4. Pricing optimization software - a must for pricing excellence with Sofia Simaria

Speaker A: Hi, everyone, and welcome back to the

Speaker B: Sweet Spot by Pricing Works, where with every episode, we try to inspire you to seek and achieve pricing excellence through a conversation with a fascinating guest. I'm your host, Anda Huzao. Today we are diving into the world of pricing optimization software with Sophia Cimaria, who is the Vice President of Science and Applications Delivery at Zilii. For those of you who don't know Zilii, they are a leading provider of price optimization, price management and sales guidance software. Sophia has a very diverse background which spans both consulting and academia. And as you will see, she's incredibly passionate about solving complex problems in the realm of pricing and sales through software and science. Stay with us to hear about some of the key business problems that she and her team are tackling for Zilion clients and about the important role played by price optimization software on the journey to pricing excellence. I hope you enjoy our conversation as

Speaker A: much as I did, and let's dive in. Hi, Sophia, and welcome to our podcast.

Speaker C: Hi, and great to be here. Thanks for the invite and let me try this.

Speaker A: Bemvinja, Sophia.

Speaker C: Oh, uh,

Speaker A: how was that to explain to our audience, that was my very poor attempt at speaking Portuguese.

Speaker C: It was very good.

Speaker A: Yes. Which I believe is your first language, right?

Speaker C: Yes, yes, I'm Portuguese.

Speaker A: Excellent. So thanks so much for being with us today. We're so excited to have you here and to get to learn a bit more about you and about the work that you do at Ziliunt. So you are currently the VP of Science and Applications Delivery at Zilii. Uh, I hope I got that right. And to get us started, could you share with us a little bit about your professional journey so far?

Speaker C: Yes, of course. Uh, at the moment at Ziliant, uh, this role is really on the forefront of delivering our, uh, applications to our customers. My background is all around, uh, designing and building decision support tools across, uh, multiple industries. So I have more than 20 years experience in doing that. Before I joined Zilii, I worked in management consulting at, uh, ey, uh, focusing on business modeling, analytics, operational research. But I started my career many, many years ago in academia as a researcher and lecturer in the areas of industrial engineering and optimization. My focus, my lifelong passion, uh, has been on this development of advanced models to support complex business decisions, uh, for a wide range of applications and industries. I can give you some examples throughout my career, um, where I've developed, uh, software tools using different technologies, but to solve problems such as improving the efficiency of industrial assembly lines, um, scheduling airport security staff, so Try to see what best rostering pattern for, uh, security staff at airports, um, redesigning, uh, telecommunications networks. These are examples of different projects that I've been involved across my different jobs. Um, and also spend quite a long time on the biopharmaceutical production processes, trying to optimize and finding ways to scale up these, uh, innovative technologies coming through in the biopharma industry. And so I joined Zilint in 2017 as a director of science, so director of the team that uh, builds the pricing science models. And um, today kind of expanded that team and also manage the whole global team of data scientists and application consultants which are really there working with a customer to deliver the pricing optimization solutions.

Speaker A: Wow, that's a really impressive background. And it makes me wonder because you've applied your skill set to so many different industries and business situations, it makes me wonder what has been the most important element, um, to your success in all of these industries. So what has helped you succeed across the board?

Speaker C: I think my ability to look at the problem and try to define the key building blocks that exist and then try to address them in a systematic way. Um, understanding what are the users and what they need to get out of that. And I think, I mean really focusing on the decision support. So what are the elements that we can expose to help these people making their decisions? So that has been really the common theme across all of my professional career. And doing this by trying to bring the appropriate tools to explore the data, to process the data, to optimize recommendations so the tools that are appropriate to solve that particular business problem. And I love learning new things. I'm not afraid of exploring an area that I've done all before. So when I joined Zilli, I hadn't worked in pricing before. And then coming into Zealand, this was a new application area that I discovered that got me so excited. That's really that common theme. Try that, solve the problem.

