Pricefx: Patrick Moorhead

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Patrick Moorhead of Pricefx has been at the forefront of marketing’s evolution for years– and now only due to COVID-19 are many companies finally digitizing…

 

 

Danny:

All right, so for today’s IndustrialSage Executive Series Interview, I am joined by Patrick Moorhead, who is the Chief Marketing Officer of Pricefx. Patrick, thank you so much for joining me today remotely from Chicago.

Patrick:

Great to be here, thanks for having me, Danny.

Danny:

Well I’m excited to have you on here, and learn about you, and your organization. So for those who aren’t familiar, we’ll start off with this, with Pricefx. Who are you guys, what do you do?

Patrick:

We are a early stage SAAS software company, and we provide a very unique capability for B2B price optimization and management.

Danny:

Okay.

Patrick:

The easy way to understand what that is if you’re not close to that, is enterprise companies, normally companies that do more than 100 million in revenue annually, in selling products to other businesses, are often managing complex portfolios of products, thousands of skus, multiple different price points, across a distributed organization with multiple stakeholders, including sales, and needing to determine pricing, in the form of contracts, to their customers in a way that is reflective of the customer relationship, of the historical customer relationship, and also their needs to maintain growth, and margin, and profitability, and account for all the costs of making those products, but also creating growth and profitability.

So we provide a platform that comes with a suite of products that are focused on how to enable dynamic pricing, price optimization, so looking into the discrete item level pricing all the way up to deals, et cetera, across a portfolio, to find out opportunities for growth, to enable promotions in a way that don’t cost margin and profitability. The tool also provides for really flexible price management, which is a capability that’s increasingly important these days, particularly with companies who are selling more and more in digital spaces. And then also a realization suite. So how does all of that insights intelligence, and how does all of that price management capability, get deployed into a sales force, in a way that enables sellers to do what they want to do with customers, but not violate the guidance, and take advantage of the insights generated from the way that pricing is set in the organization.

Danny:

Well it’s certainly a challenge for sure. I can see especially with a large shift to ecommerce, and all kinds of things as well, are you guys exclusive to sort of the industrial markets and manufacturing, or are you in other verticals?

Patrick:

No, we are a horizontal solution, which is unique for pricing software. Our platform is task based, and one of the differentiators about Pricefx is that we have really taken the risk and friction out of using pricing software. So we are a subscription based service, it’s completely customizable to the needs of the organization, it’s a no fuss contract, it’s a cancel at any time type of deal, typical for software as a service. And because of that sort of horizontal nature, we’re able to be useful to almost any enterprise, B2B type of customer, that would look to do better in pricing. Today we have more than 100 customers, and those are distributed across more than 14 different verticals, including industrial manufacturing, discrete manufacturing, process and chemical engineering, aftermarket distribution in auto parts, tear industry parts, packaging is a big sector for us, and ecommerce and B2C businesses as well, including online ticketing, ski lift ticketing, we have a customer that’s big there, and even some big ecommerce software customers.

Danny:

Okay, interesting, very cool. So I’m sure we’re going to dive into that here a little bit more, as we get later into the episode, but for right now, how did you… Tell me: how did you get into this space? What did you… take me back: what did you want to do as a kid? And how did you end up here?

Patrick:

Yeah, that’s a great story, my path has been really a winding one. I was an artist, and a musician as a kid, I went to college and got a degree in fine arts, and painting, and drawing. And when I came out of school in the mid 90s the internet was happening, and I was poor, and so I taught myself how to write web code, html, and javascript, and flash. And was easily able to pick up sort of freelance work, developing websites for customers, and wound up doing really well there, in fact making more money than I was ever going to make as an artist. And that led me down the path of getting involved in the advertising industry, which is where I made kind of the first half of my career. Starting out working in small regional ad agencies on the east coast, and then getting a job at a larger digital ad agency, which kind of took me into the big corporate industrial advertising and marketing ecosystem.

I spent more than a decade in that world, with global ad agencies, and increasingly in global executive roles. And along that path obviously, the growth curve on internet technology, and really mobile technology changed dramatically, from like 2000 to 2010. Inside the ad agency a lot of my job was about looking at technology evolution and understanding how to road map that into solutions for the agency’s clients. And so I got exposed to a lot of innovation, I got to see Twitter in its early days, I saw the sort of rise of Facebook, when you could only use it with a school address, right, with an edu address.

Danny:

Yeah.

