Jade: So today I'm joined by Jonathan Morgan, CEO of Education Perfect, one of Australia's premier ed tech software providers, and we just wanted to have a fireside chat with Jonathan to hear about his experience working with L.E.K., specifically around some pricing strategy work that we did together. So Jonathan, thank you for joining us today.
Jonathan: Thanks for having me.
Jade: Why don't we kick off, why don't you just tell us a little bit about Education Perfect.
Jonathan: So, Education Perfect is the premier learning and assessment tool, online tool, in Australia and also in some other countries, so New Zealand, Canada and some other locations around the world. And we really focus on three things, assessment, instruction and practice.
And we focus on, we say K12, but really we get into our groove probably from year two up to year 12.
Jade: Beautiful. And we're talking about, you've joined Education Perfect, it's coming up to two years?
Jonathan: It's I think coming up to 18 months.
Jade: Okay, so 18 months in. Tell us some of the key challenges that you've been facing as CEO of Education Perfect over the past 18 months.
Jonathan: Yeah, I mean, I don't know if I would say challenge, but obviously with a change of leadership, it's inevitable that you get the opportunity to look at the strategy.
And so, one of the things we did early on was to take the time to think about what the best overall approach would be for the next few years, and that we did. In terms of challenges around that, obviously you want to focus your resources on the most impactful things that give you the best market position. And so probably there was moving some of those resources for some activities we were doing in the past that perhaps weren't paying off as well as we would hope, and really put the payout for us in the long term.
Jade: And how, when you took stock of the situation when you arrived, how did that current status allow you to set a direction or think forward around the strategy?
Jonathan: So I've had the opportunity to do this a few times now. And so, I've got an approach that I quite like, which is essentially looking at all the, you know, establishing the facts, look at the information that's available internally, get an external point of view, think about what the different players are doing in the market, where the industry's going, trends, all this sort of stuff. And it's really the, you know, the outcome of that review almost, that review period, which ran for several months and culminated in a series of meetings to think about, right, how do we really think we can best position EP, both to help students, but also to help other stakeholders.
And ultimately out of that came the strategy.
Jade: And part of this was obviously a strategic review of the pricing. Tell us about why you decided to undertake a strategic review of the pricing and the go to market strategy and the timing.
Jonathan: Yeah, so I think also as part of maybe an approach that I've settled on that seems to work well, there are certain things I like to do. So, segmentation is something I like to look at. Often, I found that can lead to rebranding, which we did. So we rebranded the business in the middle of last year. And then pricing is always an area I want to look at. And I don't know if that's because of the success I've had over the years with pricing studies, or some of my career was spent on the commercial side.
And in that environment, you learn very quickly that pricing is one of the biggest levers to growth. And so probably for both those reasons, relatively early on, we started thinking about how we would do a pricing study.
Jade: So yeah, to look at pricing early on in your tenure, that's something that's part of your CEO's playbook. And why do you front load it?
Jonathan: Well, it can have such a big impact on success. And what I found in different companies I've worked in over the years is that often there is a mismatch between the value being added to whatever the situation is for the customer, and the value being captured. And of course, the problem there is that there's the ability to gain more resources to invest in the product to make it even better, to add even more value to the customers.
And so, getting a level of confidence that the pricing level is at the right point, both to enable us to serve our customers as well as we can, but also to enable us to invest in things that will be valuable in the future, is something that I always want to establish relatively early on.
Jade: Great. And you've obviously had experience doing this before, reviewing pricing, setting strategy. Were there specific goals or objectives that you set out to achieve at the start of this process? And what were they?
Jonathan: I think really the primary goal was to be confident that we understood the drivers of value in the eyes of our customer, because that's very important. And that really leads through to what appropriate pricing would be for different sets of customers we look after. And then also wanting to make sure that we had a structure of pricing that was going to stand the test of time.
So, we had a fairly clear view of the things we were going to invest in over the coming years. We had a strong level of conviction over why those will be valuable in the classroom. And what we didn't want to have to do is every six months rethink how we price our products.
We wanted one simple model that customers could understand, that our staff could understand, that made sense to everyone, and would really see us through the long term.
Jade: Right. So, there's a future proofing piece to it.
Jonathan: Yeah, 100%. That's key. All right.