Speaker A: Great. That's really great. And welcome to the dark side to the pricing world. So thank you for that. It's great to get to know a bit more about you. Let's dig into Ziliunt and what Ziliiynt does a little bit. So PricingWorks, uh, is a gold partner of Zilii and we help clients implement Zilii solutions and tools for our audience. Could you tell us a little bit about what Zilii does, kind of map out its universe solutions and also tell us where you and your team sit within that universe.

Speaker C: First of all, we're really proud to be partners with pricing Works I mean love working with a team, really have delivered some great projects to very big clients together with a few of the pricing uh works uh people. Our partnership is based on bringing the pricing works uh, experts and then being on the ground working alongside Ziliant team uh to deliver projects to our clients. And so what is it that we deliver? So typically Ziliant helps uh the focus is on B2B companies. Although we also see that some of our B2B customers have a branch that is more typical to B2C. But typically our core is on B2B companies. Manufacturers, distributors, services companies and we help them attain margin and revenue goals. And this is done through uh, looking into their pricing processes, uh, the way they do their price setting and price execution and bringing uh, automation into those processes to help them implement their pricing strategy in an efficient way. So it's really kind of through the use of uh, data driven models and bringing software to their businesses they can release their time to think on strategy and then let the software uh, do the automation and bring the insights that they need. There are some multiple uh, applications and things that we have helped our customers with. For example if a customer has multiple set of price types, they might have a list price um, that is their upper bound of pricing that is published and it is known. But then they might have matrix prices, prices where ah, different customers um, might have different discounts depending on the categories that they buy. Um companies operate a lot on negotiating directly with customers and typically there is this uh, notion that negotiation is really unique moment where you have the opportunity to give a unique price. But actually if we explore and leverage the data behind this process we can bring insight into that negotiation process that will allow the company to really maximize their margin of revenue. This is on the pricing side and then there's also uh, on the sales and commercial side um, there's a lot of information that we have from customers, their buying patterns, if they used to buy some products and then they stopped buying. So look into that data, gives us some insights on what might be happening next to that customer. Are there risk of churning um, or even opportunities in terms of providing recommendations to the customer for them to buy other products. So we also have a range of tools um, that bring insights directly into the frontline to the salesforce, equip them with information to go and have rich conversations with their customers. These are things that are um, benefits to the sales rep. While typically great salespeople, they know very well their customers, they know very well their biggest customers, they might not know very well. Those smaller ones and having an automated way to go through the data and to bring these insights allows them to actually have great conversations to every single customer and always maximize what they want to achieve out of that relationship. So this was more on the kind of what ZILLII does and the type of software. So software around price optimization, price management, um, commercial excellence, uh, and then the team, particularly my team. So I sit on the professional services organization with IT Ziliant and my team works closely with the customers, ensuring that the models are configured to their business needs and enable them to execute their pricing strategy. So the team is focusing on understanding the business problems and then designing the models, configuring the software in a way that allow them to meet their goals. Um, and then alongside those customer specific project implementations, um, my team of data scientists and consultants also devotes time to R and D activities, contributing to the continuous improvement in innovation on the ZILIII platform.

Speaker B: Excellent.

Speaker A: Great, thank you for that. I wanted to follow up on what you mentioned around data because in our work here at uh, pricingworks with clients in consulting projects, we often ask clients whether they measure different things, right? Do you measure churn, do you measure this? Do you measure that? And a lot of these companies will have the data, they'll measure it or they'll have some kind of metric to look at. And then our next question is always, and how do you use that data? What do you do with it? And then there's silence. So your work is really great, is that a lot of companies, they do have this data and especially big companies, they generate a lot of data, but they are not always able to make sense of it and draw on those insights to help them inform their next pricing and sales decisions. So that's also where Zilion comes in and you guys do a lot of great work there. So I wanted to see if we can maybe share with our audience a few tangible examples of types of problems or projects that you've had with clients where you've helped them solve some critical problems.