Patrick:

And I saw a lot of those stories, and over that time I became aware that really where I thought the action was was on the product and technology side of the business. And so I made the choice to leave the ad industry, and shift gears in my career to get into the technology, and really the data market world of technology. I took a step back in my career, both in title, and pay, in order to make that career change. And then took a job as a sales account executive at a data company, and started to refashion the way that I was working more along the lines of sales and marketing, from the inside out, from a technology company provider. And I’ve been there ever since, I got the good fortune to participate in an exit in that first company. I changed, from that point I spent a couple of years working inside Twitter, which was really exciting. It was right after the Twitter IPO, and really watching from the inside how Twitter built out a multi-billion dollar sales organization.

And then through a mentor I got a break, a mentor relationship I had intentionally cultivated for most of my advertising career, with a gentleman who is a professional investor, and a board advisor, who had come to take over the active CEO role of one of the companies that he invested in. And he called me and asked me if I would be interested in sort of being his right hand, and joining him as the chief marketing officer of this small, 35 person software company. And I took the leap, I left Twitter, I joined that company, and together we were able to raise more than 35 million dollars in venture capital for that firm, double its revenue, and double its headcount, in about two years.

And it was at that point that I encountered the guys at Pricefx, and I saw Pricefx as sort of being in a moment where they were, they had conquered a lot of the difficult challenges of starting and getting a software company off the ground, and were ready then to sort of take advantage of some of the experience that I had built over my career, and the experience that I had built in that start up software environment. I met them, it was a matter of weeks, the fit was really nice. I didn’t know anything about pricing, and I’m a year into the job, and I’m a year into the world of pricing, but I’m excited about the job because I see a tremendous potential for a group of experts in their subject domain of pricing and software to take advantage of what I’m able to bring, which is really the benefit of having worn a bunch of different hats in sales, and marketing, and advertising, over the course of my 15+ years, all to bear every day in this job.

So in this role I’m tapping into public relations, event marketing, digital advertising, brand storytelling, sales enablement, industry relation, sort of all matter in this role, in a really tangible way. And I would really only be able to bring all of that into focus for Pricefx if I hadn’t spent time in my journey in each one of those disciplines along the way. So in that way, it’s a really dream job for me, it’s a great fit for me, because I get to use all of my experience, and they get to take advantage of all of that.

Danny:

Yeah, no, that’s awesome. So you’ve mentioned actually a lot of different areas between event, storytelling, and all these, just, I’m curious, what aspect is your favorite?

Patrick:

Yeah, that’s a good question. My favorite genre of marketing is really brand marketing, and storytelling. There’s nothing more interesting to me than the craftsmanship of a brand’s story, that sort of looks too harness what’s great about the company culture, link that to what’s great about the products that are produced by that culture, and ultimately then linking that to the value that customers can derive by becoming customers of that company. I think that’s… if you think back all the way in my career, to sort of starting out in fine arts, that is truly art in practice. The ability to identify what’s important in each of those different containers. And then link them together, and put a varnish on that that is accessible, that’s exciting, that’s emotionally linked, that to me is really a way that artistic creativity gets materialized in the world of business. And so that’s what gets me excited. The other thing that’s become real exciting to me in this job, and over the last few years, is the level at which marketing is becoming accountable, and driven by data, and so the idea that you can have this sort of very artistic creative approach to telling a story, but that you also then can deploy that story and measure it, not just on revenue, but measure it in terms of engagement, in terms of pipeline, and funnel growth, and really understand is my story connecting with the audiences that it’s designed to connect with, that’s a super cool thing that is, I think, only available to the modern marketing world.

Danny:

Oh yeah, actually those two areas you mentioned are my favorites, it’s really blending those worlds and I think it’s super exciting to be able to do that because you can legitimately build out a real business case for that though now, whereas before it was a little bit more like hypotheses, like “Well it’s just creating this feeling, it’s good,” and, “Well show me the… where is the black and white impact on the bottom line, or even the top line revenue? Show me that.” “Well, it’s really hard.” Well now, because of all this great new technology we can do that, you can look at engagement, you can see it, how, it’s not all rainbows and kisses, right, because there’s still some challenges in there for sure, but by and large, you can still measure that kind of engagement, and actually draw a line, if it’s set up correctly, to see the direct impact to revenue, and what you see, sorry, you’ve hit a core, I get excited about this.

Patrick:

I know.

Danny:

What you see is that, oh wow, people, the more creative, the more heart, the more purpose there is in that content, the more you have a really true storytelling brand around it, the better it’s going to perform. The better it performs, means that it has a more positive impact on the bottom line, maybe we’ve made the connection. Thank you Mr. CFO.

Patrick:

Yeah.

Danny:

Okay, all right, we’re going to go ahead and approve that, right?