Do you want to take a stop there, team?
Jade: So originally you reached out to L.E.K. and just talk us through your process behind choosing L.E.K. Why did you choose to work with L.E.K. on this very strategic, the word you used when we originally spoke was around this being potentially transformational. Yeah. Why is it that you chose to work with L.E.K. on this project?
Jonathan: This is certainly a transformational project, without a shadow of a doubt.
And I feel the same way today as I did when we had that first conversation. I think originally, why did I even think of reaching out to L.E.K.? I think L.E.K. is known for being very good at pricing. And so, they're one of the names you consider.
But obviously there's a range of providers. But I think for us, as we got to know the different people who could help us with our project, we were really impressed by all the team that we met. And not only the expertise and the way they were asking the questions, even just trying to understand the situation, but the fact that you so clearly saw pricing as being one element in the context of a wider business strategy.
And I think that's the thing that really came across to us early on. It wasn't like an isolated project that was kind of calculating some numbers. It was a driver behind an overall strategy that would touch many parts of the business.
And through the project, I only saw that behaviour play out through all the meetings we had.
Jade: And why is it so important, Jonathan, that the pricing is just a component of a broader strategy and not just looked at in a vacuum?
Jonathan: I think it's important because if you were to just do a dedicated, almost siloed pricing project, you may miss some of the colour and the importance of thinking about it through the eyes of an overall business strategy. And I also think it's very important from the point of implementation.
So yes, you could create a price book, for example, to oversimplify things. But would you actually understand whether that price book could be implemented in your industry, with the customers you serve, with the staff you have, and the processes internally? And so I think to do that effectively, you need to consider everything in the round.
Jade: I'm glad you see it that way, because that's definitely how we see it, right? That pricing form is part of a broader go-to-market and commercialisation strategy. So happy to hear that that's also the way that you're thinking about the world.
And talk us through the process of working with the L.E.K. team. How was the interaction between your team, the E.P. team, and the L.E.K. team throughout the project?
Jonathan: So I think right from the get-go, you brought in the experts, essentially.
We felt like we had the experts on a global basis, talking to us from probably that first meeting. And so that got our attention straight away. And because they are clearly very good at what they do, even just in a matter of minutes talking, they are adding value by the questions they're asking, the way they're thinking about the challenges.
Then as we moved into the actual project, I think I remember an area of sort of data gathering early on, both from internally, talking to many different members of staff and trying to harness their experience, but also the depth of the data set that you established independently to make sure that, I presume, all the recommendations you were making were grounded in a very reliable and detailed fact base. And then as we moved into the latter stages, the way in which we brought the team and the other stakeholders we have on the journey, and then in particular the focus on getting the implementation right. I think those are the main parts that I saw through the process of working together.
Jade: That's great. And we'll come back, I think, to talk about the implementation, because it's a key part of any pricing strategy. It's not a theoretical, here's a presentation. It's can you implement this with your customers? So we'll come back to that in a second.
But when we talk about the findings and the recommendations, what can you share? What were the key findings that came out of this pricing study for you and the team?
Jonathan: I think the key findings was a pricing architecture that not only resonated with all members of the team, but also we really believed would stand this test of time. And we have a lot of conviction internally that the way in which the structures have been set up now really will support us for many years to come.
And I think that was probably what we were looking for, but we definitely got that. Alongside that, some of the ways in which you helped us think about critical areas like retention, I think really not only impressed the team, but over time they could see how valuable they were to how we were going about things internally. And then just more broadly observations about the way in which the market was developing trends around customer adoption and the way that customers would likely change in their way of thinking about things into the future.
I would say some of those things also came out as a consequence of what we did.
Jade: So a lot of what we try to do is have this holistic picture of it can't be done in a vacuum, how will different segments react and how can we actually roll it out to the market that it sticks and that there's benefit to, as you said, the value is derived by the customers and then we're able to monetize some of that value. That's exactly what I saw.
And the importance of implementation cannot be underestimated in these projects. Talk us through how you implemented the recommendations and what was the role that L.E.K. helped in supporting you with the rollout.
Jonathan: So I think by virtue of the way in which you take a broad approach, you were thinking through the reality of implementing the price book, as we might call it, right from the get go.
