CRC 2019 Podcast Series

Ep. 238 – 2019 CRC Series – Aaron Hill – Sawtooth Software, Inc.

Welcome to the 2019 CRC Series. Recorded live in Orlando, this series is bringing interviews straight to you from exhibitors and speakers at this year’s event. In this interview, host Jamin Brazil interviews Aaron Hill, Vice President of Client Services at Sawtooth Software, Inc.

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Hi, this is Jamin. You’re listening to the Happy Market Research Podcast. The next set of episodes are conversations I had at this year’s Corporate Researchers Conference or CRC. This is put on by the Insights Association in Orlando, Florida. I had quite a few interesting conversations highlighting specific companies that exhibited this year as well as a couple of speakers, Wells Fargo, IBM, etc. I hope you have a really good rest of your day and enjoy these short episodes.


I’ve got Aaron Hill with Sawtooth Software. We are live today, Happy Market Research Podcast. CRC is the name of the conference. This is day one. Aaron, it is an absolute honor to have you on the pod.


Thank you so much. It’s great to be here.


I’ve used Sawtooth for, it feels like a hundred years, but it was really, my first experience was 1996. It was a summer; it was sultry. Bryan Orme was the guy… How do you say his last name?




Sorry. Orm. I don’t know why I say Orm-e. Anyway, we were doing models. Jamie Plunkett actually was primary with him. Dick McCullough of Macro Consulting was the guy that we worked for—pretty well, respected in the space from an advanced analytics perspective. Tremendous respect for him personally. Anyway, so tell me a little bit about what the Sawtooth is doing these days.


So, Sawtooth right now, we’re always working on new conjoint stuff, working on faster algorithms, easier access to the algorithms and the programs that we’re working on, trying to make it so that we can streamline the processes that people use to analyze their conjoint data.


So, you guys are renowned for your advanced analytics capabilities, right? You’re basically the inventors of ACH, is that right? Or no, no, adaptive conjoint.


Yeah, we developed the adaptive choice-based conjoint algorithms and adaptive conjoint analysis. Most of what we do though isn’t really all that proprietary. So, we rely heavily on amazingly gifted academics and other practitioners. We’ve got a fantastic community of people that help us along. So, we look at it; all we really do is take what other people have done and then make it available for researchers.


The accessibility, I think, is what’s so interesting about your technology. In fact, you do exactly that: Creating partial factorial designs used to be really, really hard. I know that’s a long time ago, but you guys made that really, really easy. And anyway, so essentially, we’re hearing about how you’re focusing more and more on automating the bits and pieces, the process, the research operation consideration.


We’ve taken our online stimulator now. The simulator, they used to have to be an installed piece of software. We put it online; we’ve made it so that you can share it easily with your clients. So that’s the type of development that we’re working on now.


Are you guys doing an event?


Yeah, we just barely held our Sawtooth Software Conference. We do it every 18 months. It was down in San Diego, it is fantastic event. We had about 220-230 people there.


Smart people by the way, folks. So, if you’re looking for somebody to help you with something complex, like a segmentation or optimal pricing or whatever, this is a really good place to be able to network and meet some of the brightest actually, I would say, some of the brightest minds in our field.


Yeah, I think so. Definitely smarter than me.


Oh, everybody’s smarter than me. So, that’s a low bar. Sidebar: I was surprised or am surprised that Qualtrics hasn’t bought you, given you guys are like neighbors. It’s crazy. It just seems like such a perfect fit to me. But anyway, maybe that’s a separate subject.


We’ll just have to partner with you on something.


Oh, I’d love that. That would be really fun. Let’s do that. All right. That’s it. Okay. So, do you attend many conferences?


Personally, I probably go to about six or seven a year.


ROI on conferences. Favorable, works well?


Yeah. Conferences are still a great place to interact with people and reach out. And you’ve got new people coming in. Corporate Researchers is great because it puts us face-to-face with the people that are actually doing the research that need the data. And so, it’s a great time for us to talk to them and see what their needs are. And so, eventually, we can produce products that meet those needs.


Yeah. Market-driven product, right? That’s exactly how you guys have always operated: building from the customer centricity aspect of it. Your pricing model, now I’m really interested in that. So, it used to be a really big heavy load upfront price point. What does that look like now? Is it more of a SaaS model?


So we’ve gone to a subscription model now; so, you pay for it per year. The most popular one includes all of our suite of tools. We’ve been kind of dropping the price point a little bit. So, you can get into all of our stuff for south of $10,000 now.


Guys, just to give you like a point of reference: There was a company called Web TV, which was acquired by Microsoft for $500 million. We used Sawtooth Software to identify their optimal price point. They were at a $200. This is a particular product and software solution for internet access; it goes back more than a few years. So there are a couple of hundred dollars. I want to say it was $300 off the shelf. And by leveraging your software, we identified the optimal price point, which was a $90 set top-box out-of-pocket and then a $40 monthly fee. The break even point for them was around six months, if I can remember correctly, which I’m probably not. But at that point they were making money. So, as soon as they reframed the product price points, then they actually had a material supply problem or a demand problem or, sorry, a supply problem. So they went from not being able to sell anything to, they just didn’t have anything left to sell. Right? It was off the shelf and that’s when Microsoft swooped in. So it was a less than a two-year journey for them. As soon as they did, we leveraged your software, identifying the prop in order to move units and also maximize shareholder value or profit per unit. That model was realized and then it was just like gangbusters and then that Microsoft acquisition. Like there is not enough people doing sophisticated pricing research that should be doing sophisticated pricing research because I see in a lot of cases that people are not charging nearly enough. They could charge two, three, four, ten times more than the are right now. But because they haven’t taken the time to analyze optimal price point for their market, they are literally stealing from themselves.


Yeah, and they’re not meeting the customer needs. So the nice thing about conjoint analysis, not only do you figure out what price people are willing to pay for your product, but you figure out which features they need you to include in the product. So, once you get the features right and the price right, both parties win. The consumers win because they’re getting the actual features that they need. You’re winning because you’re selling it at a price that you can make money off of and everybody’s better off. Everybody’s happier.


It’s called product market fit. Basically, you don’t accidentally happen to get into it or you don’t have to AB test yourself to it. You can literally scientifically in a study identify the features that go into your product that you need to talk about in order to drive your optimal pricing in order to achieve your full potential as a company. So, if you don’t want to do that, that’s fine, but if you do, contact Sawtooth Software. I’m a huge fan. It’s been an honor having you on the podcast. Thank you so much.


Well, thanks seriously so much. It’s great spending time with you.


Yeah. Honestly, this is a highlight for me. His contact information is going to be in the show notes. If you found value in this episode, please take the time to screen capture, share it on social media, tag myself. I’ll repost it. Really appreciate your time and attention. Have a great rest of your day.