Speaker C: Sure. Maybe I'll ah, give a little bit of ah, context into the type of industries. One example comes to mind. Um, we helped electrical products wholesaler, um, leverage our price management solutions. So they use a price manager, which is our price management software, to um, digitally transform their pricing and discounting processes. So um, by using the software they were able to align uh, their pricing to the market, um, both in their sales LED and digital channels. So this means that the price management tool allows them to leverage the data they had about their market about their competitors in an automated way. Uh, bringing their strategy into the software to allow them to update their prices for their sales channel and for their e commerce channel. Um, this allows them to solve a big problem that they had which they would need to go to their ERP directly to change their prices. And that was a cumbersome task that was very manual, time consuming and now they use the price manager software at Ziliant to automatically change their prices in an easy way, really easy, friendly and at the click of a button the new prices flow through to their erp. So they don't need to go through the ERP anymore. So that is a big pain also that we see in our customers difficulties and challenges with updating prices in ERP systems. Another good example that we had actually speaking at one of our uh, past conferences building products distributor two uh person team. So this is a pricing team, two people. They had a lot to do, a lot of challenges to solve uh, in their pricing department um and using our price optimization and price management solutions, Price IQ and price manager they uh, were able to leverage again their competitive data um, and ensure that they had good aligned prices between their B2B and B2C channels. So this is a company where they really had the B2B and B2C. Uh they had competition data for B2B and B2C and the tools allow them to bring all of that together and um, in an automated way update the prices whenever there was changes in the competition uh, environment. So this was a project that allowed to consume uh data that was done through web scraping and then brought into the tool, uh, identify if there was significant changes in the competitors data, um, compare with the current prices of you know of our, of our company here and then through the use of rules apply the changes into the price in a way that was you know, following you know in a way that it was aligning the price according to the, to the competitor according to what the company wanted to do but at the same time applying some safeguards that would ensure that in case that there was a, some quality issues with the data, uh, that the model will not blindly change the prices. This is very important and it's a challenge we have with data driven. So the recommendations are only as good as the quality of the data that fits in. It's important to have these uh, safeguards in the tools so that we can trust in the recommendations that come out of them.

Speaker A: Uh, it sounds like magic but it's not.

Speaker C: It's science. Yeah. And then there are other examples on the Sales and revenue operations side. Um, for example we had a specialty chemicals manufacturer and so they had E Commerce portal. Their customers would go to the portal, um, and they used our uh, revenue opportunities, uh, solutions to bring actions and recommendations directly to their customers in the E commerce site. So this is uh, things like the recommendations. So you go, their customers will go to the portal to buy products and as they uh, are buying, as their heart was filling up they would see the recommended products. Ah, so this is something that we are used to in our day to day as individuals. We interact with Amazon, Netflix, everywhere we see these recommendations. So it's something that we're very used to. And Jio products allow to bring that experience also into the B2B environment. Uh, and that is really valuable by the customers.

Speaker A: That's great. It sounds like um, you've saved them a lot of time and you've uh, materially improved the outcomes, um, the pricing outcomes for their business. So those are really, really great examples of where Zilion uh, can make a difference. Something that you touched on earlier and I really wanted to sort of dive into is that we know from experience that something a lot of businesses everywhere struggle with is that is uh, their customer agreements and specifically how to use those, how to leverage them to drive profitability. And then I remember that at the EPP last year you delivered a workshop on this exact topic. And so I wanted to ask you and follow up on that and I was hoping you could outline how, you know, what are some of the challenges that you see clients uh, face with their price agreements and how is Zillion helping them address those challenges?