And so, I remember there was a way in which you were thinking of segmenting our customers that I think we call pathways. And I remember when I first took the team through this, there was a little bit of suspicion, even apprehension, thinking this feels like what we've done every year. But what I saw as we progressed through the year was a real buy into that approach and a real appreciation that you had managed to simplify a very complex situation in a way that the staff could really engage with and made their job easier.
And when I was catching up with some of our key staff just before and just after Christmas, as the year drew to a close, they all commented on how valuable that was and how it will be a way we use every year from now on. I think the other thing to mention is just how hands on you and the team were on implementation. I mean, this wasn't a case of sort of, you know, let us know if you need a hand.
You were in the meetings with us, in the stand ups with us, even some of the stand ups I think we had from this office where we're going through line by line how things are going and, you know, genuinely working as a collaborative team between yourselves and ourselves, just doing the work. And I think that was something which, if you haven't seen that before, that was really quite surprising and certainly something that the team got great value out of.
Jade: So that's something that we're passionate about, right? Seeing the actual transformation and seeing the pricing strategy come to fruition and see those changes and having that commitment to work with together with your team.
And I think there was a good collaboration and bond that still exists to this day. We're still working together.
We're now a few months down the road from having implemented this or having worked together. Tell us about some of the initial changes or any of the changes to the business, changes with the customers that this study has shown, some initial impact.
Jonathan: So, we've seen huge success with implementing the pricing strategy in many different ways. And I think one of the ways in which we're most pleased is that retention is always important to a business like ours. And we've seen an increase already in the level of retention compared to prior years.
And I think that's as a result of the work that we did together. Going into the future, some of the pricing you've done for some of the new initiatives that are coming to fruition this coming year, I think we'll probably see the full extent of the value through the next probably 12 months or so. But even in these early stages, we've been really pleased with the results.
Jade: And you mentioned the impact on the team. How has it galvanised your entire go-to-market organisation, knowing that they've got clarity on their pricing, a conviction that's built on a solid fact base and they can take that out and go have more robust conversations with customers?
Jonathan: I think certainly knowing that it's steeped in so much research and thorough thought, particularly by people who do this for a living every day and see so many different situations, does help. I actually think almost the strongest part of the project is the simplicity with which you designed our future pricing architecture.
I remember the day you unveiled it to us, sort of with all the synthesis of information that led up to that. And I remember being struck by just how elegant it was. And I had a pretty good feeling right from that moment that it was going to serve us pretty well, because if it's simple to understand for our staff, it's simple to understand for our customers.
It's simple to see how the things we will be bringing to the classroom over the next few years will fit into it. It's probably going to suit us very well.
Jade: It sounds great. And from our perspective to hear you see how it's bringing your team together and setting up for future success is very, very gratifying.
You spoke about retention rates, retention rates. Again, we don't need to share any details, but have you seen any other signs, any upticks, any encouraging signs around this project and how it's impacting your go-to-market and your relationships within accounts?
Jonathan: I think that in parts of the business where we've implemented some of the recommendations, we've been pleased by how easy it was to implement those recommendations.
There's always a level of trepidation when you're trying to make sure that your pricing is right. There's sometimes questions from customers. There's things to work through.
You're not quite sure how the market's going to take it. And in particular areas where we've been working quite closely since the project started, we've seen very good uptake and support for what we're trying to do. And I think the customers see the reason why we're doing it, because it enables us to invest in areas that they're asking us for, and they are wanting support in the classroom on.
In other areas, some of it has started to be implemented. But as I mentioned, some of the capabilities we're bringing to market will come to fruition this year. And so as we start to roll those out, we will get more information on how things are going.
Jade: And have there been any unexpected outcomes that have surprised you?
Jonathan: I think the unexpected outcome was what I was talking about earlier when I was talking about that way of thinking about segments that we call pathways, because there was a level of sort of hesitancy around the approach that you'd recommended, and then seeing that translate into genuine gratitude for simplifying what is quite a complicated situation. In our business, we're looking after 5,000 schools, 50,000 teachers, 1.8 million students. There's a lot of complexity in our business.
You're talking about multiple subjects, multiple grade levels, multiple segments of education, multiple countries. And so for that to work smoothly across all those different environments, it is a lot for somebody to try and figure out on their own. And I think the structure you gave us to simplify all that is, as I said, something which the staff are genuinely grateful for, and are very appreciative that you helped us with this.