Patrick:

Yeah. And I think that’s exactly right, and there’s something about the idea that if you’re able to create a brand story that connects emotionally with customers, and that story is driven off of, sort of authenticity.

Danny:

Yes.

Patrick:

Of the company, and the people that work at the company, and then you can find a way to connect that in a commercially meaningful way, that results in pipeline, and funnel, and revenue. There’s nothing to me that’s better than that, right. To be able to take truth, make it beautiful, and make it relevant for an audience, so that it’s not I’m getting you to buy this story, but I’m selling you something else, that actually there’s a seamlessness to it.

So the addition of all of the technology really, I was fortunate enough to meet and know a guy named Rishad Tobaccowala, who is a chairman of Publicis Groupe now, but he started in an ad agency world years and years ago. And his analogy really stuck with me to understand the sort of data driven marketing world that we live in, which is all of the technology that we have deployed around data, and analytics, and ad targeting, and all of this stuff, is really plumbing, right? And plumbing is plumbing. It’s only as useful as the water that you put through it. And artful brand storytelling is the water. And so you can build amazing, elaborate plumbing systems, but if they leak, or if they only deliver dirty water, then the plumbing is malfunctioning, right. It’s pointless. And so I like that analogy, of the idea that hey, don’t forget, plumbing is important, plumbing gets stories to the right places, in multi-channel, and all this data, right. But if fundamentally you’re putting dirty water into a complex plumbing system, you will get dirty water out the other end.

Danny:

Yeah.

Patrick:

And storytelling, in today’s data driven world, is the water of marketing plumbing.

Danny:

That’s a great analogy, I love it. I couldn’t agree more, no you’re 100% right. I mean you so easily get lost in the measuring, and the work flows, and the integrations, and the automations, like all that stuff. And I admittedly get excited about that stuff, that stuff is cool, but you can get lost in that so easily. You’ve got to go back to the core, to your point.

Patrick:

Yeah.

Danny:

So we could probably talk another three hours on this, but I want to kind of move on to some of the other areas right now. Let’s talk about… obviously we’ve got this whole, like COVID issue, this whole challenge of Coronavirus, and it’s creating just a whole host of challenges, and opportunities, quite honestly, for a lot of organizations. What are some of the challenges that you guys are seeing in the industry relative to pricing that have been affected because of the Coronavirus? And what are some problems that were still… that were there, not affected, those problems, those still exist.

Patrick:

Yeah. There’s quite a few, and it’s been really interesting and sort of the discrete pricing optimization and management universe, to see how some of the challenges have existed, and now are more acute, but also opportunities. I think in general my take is that the global crisis has polarized things industrially. There have been clear winners and losers, and there’s not a lot of middle ground. So from a pricing point of view, organizations look at pricing, and it’s very pragmatic exercise, where you want to be able to primarily manage pricing around the products that you sell in a way that is scalable, and maintain some level of sanity as you’re doing that, right. So we don’t want to give away our margins, but we do want to offer promotions, we want to aim for a certain level of profitability. How are we going to get that? And so as the crisis has unfolded, you’ve sort of seen companies who fall on the side of, oh man, they’re really going to get crushed, because, for example auto manufacturing is at a standstill. So all the downstream industries around auto manufacturing, parts manufacturing, distribution, suffer. At the same time you see other industries that are having the opposite problem, where they have so much demand that they’re actually not built out to deal with it, right.

Danny:

Yeah.

Patrick:

So anybody that’s adjacent to sort of medical supplies, medical device componentry, anything in that area, anything that would be in demand as a result of the crisis, now you have overclock on those systems, and then you have on the other side sort of latency, right. So you have this severe sort of delta. I think the interesting thing that we’ve seen is that many companies have responded to the crisis by saying the same thing, which is “Wow, it’s showing us we probably shouldn’t have waited to do better with how we do pricing management, and pricing optimization.” Either because now it really matters, and we want to go re-look at our pricing, and re-deploy our pricing, in a rapid, short amount of time, in order to try and survive.

Danny:

Yeah.

Patrick:

And we’re finding out that we deployed a price management and optimization system that doesn’t work as fast as we need it to work. So we get those calls, because our solution is highly flexible, we can deploy a standard set of price optimization management capabilities to an organization in under six weeks, and sometimes as little as a couple of weeks. Many of our competitors don’t have that ability, they have six month, nine month, twelve month implementation and customization cycles. So we’re seeing an uptick in those things of saying “Wow, we really need to do better, we need to do it fast, we shouldn’t have waited, but we did, now we’re sort of ready.”