Speaker C: Yeah, there's a lot of challenges with managing those customer specific price agreements. As indication of the magnitudes, price agreements can represent up to 50% of a company's revenue. So they are companies that really their pricing structure is focused on price agreements. So when a customer price agreement is set, a lot of times the sales rep is focusing on getting the deal, winning the deal and uh, doesn't necessarily take into account what would be a good price to give to that customer based on uh, the customer's industry or the type of product they buy, the volume they're buying. So bringing a good price guidance into this process is very important to ensure that even a customer specific price is profitable for the company. It's really kind of what we've seen in our customers is that the ability or the inability to update these agreements and bring them uh, to market aligned prices and also prices that are aligned with the company's strategy. This is a gap that exists. Um and at Ziliant we have been bringing to market particularly to address this gap. Uh, um, an agreement management package that allows our companies to very quickly go through uh, this data in their data sets, apply uh, changes in a quick way, but in a way that allows them to bring all those price agreements to the state where they should be applying start dates, uh, and from there updated periodically whenever there's a change in the, the strategy, changing in costs, um, simple things as ah, vendor cost has changed, we want to pass that price back to the customer. It's difficult to do when we have these set and forget customer agreements. So uh, when we had uh, that workshop back at App, uh we provided a framework to uh, go through customer price agreements that are uh, buried in the system and lift them into a mechanism where there is a systematic way of bringing new data into the system, uh identifying the agreements that need an update, whether because the cost have changed or there's a new competitor price, um, or um, they are not following the minimum margin and then update those price agreements according to the rules that were set in the system and then publishing back to the ERPs, bringing the new prices into the ERP uh is a very important one and that is the value that Zilion brings helping really do that end to end integration so that you uh, can update the prices but also automatically see the new prices reflected in the, in the ERP systems.

Speaker A: M I've worked with many salespeople over the years and uh, I've met very few salespeople who are excited about customer agreements. Uh because of exactly what you said. They tend to be clunky, stored somewhere where you have to dig them out. It's very tough to parse them and to find the sort of terms that you're looking for, which is usually the commercial terms. Right. For salespeople. And so um, having software that can help you do that and make sense of that is actually really great. So I'm sure many salespeople would be excited to enjoy the benefits that you've outlined. Um, I'm curious um, at the epp, as you were talking about all of these benefits and what Zilion can do and asking the participants about their struggles. Was there anything interesting that the audience has come up with or anything that surprised you in terms of um, their own challenges?

Speaker C: Yeah. So um, all participants in the workshop felt the pain of the set and forget price agreements. Everyone uh, recognized that uh, that's what happens. And then it's very difficult to change the agreements. Um Also something that, um, surprised me was that some of the people that I talked to at that workshop, it takes them a, um, lot of time to go through a periodic price review process. So, uh, some examples we're talking about, a whole quarter was needed to do a full update of prices. And why was this? Because, uh, the data is scattered around multiple Excel sheets, passing between different people. Uh, really pain to consolidate all the data. Vendor cost updates, maybe some new market data. Uh, pricing strategy. There was a big, big challenge on being able to rapidly respond to the cost increases that we were seeing and still are seeing in the market. To me, I think that was the most shocking to see that there are still companies out there that takes the. Take a whole quarter to do periodic price review.

Speaker A: Wow, that is really costly in today's world, right when costs um, are going up and there's cost increases that kick in so rapidly. And uh, I remember our first, uh, podcast guest, we asked um, about the time lag between a cost going up and the company's own prices going up. And he said the time like is zero days. So when you compare that to the quarter, um, a quarter is a very long time and it's very costly. All right, so we've been sort of touching on this, spoke about software more generally. But, um, could you describe for us why pricing software is so critical currently and also for those businesses who are still on the digital transformation journey, and we know there's a lot of them out there. Can you talk about what is the key to a successful transformation initiative?

