Integrating Value-Based Pricing with Product Leadership - an interview with Ed Arnold
Ed Arnold is a Senior Advisor at Ibbaka. See his Skill Profile on Ibbaka Talent.
Ed Arnold led product development at LeveragePoint, a SaaS solution for value-based pricing and sales and at Forrester Research where he was VP Products for CX (Customer Experience) Analytics. He is a leading expert in value based pricing and go to market strategies and how these energize the customer journey.
This compelling combination of value-based pricing, product leadership and customer experience (CX) experience gives him a unique perspective into B2B growth strategy and execution. Understanding the experiences that have shaped his career gives insights into the range of skills needed to lead growth in 2021.
Ibbaka: Tell us about your background and how your experiences have formed your approach to pricing and value?
Ed: I started my career at a small strategy consulting firm in Boston fresh out of college (I had a bachelor’s and master’s degree in Political Science). Management consulting and investment banking were the hot industries then, so I started as a research associate and that’s where I learned the basics on marketing research, strategy, business and client management.
Then I got my MBA at NYU and found another consulting job at a firm in Chicago that later merged into DiamondCluster (now part of PWC). I moved up in the consulting ranks, managing large-scale projects: organizational transformation, workforce automation, and custom e-learning. Diamond at the time was known as the killer app consultants.
After Diamond, I shifted my focus to working with software companies. I did implementation and change management work for start-ups and later for Communispace (now C Space). From there I went to Monitor-Deloitte in 2005 to help lead development of their e-learning apps. In 2009, we had the opportunity to spin out that group and so I became one of the founders of LeveragePoint, which is a value-based pricing SaaS platform. After that, I worked at Forrester Research as a product leader for their CX analytics products.
So In terms of my experiences, it’s interesting to note that the key pivots in my career coincided with major historic disruptions: the dot-com era and the dot-com crash, the financial crisis of 2008 and now as we speak the pandemic. I think that’s kept me grounded in many respects, forcing me to be very practical in how I approach business problems, as well as the importance of being nimble. It’s been a steady accumulation of hands-on knowledge that’s constantly being tested and adapted to new situations.
Ibbaka: How does your understanding of value and pricing shape your approach to product and service management?
Ed: Value-based pricing or value strategy is a great technique to understand customer needs, particularly for B2B customers. As a product leader, your primary responsibility is to be the trusted source of truth in what customers need and then align that need to your product strategy.
A value-based approach really focuses an organization on what it wishes to accomplish strategically. It’s important to get the voice of the customer from multiple dimensions, both directly and through the various processes a customer interacts with, be it sales, marketing, customer success, or even finance. One has to know all the touchpoints and whether those interactions create or destroy value for that client. So it’s particularly helpful to analyze these touchpoints across the entire customer journey and whether they add value or not.
As a product manager, one of the big challenges is being overly fixated on features and releases, which can push you toward only developing shiny objects, or responding to the squeakiest wheel. A value perspective gives you a way to really assess features in terms of customer benefits, and even further to measure the impact on the client’s business success. It helps product managers zoom-in on what really creates value for their customers.
Ibbaka: You’ve recently published the “B2B Digital Product Growth Playbook.” Can you share what motivated you to create this playbook and who is it meant for?
Ed: The playbook is meant for product leaders in the B2B space who manage a solution that includes both digital products and professional services. Or even a physical product, like with Internet of Things. So it’s meant to help leaders of such hybrid companies drive growth and to overcome the roadblocks they will encounter.
Recently, there’s been a lot written about product-led growth, and I’m a huge fan of that, especially the OpenView blogs. Companies that are able to execute on it have been super successful even during the pandemic. Reading the blogs, it seems like all you need to do is adopt a product led growth strategy and then away you go.
But that didn’t square with the reality I was hearing from people in other companies. I think the reason is that when you look at the company examples for product-led growth, they are pure SaaS plays; like Slack or Hubspot. Hybrid companies really need something else because they have different challenges and this wasn’t being addressed in the literature I read. They are dealing with more complex users, solving more complex problems, managing both product and service, and that these are the things that can get in the way of their growth. So I wanted to leverage my experiences across consulting and product leadership to create the playbook that I would want to have if I were going into a new product leadership position.
Read Ed Arnold’s thoughts on “Product Led or Service Led Growth: Which is a Better Fit for Your Business?”
Ibbaka: What is critical for execution? What do people in these service-led growth, or hybrid Internet of Things companies need to do to execute?
Ed: They really need to understand what value they are creating for their clients. They need to understand value and specifically differentiated value across the entire customer journey. Doing this allows them to focus on the things that create the most value. Every client touchpoint needs to be as efficient as possible. It is critical to show value from the very first touchpoints and to find efficient ways to do this.
I was managing hybrid products at Forrester. They included hardware, data, software and services. But from the client’s perspective, that all merged together to create value. When you have a more complex offering, the execution of those piece parts needs to be in sync and organized around a common definition of what the client needs to accomplish. Again from a client’s perspective, it’s all one experience. You must be able to align all the different pieces of the organization to deliver the value that makes the client successful.
If you can do that, then you’ll get the growth you want.
Ibbaka: What skills does the organization need in order to execute on digital product growth and create the kind of client experiences you are describing?
Ed: Listening to the customer is a very important skill. Being able to distinguish the real feedback from the noise both qualitatively as well as quantitatively is critical.
Another skill is what I’d call agile execution – adapting your digital product and service models to meet changing needs. You might think that services would be easier to change, but it’s not. Many consultants develop strong habits and once they’ve invested time to establish their process they are slow to adapt them. The ability to change how you serve clients is critical. This can mean automating parts of the service, finding new ways to collect and interpret data, or even retiring services that no longer add value. For example, consultants love to do live demos and presentations because they feed off the interaction with the audience. But these sessions are largely inconvenient and inefficient. Today most customers prefer to access content on demand and in bite-size bits. Many of these touchpoints will become digital.
Product leaders in particular need to have excellent cross-functional collaboration skills. That is being able to engage with different parts of the client’s organization, as well as internally with the design, engineering, and product teams. Plus the ability to align those efforts along with the marketing, sales, and the customer success teams.
Finally, business leaders need to be able to clearly articulate their value strategy. One reason I created the playbook is to give them a series of templates that helps them assess their product-market fit and develop a plan for creating, communicating and capturing value.