Latest / The Yield Doctor with James Deaker / Fast Effective Ratecard Updates

Transcript

Fast Effective Ratecard Updates · The Yield Doctor with James Deaker

0:00
What do you do if your boss calls you
0:03
and says, "We need to quickly pull
0:05
together next quarter's rate card?"
0:08
What data do you need and how do you
0:10
even go about approaching this?
0:12
Because the temptation in a situation
0:15
like this is to jump in and quickly
0:17
start making changes based on the issue
0:21
that generated the request. Was it a
0:23
customer that was lost due to poor
0:25
pricing? Was there news in the press
0:28
about some competitor who made
0:30
significant price reductions? Uh and
0:33
that would be a mistake because in a
0:34
situation where you are under the gun,
0:37
you need to focus on what really moves
0:40
the needle.
0:42
I've talked in other videos about the
0:44
importance of structuring the rate card
0:46
correctly and at times it can be
0:48
challenging to create a rate card from
0:50
scratch. But today I'm going to assume
0:53
that the rate card is already in place
0:55
and has largely the right structure and
0:58
the right products in place. And so we
1:00
don't need to start from first
1:01
principles.
1:03
Instead, we need to focus on three
1:05
questions. One, how has the current rate
1:09
card performed? Two, what is changing
1:12
externally with either the market, our
1:15
customer, or our competitors? And
1:18
thirdly, what is changing internally,
1:21
for example, with things like product
1:23
launches?
1:24
All right. So first, question one.
1:27
We need to look at how the rate card has
1:29
been performing and this is largely a
1:32
backward-looking exercise. And so you
1:35
need to look at actual data plus
1:38
internal experience. You need to look at
1:41
the data associated with price
1:44
realization and how it's trending. You
1:46
need to look at overall revenue. You
1:49
need to look at the discounting,
1:51
sell-through, product performance, deal
1:54
review feedback, and other internal
1:57
reporting.
1:59
This sounds like a lot. Hopefully, it's
2:01
the kind of information that you have
2:04
now established in your dashboard as a
2:07
yield manager in your company. And so,
2:09
the process is going through and
2:11
thoughtfully thinking about what you're
2:13
seeing in this report.
2:15
Uh the other thing that goes without
2:17
saying, if you're going to look at how
2:18
the rate card has performed, is you need
2:21
the current rate card. And again, if you
2:23
are the yield manager or pricing manager
2:25
in charge of this process, hopefully,
2:27
you know where to find it.
2:29
Uh
2:30
the other thing to think about when
2:31
you're looking at how the rate card has
2:33
performed is things like which
2:35
dimensions are most important. I've done
2:38
other videos before talking about how
2:41
sell-through is often an overused price
2:44
in uh overused signal in a pricing
2:47
analysis,
2:48
particularly if there are cases where
2:51
the demand is low.
2:53
And so, the sales team uh starts to put
2:55
pressure on and say, "Hey, we've got low
2:58
sell-through. We need to lower the
3:00
pricing." And that's often a mistake.
3:04
However, you do still need to understand
3:07
sell-through, particularly if you're
3:08
doing a rate card refresh. And cuz you
3:11
need to understand how the projections
3:13
might impact your business. And there is
3:16
some asymmetry here. While a low
3:20
sell-through doesn't necessarily mean
3:22
that you should lower your prices, if
3:25
you have a high sell-through and you're
3:27
starting to run out of inventory, it is
3:29
a signal that you may have to start
3:31
thinking about raising your prices,
3:33
particularly if you're going to squeeze
3:35
out the last of the optimization.
3:38
Another component that you need to look
3:39
at is the deal review requests that
3:42
you're getting into your deal desk. What
3:45
are What are those requests? How many
3:47
are getting approved? And for when you
3:49
approve those deals, how many are
3:51
significantly below the rate card price?
3:54
Cuz all of these things are signals that
3:56
maybe the rate card that you put in
3:58
place isn't working as well as what you
4:01
hoped.
4:03
You need uh sales and advertiser input
4:06
on is the current rate card working?
4:09
Again, this is hopefully something that
4:10
you are capturing as part of your normal
4:13
course of business, but you are trying
4:15
to get feedback from the advertisers via
4:19
your sales channel to distill what your
4:22
sales team and your advertisers are
4:24
saying are the current pain points. And
4:27
you're not going to be able to satisfy
4:29
all of these pain points with a rate
4:30
card update, especially if the feedback
4:33
is our prices are too high or our
4:35
customers hate that we only allow them
4:38
to buy if they bond if they buy the
4:40
bundle of these two products together.
4:42
The key is to catalog the issues and the
4:45
themes so that you know how to respond.
4:49
And since we're assessing how the rate
4:51
card performed, the other thing that you
4:53
need to look at associated with this
4:54
first question is overall revenue. Were
4:58
that you able to achieve the revenue
5:00
goals that you set out using the rate
5:02
card that you have in place? And so an
5:05
ideal state from this first answering
5:07
this first question is that the rate
5:10
card is being taken seriously, that the
5:13
sell-through expectations are coming in
5:16
in alignment with how you planned, and
5:19
that the discounting off of the rate
5:21
card also aligns with your process and
5:23
with your predictions.
5:26
The second major question that you need
5:28
to think about when you're going through
5:29
a rate card update is what is changing
5:32
externally.
5:33
In particular, is the market changing?
5:36
What are sales and customers seeing?
5:38
What are competitors doing? What is
