Drew Marconi, co-founder of Intelligems, shares his take on the importance of price testing for ecommerce brands to increase sales and improve margins.
Drew Marconi is an experienced leader of operations and finance teams who decided to bring his knowledge into the ecommerce space to help merchants increase their margins. In this episode, Adii Pienaar and Drew discuss why brands need to build a culture of testing and iteration and how this can help them achieve more with their resources.
Meet Drew Marconi
Drew Marconi is the founder of Intelligems. With an economics degree from Yale, it is no surprise that he led McKinsey's operations and finance team in New York City in 2016.
Drew then joined Via, a ride-sharing company in NYC, where he became the VP of Marketplace operations and learned about dynamic pricing algorithms. This is where he met his co-founder Adam Kitain. Later, Drew and Adam decided to go out on their own and bring their learning, mindset, and toolkit to ecommerce operators through Intelligems.
Intelligems is a powerful revenue optimization tool for ecommerce brands to increase sales and improve margins.
Pricing is multi-dimensional, and having a team of data analysts constantly running tests to generate rapid insights for your business is unrealistic. This inability to run tests often leads to leaving money on the table.
Intelligems makes integrating and launching new tests easy so you can focus on increasing profit. It gives you access to optimization tools that power the growth and profitability of companies like Amazon and Uber.
No more finger-in-the-wind approach to pricing. With Intelligems, you can achieve 5-20% more profit in your store.
The Checkout episode 40 unpacks:
In today's episode, Adii Pienaar and Drew Marconi discuss the need for brands to be more dynamic. In this conversation, they dive deep into retention methods, increasing margins, and what it takes to make more with what you already have. Here are the highlights:
[0:10] – The definition of testing in the DTC/ecommerce space
- The key distinction between price testing and conversion rate optimization testing
- Analyzing price testing and its impact on profitability, conversion, and AOV
- “You need to figure out in this environment, what price maximizes the yield from your business? What price is going to find that sweet spot of conversion rate, the profit you're making per order, and the right types of customers? And you can't sit and wait and see for a year anymore.”
[7:34] – The maximization of resources
- “I think most brands should be focused on profitability and margin as those key metrics.”
- What being “dynamic” really means in the ecommerce space
[19:05] – The importance of communicating pricing changes with your customers
- “Tell your customers that you are lowering your prices. That email will do very well. When you say — hey, we just lowered our prices, buy now to lock in — I mean, obviously, that should be after you're confident, you've done your testing, but that's a great occasion to talk to your customers. And I think one that people often miss out on.”
- Why crafting a story around your pricing change can go a long way
[19:55] – What you need to know before price testing
- How to prepare before moving forward with price testing
- Why you should keep historical price changes documented
- “You should come with a hypothesis and, a tool like Intelligems or other testing tools, try to make it as easy as possible to run tests and understand what happened.”
[24:47] – The benefits of empowering your team to make pricing decisions
- Giving your team permission to play with pricing can be beneficial
- “What's super important then is that they keep their CX team informed of what's going on. Price testing is pretty low risk if you do it correctly, but there's still a chance someone sees a different price and an offer doesn't work. This is why you should empower your customer support or experience team to honor a lower price for someone.”
[27:04] – Reacting to external changes affecting your operations
- How to go about increasing prices when your supplier increases your costs
- “You can build some suggestive models of how you think people might react to those changes. So, if we change this about shipping, how much extra revenue would we have, and what are a couple of different scenarios for customer reactions?”
- Taking a long-term approach to pushing down costs in specific product areas.