heart & Mind of Buyer 3.0 

Initially, the workshop highlights recent changes in consumer behavior. There are many ways for businesses to remain emotionally relevant. Investing in cloud technology, in itself, will not suffice. This is because today’s cloud buyer is very different than traditional ones. 

In the past, IT professionals used to make most of the purchases in the tech market. They made decisions based on technical product descriptions. Today, on the other hand, business executives dominate the tech consumer market. 

Joanne Charley, Chief Marketing Officer at Neural Impact, pointed out that “[business buyers] don’t speak a technical language”. Instead, the big question on their mind is “how is [the product] going to help me in my job?”, Sharka added during the podcast interview with Joanne. 

“The IT folks are still there, they’re still trusted advisers” Joanne said. However, she also added that the new cloud buyer is looking for “outcomes that are aligned with providing business value to […] their strategic discipline”. 

The upcoming workshop goes over several related key shifts. Marketers and business organizations need to change the way they sell their products and how they communicate with consumers. Doing so will allow them to emotionally and psychology connect with Buyer 3.0. 

Define Your Value Proposition 

The second part of the workshop is about developing your message and defining your core value proposition. Similarly, you will learn how to accurately measure your ROI and the effectiveness of your new marketing strategy. 

In order to do so, Sharka is going to illustrate the role of buying triggers. Once they are identified, you can map out your product offerings and value proposition around these said triggers. 

The process is relatively simple. First, you have to understand what the concerns of your industry are. Next, you prioritize the key components of your marketing message and value proposition. Lastly, this will allow you to fill the gaps in the market. The whole process revolves around the buying triggers of your customer.

What are the pains of your industry’s consumers? Which problems keep the cloud buyer up at night? What are their main worries when it comes to their business? These buying triggers incentivize customers to take action. Your products and cloud services should provide solutions to these problems.

Packaging, Pricing, and AppSource 

The second day of the workshop is about your packaging and pricing model. Participants will identify three potential offerings for their target market. These packages will accelerate sales, create recurring revenues, and minimize churn. Similarly, Sharka also uncovers new ways for your business to make money, including AppSource.

AppSource is a great way for your business to drive additional revenue! Moreover, Sharka teaches participants how to create engaging and effective landing pages. This strategy is especially important because of the new way that the cloud buyer makes purchases.

According to the latest studies, consumers go through 60-85% of the decision-making process before contacting a company’s sales representative. This is a major shift from the traditional, face-to-face selling process. In the online world, your landing page will play the role of the effective and personable sales rep.

Are You Ready for the Next Level? 

Business leaders, product managers, salespeople, marketers, and cloud services professionals will all find great value in our workshop.

Are you ready?

Click Here to get started!

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Blog written by Sharka Chobot, July 23, 2018

Last week thousands of partners from around the world attended Microsoft’s annual Inspire global partner conference to gain insights into Microsoft’s vision and strategy for the coming year and to ensure their development and go-to-market strategies are aligned.

We highly recommend you investigate, explore and leverage each of them to position your organization at the center of Microsoft’s growth strategy.

Here are the core themes from last week that we believe are clear priorities in FY19:

1. Focus on your customers’ success. Make them the hero of the story. Technology should fade into the background, with your customers’ growth in the spotlight.

2. Honour privacy, which is a human right, and ensure security. This includes ongoing GDPR compliance and ensuring customers are in control of their data. Pledge to protect your customers. See https://cybertechaccord.org/

3. Intelligent cloud and Intelligent edge. The proliferation of server-less computing and the changing nature of distributed applications is forcing every business to change. Find or develop creative solutions that seamlessly link the 8.4 billion connected sensors and IoT devices on the planet (Gartner).

4. AI for “Good” – Leverage AI in an ethical and responsible way.

Microsoft also updated its core solution area definitions, which now include: Gaming (i.e. educational games that teach children life skills), Modern Life (i.e. intelligent electricity metering devices in the home), Modern Workplace, Business applications, Apps & Infrastructure, Data and AI.