On the other side, we see folks saying, “Well since we are sort of slow,” or, “Since we do have a sort of lull or a slow down, maybe now’s the time to look at implementing some more robust changes in the way we approach pricing optimization and management. Provided we can do that relatively quickly.” Now the crisis kind of provides an opportunity to step back and look at things in a radically different way and say, “Well hey, if we’re sort of shut down at the moment, maybe it does make sense to take this time to look at throwing out what we had and implementing something new that is going to serve us better on the other side.”

Danny:

Yeah, absolutely, and I think a lot of companies right now, that is a big challenge, and it reminds me obviously of 2008, when you got into the recession, and there’s this question, it’s funny actually, that we were talking about brand a little bit before this, a little coincidentally maybe, but there is a big impact between pricing and brand. I mean there is a little bit of a relationship there. Have you seen companies… I guess where I’m going with this is that, depending on the luxury product that you have, we’re talking B2B, so let’s say B2B industrial, you’ve got the top of the line whatever, tank, that you’re manufacturing, and your brand is synonymous with top quality, and everything, in terms of like lowering that price during moments of disruption, or challenges right now, how does that… that can negatively impact your brand, but then maybe there’s also areas of like “Well, gosh, in order from a survivability standpoint, we have to do this, and we have to give up margin, because we, from a top line revenue perspective, there might… if we don’t have any dollars coming in, there is no margin to reduce, or keep up.” So have you been seeing a lot of that going on right now?

Patrick:

I think that, well certainly all that pressure exists, and is amplified because of the crisis, right. But I would argue that’s not new, it’s just amplified, right.

Danny:

Yeah.

Patrick:

Some of our anecdotal data is that more than 70% of companies over 100 million in revenue that could make use of a platform price optimization and management tool, don’t. In fact operate their pricing management and guidance from offline solutions like Excel. That’s kind of an astonishing number, if you take into account what’s in there. That’s all the way from companies that are barely doing 100 million in revenue, all the way to companies that are doing multiple billions in revenue.

Danny:

Yeah.

Patrick:

And so if you think about almost 3/4 of enterprise customers managing pricing for their enterprise with, kind of a horizontal tool, but an offline tool that’s not built to do that at scale, a spreadsheet tool. That by default means that that problem you’re indicating about, “Oh how do we cut prices and not lose the company? How do we… is it possible for us to operate on a lower margin, or what kinds of sacrifices would we need to make in profitability, in order to not, you know, lose the whole game, through the course of the crisis?” Reveals that that tool can’t do that, and actually that tool was never designed to do that, and you’ve been limping along with that tool for quite a while, and got away with it because you didn’t have the pressure that you have as a result of the crisis.

Danny:

Yeah, so I mean, pull out your crystal ball, here for a minute. What do you see companies, what are some of those adjustments, or those changes, for better or worse, that you see, maybe in the short term. So, let’s say we climb out of this thing, and I guess by climbing out is super subjective, I don’t know. But short term, two to three months from now, versus six to twelve?

Patrick:

Well, I don’t know, I saw a funny comic on Twitter the other day. There’s been a couple that have circulated around. The first comic that I saw was, it was actually I guess you call it a meme, but it was a fake survey question, and it said “Who was the catalyst for your digital transformation initiative? A: the CTO, B: the CMO, or C: COVID-19?” And it was COVID-19 circled.

Danny:

That’s awesome.

Patrick:

And I think that’s right, right. There was another comic that sort of was a cutaway view, where it had a bunch of people in an office, and they were obviously like the executive leader of the meeting was saying “No, we don’t need to do a digital transformation, we’re fine with things as they are.” And then you can see outside the window, there’s a giant wrecking ball that says COVID-19, sort of swinging towards the board room.

You know, I think those are true. I think that what’s the positive upshot is it’s going to show companies that being digitally nimble, that adopting newer generation technology solutions for mission critical functions in the business is not optional just because it has a marketing speak title of digital transformation. And I think you’ll see some near term winners and losers right, around that. There will be companies that either took advantage of the crisis to rapidly enable themselves around things like pricing, with new tooling that enables them to be on a much faster footing, or you’ll see companies that already had made those decisions prior to this, that manage to make it through easier, or that even potentially grew through it, and you’ll also see companies that A didn’t make those choices early enough, and B didn’t move when they had to, and got walloped, right. But in general, I think that the crisis is going to have a big impact societally, and certainly in enterprise, of further accelerating digital transformation for companies.

Danny:

Yeah.

Patrick:

It’s going to emphasize, right, and you can see that just from the fact of how we’re doing this interview.

Danny:

Yeah.

