It’s hard to put a price on customer loyalty, but thanks to technology and flexible pricing models, some marketers are trying. The trick is determining what’s a fair price.
Advancing technologies are enabling marketers to price products and services based on intricate detail, such as product shelf life, individual consumer behavior, demand and proximity, according to a recent story in The Curve Report.
With new flex pricing models, the story states, “Prices shift based on a wide range of variables, from external factors like expiration date and stock market fluctuations to personal data such as proximity and social clout. And while shopping history−based loyalty programs have helped consumers score deals for decades, expect these programs to gain new dimensions.”
The topic is not necessarily new. In fact, a blog item I wrote more than a year ago addressed practices by some companies that priced offers based on the consumer’s profile. The risk, I noted then, was of being misinterpreted as unfair.
That still applies. Historically, most organizations looked at price as a default promotional tool –when all else fails, you can sell products by cutting the price. But now data enables us to use price as a strategic lever to get the right customer to make purchases. It can literally be used at the customer level as a way to promote selective trial of products or to recognize specific behaviors.
But there is a risk, and that is of under-defining the data. Some consumers may behave as if they are not price sensitive, but in certain categories they may be hyper price sensitive. If they are overlooked for certain promotions, they may feel the brand is not offering a fair opportunity across the board.
However, if we use the data as a way to define the full spectrum of consumer preferences and activity, across categories and channels, price can be used to ensure customers are introduced to the right products and services in the right way. A shopper may pay top price for mangoes, for instance, but balk at expensive goat cheese. She may be willing to spend more on a Friday than on a Monday, or less in an urban store than a suburban store. Add mobile and online channels, and the variables multiply.
We certainly should be prepared, because some consumers might soon demand to know their price. According to the Curve Report story, it tested several new flex pricing models and as many as 76 percent of 18- to 49-year-olds were interested in at least one of them. Two-thirds (66 percent) said they’d prefer pricing that is flexible rather than fixed.
So instead of seeing price as the last line of defense in a fluid marketing environment, think of it as one more strategic arrow in your quiver. Just be sure it hits the target, fair and square.