Intelligent Cloud & Intelligent Edge

As we continue to use more internet-connected devices at work and home (I have a fit bit to track my steps, Alexa to provide an update on my morning commute and a smart thermostat at my ski cabin that allows me to remotely turn up the temperature prior to my arrival) customers will increasingly expect all of their IoT devices to be easy to use, respond to their natural speaking voice, seamlessly integrate with other applications and dynamically evolve to meet their changing needs.

In the words of Kevin Scott, Microsoft’s CTO “when we take the power of the cloud down to the device – the edge – we provide the ability to respond, reason and act in real time. Internet-connected devices are bringing us closer than ever before to a world of ubiquitous computing and ambient intelligence.”

Regardless of your industry, whether vertical or workload focus, IOT should be on your list of development priorities.

AI for Good

Satya challenged us all to ask not what computers CAN do but what they SHOULD do. Artificial Intelligence (AI) is at the forefront of the Microsoft vision. Not just for greater efficiency, productivity and economic growth, but to do “good” in the world. Our challenge is to seek out opportunities that leverage AI to help our customers make a positive impact on society, and the world a better place.

Examples include leveraging AI to help farmers increase their yield, harvesting more crops from the same plot of family land, increasing literacy rates in developing countries, enabling the disadvantaged or disabled to lead more productive, fulling lives, or equipping third-world doctors with technology and information that allows them to triple the number of patients they can help each day. Our collective goal should be to create AI solutions that support people and organizations focused on accessibility, environmental advocacy, education, and healthcare. Leverage AI to create a more sustainable future.

AI for Accessibility 

Microsoft has committed $25 million to a new program that leverages AI to provide better solutions for persons with disabilities, giving them new opportunities for independence and productivity that was not previously available to them.

The Strategy:

The program is anchored in an artificial intelligence platform that allows you to create and test new AI applications for people with disabilities; with a team of Microsoft engineers standing by, committed to helping you get your new ideas off the ground. The three program focus areas are employment, modern life, and human connection, with the goal of developing professional skills, increasing independence, and providing equal access to information.

AI in Action:  

“Seeing AI” is an excellent example of AI helping people with disabilities. https://www.microsoft.com/en-us/seeing-ai.  This free app provides the visually impaired with a description of the world around them. Using your smartphone’s camera, the app can describe the person in front of you, their facial expression, as well as read text. When I used the Seeing AI app it described me as a 47-year-old happy woman… I think I like the app already!.

AI for Earth

This $50 million initiative is aimed at saving the planet. It puts leading edge AI technology in the hands of teams working to solve global environmental challenges. The project has four focus areas: climate change, agriculture, access to water, and biodiversity. The initiative focuses on accelerating innovation using AI to solve some of the biggest environmental challenges of our time. https://www.microsoft.com/en-us/aiforearth

The Strategy:

Scientists or organizations working in any of the above focus areas can apply for a grant to support their research project. Microsoft provides Azure cloud computing resources to support research that helps the earth, environment, and ultimately, our future generations.

In Action:

To date, Microsoft has awarded 110 grants in 27 countries to individuals and organizations who are finding new ways to stop climate change, conserve the earth’s biodiversity, feed the world’s ever-growing population, provide clean, safe water, and much more.

AI in Education

Today’s children are tomorrow’s leaders, but many lack the essential support and resources required to help them achieve their potential. Microsoft’s AI for education initiative focuses on providing students and educators with the tools and information they need to construct a brighter future.

The Strategy:

The program focuses on reducing dropout rates by providing teachers with machine learning technology that allows them to better support students. The solution uses advanced analytics and learning strategies that enable educators to identify at risk students early, and then intervene to provide additional support, leading to increased graduation rates.

In Action:

In New Delhi, India, this approach is currently being used in over 10,000 schools to help lower dropout rates, which currently range between 40% and 64%. With this AI solution in place, the New Delhi school system has a greater than 90% prediction rate for identifying students at risk of dropping out of school. With this information, the schools can provide customised counselling and help at risk students.

AI in Healthcare

According to the United Nations, in 2017, there were an estimated 962 million people on the planet aged 60 or over. This population segment, which represents 13% of the global population, is growing at a rate of 3% per year, rising to 1.4 billion by 2030. An aging population will drive many changes, but none greater than in healthcare. Microsoft’s AI for Healthcare is now providing advanced AI solutions to help tackle some of these challenges and ensure a better quality of life for all in the future.