Patrick:

And the amount of people who are on Zoom calls right now, while you and I are on a Zoom call, right. That is a digital transformation that has quickly taken root across the world. It’s just one example, though, of I think how the crisis likely will force digital transformation onto businesses that maybe were on the sidelines.

Danny:

Yeah.

Patrick:

Because they felt like it was okay the way it was, and now all the sudden, the crisis has made it non-optional. I think pricing certainly is going to be one of those places, right. So again if you think about our data point of 70+% of enterprises who could benefit from an enterprise price optimization and management solution, currently not using anything other than spreadsheets, that’s a great example of a place where, wow, what are you waiting for? And if you’re not getting clobbered as a result of that today, are you prepared to say that this was a one and done, and you don’t need to be ready for the next calamity that comes along? I don’t know.

Danny:

Yeah, yeah. I think you’re 100% right, I think the digital transformation piece is a big thing. It was hot, it was a big thing, a lot of companies were making that pivot, and starting to adjust, but there’s a lot that didn’t, or… and now, you’re right, like those cartoons, absolutely make sense, for better or worse, and I think honestly it is for the better. It’s a motivator, like okay, we’ve got, not like it’s a nice to have, it’s a got to have, really, at the end of the day, it’s a got to have.

Patrick:

There’s a lot of data out there too, I can’t site the source, I’ll do a bad job of reading it out, but if you look at sort of company behavior around the 2008 economic recession, there’s clear data that shows that companies that invested in technology, and digital transformation initiatives, during the recession, materially performed better in the recovery than companies that didn’t, that kind of hunkered down, and tried to stay the course with what they were doing, right.

Danny:

Yeah.

Patrick:

It’s counterintuitive, because your instinct as a human, right, fight or flight, is sort of “Oh man, the world is getting really challenging, and aggressive, I better just circle the wagons and hide.”

Danny:

Yeah.

Patrick:

But there’s lots of evidence to suggest that when the world gets hard, it’s time to kind of double down on aggressive innovation.

Danny:

Yeah, there’s a similar analogy I have, so I’m a private pilot. And so they train you, you’re taught that typically, you always want to have air going over the wings. Maybe that’s cash flow, I don’t know, we’ll say that’s cash flow. But there’s a natural tendency, if you get nervous, or you lose an engine, or something, that you pull back on the stick, that… because you think okay, well that’s going to make me climb. Well you can’t do that, it’s counterintuitive, you actually need to push the nose down. So let’s say you lose an engine, you’re like “Ahhh!” No, you need to push your nose down. And yeah, you’re going to descend, but you’re going to descend a whole lot slower than if you pull way back up. And so it’s one of those things that you’re kind of like, “Ahh!” Counterintuitive, but you’ve got to do it.

Patrick:

Yeah, that’s right, yep.

Danny:

So, well great. And I’m sure, I know, I know, I know for a fact we could go on for hours, and hours, and hours, and hours, and hours.

Patrick:

Yeah.

Danny:

Because I’ve really enjoyed this conversation.

Patrick:

Me too, thank you.

Danny:

But for those that want to learn more, I’m sure that they can go to check out your website, is it Pricefx.com, is that right?

Patrick:

Yeah, P-r-i-c-e-F-X.com.

Danny:

Yeah, okay, perfect. And I’m sure, yeah, if you have any questions, that they can find out all the information, all the things they want over there.

Patrick:

We have a really fun automated chat bot on the site, so you can come in there and use the chat bot to help you find content you’re interested in.

Danny:

Awesome.

Patrick:

And you can even get in touch with our sales teams and book demos, and everything else through the chat bot on the home page.

Danny:

Excellent, that’s awesome, I love chat bots. So, that’s a great, great innovation. So, well Patrick, thank you so much for the time, I hope that things warm up for you, and the weather gets a little better there for you.

Patrick:

Thank you, appreciate it.

Danny:

Well, we’ll catch you next time.

Patrick:

Okay, appreciate it, thanks for having me.

Danny:

Thanks. Well there you go, that’s the latest IndustrialSage Executive Series, with Patrick Moorhead, who is the Chief Marketing officer for Pricefx, so the letters F-X, dot com. And you can check out more about them if that’s something that you are interested in, and you’re going through, and you need to figure out, as Patrick was talking about, how this whole digital transformation piece is really, look, it was important before, but it’s even more important now. And if that’s something that you need to look at, your pricing, your optimization, maybe you have a lot of different skus, go take a look at them, and see how they might be able to help you solve some of the challenges, in the near present, or the near future.

So that’s all I’ve got for you today, thank you so much for watching, and I will be back next week with another episode of IndustrialSage.

 

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