Speaker C: I think so. There's two things. One to me is ability to bring the data together into a single source of truth, into one single platform. Think that consolidating all the data that is needed to make depressing decisions is number one, and then number two is having a pricing strategy because just having the software is not enough. So you need to know what you want to do with it and what is your goal in terms of that strategy and what do you want to achieve? Um, and so from a technical perspective, the first one, consolidating all the data, it's something that can take some time because, uh, the data needs to be extracted from the ERPs, needs uh, to be consistent across different data sources. For example, your price lists need to have product references that are consistent with what you have in your product master with all those product references are enriched. Same with the customer margin. So all of those pieces of data, uh, uh, need to talk to each other, be consistent so that then

Speaker B: if

Speaker C: you have a tool where you Want to execute a strategy. For example, I want to increase by 5% all my customers that are in the electric industry. You need to have all that information at the click of a button. Um, what we see is that that journey might take a while to kind of bring the data ah, and have uh, data within integrity and being able to be consolidated in a single platform. Um, and then the pricing strategy is very important because uh, also sometimes we see that um, just because you have a software that can do things, the software is not telling you what should be your strategy that really needs to come from the business. Uh, and uh, having that kind of the business on the steering wheel, the software is there to execute uh, the strategy and really um, make the journey easy and more automated. Right.

Speaker A: And that's something we can help with our wonderful partnership between PricingWorks and um, Zillion. So let's try to then conclude and summary um, for our audience, um, sort of the key areas that they can get help from Ziliiit on. So the key challenges. So Sophia, let's structure it this way. If you are this kind of company, this is what Zilii can do for you.

Speaker C: Mhm, sure. Um, if you are a large B2B distributor, you know there you operate across multiple channels, multi geographies. Um so this is a type of company where there's a large volumes of data, large transactional data and there's a lot of richness that can come out of that. So Xilin can help you optimize your pricing um by leveraging artificial intelligence techniques to measure your price elasticity and uh, predict the outcomes of pricing strategies before putting into market. Um, so this is the situation where the data can be used to uh, provide intelligence on the price recommendations. For example, um, this can help the company decide which customer's price should move and by how much because the different customer segments will have their different sensitivities. Um, how do you execute against the market pricing? So if you look at your competition, where do you want to be? Uh, and what's going to be the impact on your revenue and your risk? Um and also kind of as I mentioned before, which are the customer segments that can take more price changes and those that we should not really move much. Um, I would say that these are the type of companies where we can leverage the most from their data richness. Um then it might be that you are a company where you have a lot of manual processes. You are still in that pricing journey, maybe early stages. All the process are manual, Excel based, disconnected, multiple people interacting, sharing Excel files across by email. We also call this type of companies that they use the swivel chair. So where you have to go to different systems to do different things. Um, and here Zilink can help by streamlining that price management process. Uh, so here we really focusing on um, bringing the data into a single place, uh, using it to clean up your uh, process steps, making them more automated, um, in a way that you can manage. All your price types can have good control of what are your, all your price lists, what is the impact of doing price changes. Um, and here the focus is really of consolidating uh, your process into a single place, uh, and have better control of your data. Uh, if you are type of company where a lot of your business is driven by those customer price agreements, then here is really around giving the ability to uh, centralize the creation of those agreements, the maintenance and the renewal by uh, in an automated way identify those agreements that need to be updated and apply those updates in a quick way so that uh, they can be always in line with what the company's strategy is overall. For all of these type of customers the ultimate goal is to uh, incorporate those margin and revenue strategies across the business. Uh, and as I mentioned before, knowing what is the pricing strategy, then the software can help with executing it.

Speaker A: Excellent. Thank you so much. Thanks for that Sofia. And thank you so much for coming on the show as well. This has been very interesting for me and I'm sure very valuable um, to our audience. For those who would like to contact us, we will leave our contact, contact details in the show notes and of course I have to say obrigado at the end to uh, wrap up with my uh, amazing uh, Portuguese uh, speaking skills. So thanks so much Sophia and we hope to uh, have you back on the show, um, soon.

Speaker C: Thank you very much for having me, Hande. It was great pleasure speaking with you.

Speaker B: Many thanks as well to our friends at Milk who have designed beautiful art for the podcast and to our listeners for tuning in in. If you've enjoyed this episode, please subscribe to the sweet spot on your favorite podcast app. Uh, if you have any questions or feedback for us, we'd love to hear from you. So please go to pricingworks IO and get in touch. See you next time.