The Strategy:

Microsoft is developing algorithms that will be deployed as intelligent Azure services that are designed for third party medical software developers to help researchers and medical specialists combat cancer and other illnesses.

In Action:

Project InnerEye offers innovative machine learning tools that help radiologists identify and analyze 3-D images of cancerous tumors. This capability enables them to plot the path of a disease’s progression with much greater accuracy.

Leverage AI to Make a Difference for Good.

Much of today’s press and media coverage has focused on the dark side of AI. As industry leaders it is our responsibility to counter that fear with evidence of AI for good. Identify a cause, environmental challenge or social inequity you or your customer are passionately about, then create an opportunity to leverage AI and make a difference. AI holds the potential to bring health, hope, possibility and prosperity to all 7 billion + global citizens, but change happens when you make it personal.

Last Words.

My favorite quote from Inspire: “Want to be ‘cool’? Go look for somewhere else to work. If you want to join a company that is committed to making others cool, join Microsoft!” Satya Nadella

Helpful related articles and content:

Scott, K. CTO Microsoft (July 23, 2018). The next wave of computing is the intelligent edge and intelligent cloud. https://blogs.microsoft.com/blog/2018/07/23/the-next-wave-of-computing-is-the-intelligent-edge-and-intelligent-cloud/

Cybersecurity Tech Accord (June 20, 2018). Eleven new companies join pledge to fight cyberattacks, promise equal protection for customers worldwide. https://cybertechaccord.org/

Vanian, J. (May, 2018). 4 Big Takeaways from Satya Nadella’s Talk at Microsoft Build.  http://fortune.com/2018/05/07/microsoft-satya-nadella-build/

UN Global Ageing Issue (July 2018). Retrieved from http://www.un.org/en/sections/issues-depth/ageing/index.html

Tung, L. (2017). IoT devices will outnumber the world’s population this year for the first time. Retrieved: https://www.zdnet.com/article/iot-devices-will-outnumber-the-worlds-population-this-year-for-the-first-time/

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Imagine this scenario. Your team has worked extremely hard to bring your latest cloud subscription service to market. Now, you’re walking into a meeting with Product and Marketing, with a goal of devising the final prices for your new service. You’ve done lots of research with target customers and have a pretty good idea of a price range. (Your research suggests somewhere between $18 and $20 would be the best price for your lowest-tier subscription offering.) But how do you come up with that final number that becomes your price? And, how can you support that price with the best call to action? Here we will describe some psychology that will help you in deciding between pricing your product at $20, $18, and $19.99, and in deciding the optimal number of words to use in your call to action.

Tip 1: End Your Price With 9

If you’re deciding between offering your cloud service at $19.99 per month, or $20, go with $19.99.

Why is that?

According to a paper published in Quantitative Marketing and Economics by researchers at MIT and University of Chicago’s Graduate School of Business, the effect is true. A price ending in 9 increases demand. It’s called price-ending effects, and there is a fair amount of research done on the topic. The MIT/Chicago researchers reviewed years of literature on the topic and found several possible theories explaining the effect. Some theories suggested that the price-ending affects the left-most digit, while others suggested its importance is an impact on the rightmost digit:

“The literature contains a range of explanations for price ending effects. These explanations fall into two broad categories. Explanations in the first category posit various reasons for why customers ‘‘drop-off ’’ the right-most digits and therefore overweight the leftmost digits. The most common of these explanations is that customers round prices down (Gabor and Granger, 1964; Lambert, 1975; Schindler and Kibarian, 1993) and essentially ignore the right-most digits. For example $59.99 might be coded as $59 or, in an extreme case, as $50.

A second class of theories posits that price endings provide information about relative price levels and/or product quality (Schindler, 1991). In these theories, customers pay more attention to the rightmost digits because of the information that they convey. This contrasts with the customer’s emphasis on the left-most digits in the ‘‘dropping off ’’ theories. Researchers have suggested that one inference customers may draw from $9-endings is that a price is low, discounted, or on ‘‘Sale’’ (Schindler and Warren, 1988). For example, Salmon and Ortmeyer (1993) describe a department store that uses a 0-cent ending for regularly priced items and 98-cent endings for clearance items.”