Jade: Well, it's definitely for us very gratifying to hear. So share your thoughts on how satisfied are you? What was the experience of working with L.E.K. overall?
Jonathan: We're very satisfied. And I think one of the reasons we're satisfied is because the project went as we hoped it would.
It played out exactly as you and your colleagues said it would. The level of support was extremely high. And even today, I was texting with one of your colleagues yesterday and he was replying very quickly, helping me think through one aspect of our pricing for this coming year.
And you do feel like a genuine partnership has been formed, which let's see where that takes us in the coming years. But you really are an extension of our team. And we reach out when we've got questions and we share information with you and ask for your perspective.
And yeah, we've been very pleased with it from our side.
Jade: Excellent to hear, Jonathan. Want to take a little break?
So Jonathan, as a CEO, as a leader in the Australian global tech business, what do you consider the most crucial aspects of an effective pricing strategy?
Jonathan: Well, you certainly want to make sure you're building it on a reliable fact base that is deep enough and broad enough that you won't end up coming back and questioning the conclusions, you know, relatively shortly after the project, because that's the worst case scenario.
You know, you've spent money, perhaps you started to implement, you realise you've got to miss. And then you come back and you realise that, you know, actually a bigger fact base was needed. So that's definitely an important aspect.
I think the second thing is experience. I think people with actual experience of doing similar pricing strategies for similar companies in similar markets is very important. And I also think the global perspective is also crucial because, you know, we're a company that is in many different countries around the world.
We have ambitions to expand over the long term more globally. And so we want people who are bringing expertise and thinking that will serve us well into the future through the work we're doing. So I think those are probably the three I would mention. And we certainly got those on this project.
Jade: And thinking of that Australian tech company looking to enforce or not enforce or dominate the local market, grow globally, expand customer accounts, there'd be a lot of other CEOs or companies in your position. What advice would you give to them, thinking back 18 months and now we're post this project, the pricing study that we've done together? What advice would you give to other CEOs or other tech companies who are facing a similar challenge on the best way forward?
Jonathan: Well, I would always look at pricing relatively early on.
I think in any business I was running, even if I felt pretty good about the pricing, there's always the potential to think about it in new ways and more creative ways. And it can unearth opportunities you may not have thought about. And so the advice I would give and the advice I do give to other CEOs is, you know, relatively early on in the tenure, do engage some pricing expertise and take a look at how you're going about structuring your pricing for success.
And so I think that's what I'd say.
Jade: You mentioned getting external expertise. Talk me through why having that outside perspective is helpful or what's the impact of having that outside expertise or external perspective in making sure that you as the CEO can go forward with confidence?
Jonathan: Well, you need to know what you're doing on pricing. That's the primary thing.
And I remember coming up through my career when I was, you know, earlier in an earlier stage. And I used to see, you know, people in rooms or spreadsheets trying to figure out the pricing. And, you know, these are intelligent people making sensible, rational decisions about how to do things.
And then as you start to understand pricing more and you realize the psychology that's involved and all the different levers to go into a good pricing strategy, you realize you can't do this on your own. You 100% need someone who is an expert in pricing. And obviously there's different people you can use to help, but 100% you need someone to help you with pricing.
The idea that, you know, it's about being bright and able to use a spreadsheet and all the rest of it, that's really scratching the surface in what is involved in a pricing strategy. And so, you know, that's the main thing I would say.
Jade: Excellent.
And as we wrap up, is there anything that you would, I guess, care to share? How would you sum up overall the entire experience of, we're still in the experience, we're still working together, which is great. How would you sum up the partnership that we've built and the impact on Education Perfect?
Jonathan: I think I would have used that word partnership, because I think that's how I feel and my team feels. I know that the different stakeholders involved in the project have fed back to me that they've been very pleased with how things have gone.
They really like the depth and level of expertise that you've brought to this project. On a day-to-day note, I think the two teams like working together. They seem to enjoy their interactions.
I think we do see you as an extension of our team. And so I think you used the word I would use, which is, you know, true partnership.
Jade: So in the spirit of partnership, I'll say thank you for coming in here and spending some time with us today.
Jonathan: Pleasure.
Jade: Thank you, Jonathan. Thank you.