5:41
happening with the economics of budgets,
5:44
economic conditions, buying behavior,
5:47
changing industry practices. So again,
5:51
sales and customer feedback can be
5:54
incredibly important here. And
5:56
obviously, this is related to the
5:58
question of how is the rate card
6:00
performing, but you're trying to get
6:02
something different here. You're trying
6:04
to get at what is changing in the last
6:07
year or changing in the current moment
6:09
that your demand channel has access to.
6:12
So feedback in this dimension might be
6:15
along the lines of when our competitor
6:17
launched their new product, we noticed a
6:20
decrease across most of our legacy
6:22
products.
6:24
Or it may be macroeconomic, along the
6:26
lines of things like customers are
6:28
worried about a potential recession and
6:31
aren't spending the way that they were
6:33
last year.
6:35
At this stage, to answer this question,
6:37
if you can get your hands on any
6:39
industry reports that talk about
6:42
changing market dynamics, particularly
6:44
related to price,
6:45
that's invaluable.
6:47
Now to the third major question that you
6:50
need to address as you're going through
6:51
this rate card update, what is changing
6:54
internally? What is your company
6:56
changing that may influence what you
6:58
need to represent on your rate card? So
7:01
it might be new products, it might be
7:03
new inventory that's becoming available
7:06
either because you changed your app or
7:08
changed your website.
7:10
It might be partnerships, it might be
7:12
improved measurement capabilities.
7:15
It might be changes to your sales
7:17
strategy. These are all things that you
7:20
need have visibility into and all things
7:22
that would potentially change the how
7:24
you would think about the prices that
7:26
you're going to put on your rate card.
7:28
So significant internal changes
7:31
are things that may include new product
7:32
introductions. It may be the launch of a
7:35
new product, it might be the launch of a
7:37
new consumer application or new website
7:40
that is expected to drive a lot of
7:42
traffic and in turn generate a lot of
7:45
new ads. And here you want to capture
7:48
anything that may impact supply and
7:51
demand dynamics.
7:53
And so, once you have all of this data,
7:55
cuz I've listed a lot,
7:58
uh what do you do? Again, the answer is
8:00
not jump in to start changing prices.
8:03
You need to articulate what this all
8:06
means. Without good process, uh this can
8:10
get overlooked and you just start as a
8:12
good analyst jumping into changing the
8:14
prices.
8:15
You need to create the business plan and
8:17
the list of assumptions. And this it
8:19
gives you a shared understanding of
8:22
what's going to happen. And this doesn't
8:24
need to be rocket science. It can be a
8:26
list of a few bullets and it can include
8:29
things like we expect that demand is
8:32
going to be largely the same next year.
8:35
It might include we expect to have
8:37
largely the same ad products next year
8:40
as we do this year. Or it might be we
8:44
expect to have better performance on our
8:46
ad inventory due to new integrations and
8:50
better measurement services.
8:52
So, often this occurs that you are
8:55
creating a rate card at around the same
8:57
time that your ops finance team is
9:00
creating the plan for the next quarter
9:02
or for the next financial year.
9:04
And in this case, the list of
9:07
assumptions that you could be writing
9:08
out becomes a little bit circular
9:11
because you're listing things that
9:13
you're assuming as part of the broader
9:15
business, you want to make sure that
9:16
your ops fin team has signed off and
9:19
agreed that these assumptions are the
9:20
right ones.
9:22
And then once you've listed this all
9:23
out, you have a few options.
9:26
Option one, a very valid conclusion that
9:29
you might come to is that not much has
9:33
changed and you can leave the rate card
9:35
largely as it is and that is fine. Just
9:39
make sure that you are doing it because
9:41
it is still valid and still appropriate,
9:45
and not because of laziness or because
9:49
you are overwhelmed by the process.
9:52
Option two, you may decide that the
9:54
structure is good and that some minor
9:57
changes are all that's needed to pricing
10:00
and maybe the addition of a few new
10:02
products.
10:03
Or finally, you may have gone through
10:06
this process and I started this video by
10:09
saying we're doing a business as usual
10:11
update and assuming the same structure.
10:14
But you may have gone through this
10:16
process and realized that in fact a
10:18
significant structural change is needed
10:21
because either the external market
10:23
conditions warrant it, your internal
10:25
business is changing around so much, or
10:28
you find that the rate card that you had
10:29
in place that you loved so much is just
10:32
not working.
10:33
Uh if so, either check out my other
10:36
videos on rate card creation or reach
10:39
out to me directly. At the end of the
10:41
day, a rate card update isn't just an
10:44
excuse to reinvent the wheel, nor is an
10:47
automatic price bump. It's a deliberate
10:50
exercise in answering three core
10:53
questions.
10:55
What happened? What's changing around
10:57
you? And what's changing within your
10:59
business?
11:01
Once you align on these assumptions with
11:04
finance and with your leadership team,
11:06
the numbers usually fall in place where
11:08
there again it's leave it as it is, make
11:11
some specific fine-tunes, or time for a
11:14
deeper structural analysis.
11:18
How often does your team run into these
11:20
types of problems and what's the biggest
11:21
challenge that you run into? Please
11:24
leave your response in the questions and
11:27
comments below. I am James Decker. I am
11:30
the Yield Doctor. Thanks for watching.
11:33
I'll see you next time.
11:43
>> [music]