After completing their review, the researchers found most convincing evidence for the rightmost digit theory, although it’s not crystal clear, with several studies reporting evidence for the leftmost digit theory. It appears to be context dependent, and it’s clear that there are still gaps in understanding the mechanisms behind price-ending effects. In any case, that shouldn’t stop you from experimenting with achieving price-ending effects.

Implement A Price-Ending of 9 In Your Pricing!

• Price your products with the rightmost digit ending in 9.
• Any other number will not work as well. (There is a gap in the research as to why a price ending with a number other than 9– for example $19.80 or $19.50– would not be as favourable an effect as a price ending in 9.)
• Effects are best for “new items that customers have seen less frequently in the past”  (Anderson, Simester, 2003.)

Tip 2: Make Your Call to Action Seven (Plus/Minus 2) Words

You just learned that ending your price in 9 is powerful, and you’ve updated your prices with this principle. Now, how can you support your well-formed pricing with the most engaging call to action? Now it’s time to apply Miller’s Magic Number.

In one of the most highly cited research papers in psychology to date, cognitive psychologist George A. Miller discovered that the maximum amount of elements that humans can store at once is 7,± 2. These “elements” can be letters, digits, or words– and Miller found that 7 seems to be the limit of our capacity for short-term memory. This magic number 7 can also be “stretched”, by categorizing information into related groups. How can you apply Miller’s Magic Number to pricing?

Use The Magic Number in Your Call to Action

Try using it on your call to action, by constraining your copy to Miller’s number– 7± 2 words.

As an example, let’s take a look at Salesforce.com’s Sales Cloud pricing page. Notice how each call to action follows the principle of Miller’s Magic number, and as a result, how easy it is to digest the information. Each call to action uses a limit of 7 ± 2 words, which allows customers to absorb the entire call to action at once. In contrast, let’s examine an instance where Miller’s principle is not followed: take a look at the Dropbox business pricing page. In this example, notice how it seems much harder to process the information here, even though these call to action statements are only a few more words than the Salesforce example.

Use The Magic Number in Your Features List

You can also apply Miller’s principle to the number of bullet points in your features list. This will help you ensure your customers are reading and retaining everything you’ve worked so hard to build them.

This may be challenging in practice, with so many benefits that your team is excited to convey. The point here, is that by constraining your content to manageable chunks, you can get customers to read all of your benefits, rather than overwhelming them with a long list that seems like work to read. To observe this in action, let’s take a look at some examples of companies’ feature lists. First let’s revisit our previous Salesforce example. Notice how this page violates Miller’s principle in its lengthy product descriptions for each tier. How do you feel when reading this? Now, compare it to the company’s Marketing Cloud pricing page, which sticks to Miller’s principle for the benefits of each tier. Notice how the information is much more easy to consume with this offering. This is a great example of how you can design your features list into manageable “chunks” to fit within your customers’ short term memory limits. (Although, the prices are not listed on the website, which we never recommend!)

In the example depicted in this photo, the call to action statements are too wordy. However, the number of items in the features lists do fit within Miller’s principles.

Implement Miller’s Magic Number in Your Pricing Page!

• Craft calls to action that are your best 7 ± 2 words.
• Extend this learning to your product description, with a maximum of 7 ± 2 bullet points to describe each offering.
• Consider other ways to limit your content to chunks following Miller’s principle.

Now, back to our scenario from the beginning. You attend your meeting, eager to share your customer research, and your recommendations to price the new service at $19.99. Your team moves forward with the pricing, as well as a refined call to action statement and feature list. By the end of the meeting, the team has a well-formulated pricing strategy, and an appreciation for considering customers’ psychology for optimal results.

These insights are just an initial starting block for learning lots more about pricing psychology for your business. To get started, try implementing one new idea, and be sure to arrange a plan to test and understand the results. The greatest rewards will come when you continue to tweak and understand how these insights are relevant to your specific business.

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