Ah, pricing. That critical, and in some instances, the critical factor for influencing a consumer’s purchasing decision. But it doesn’t exist in a vacuum, and in order to develop healthy and lengthy relationships with shoppers, retailers need to fundamentally rethink how their pricing strategies impact their customer experience goals and integrate with their loyalty strategies.
Retail Systems Research (RSR) recently published a list of the top 10 things retailers need to know about pricing in 2017 in its “Retail Pricing 2017: The Dawn of Personalized Prices” report to show how a modern retail future demands new thinking on this essential consumer influencer. A few of those on the top 10 list stood out to us at Ecrebo:
Are your price strategies very effective at building loyalty with customers? 90% of top-performing retailers say yes vs. half their peers.
- According to the RSR report, retailer winners are more confident now than they have ever been in their pricing strategies (compared to 2016). This is all good and well, but as we’ve heard time and time again – it’s not always about price! Today’s shopper is, of course, very price-driven, but they still want to know that their favourite retailer truly knows who they are. In recent research conducted by Ecrebo, half of respondents (49%) felt the rewards they received for their loyalty simply weren’t good enough. As RSR states in their report, loyalty does indeed have a price tag.
- In addition to launching the best pricing strategies to build loyalty, retailers can’t afford to not build in a loyalty programme that offers targeted rewards and a greater variety of ways to offer them.
- In the RSR report, both dynamic pricing and better matching of demand and supply dropped off as opportunities in 2017 as retailers have started to put more of an emphasis on top-line sales and margin. This suggests that retailers are evolving their pricing perspective to focus on a “wider, longer-term view of influencing customer behaviour, instead of quick hits like those offered through dynamic pricing.”
- This analysis really stands out to us here at Ecrebo. As we’ve blogged about previously, there is such a tremendous opportunity for retailers to engage with their customers on a more personal level – encouraging more authentic and profitable brand engagement. While tempting, relying on dynamic pricing instead of data on each consumer’s shopping history or shopping basket, only dilutes the opportunity to deliver highly targeted offers to the highest value customers. As RSR states in their report, targeted offers should trump dynamic pricing.
Retailers often neglect the promotion delivery mechanism in favour of optimising the offer in the first place. The best offer in the world is worthless if you can’t deliver it to the right person at the right time.
- Truer words have never been spoken. We see time and time again what happens when retailers try to focus on personalised offers, without considering if they are relevant to the customer. RSR concludes in their report that retailer winners are making sure that personalised offers are also relevant by focusing on the value proposition first, followed by offers to individual customers. In other words, retailers need to get it right the first time when sending offers to customers, and avoid delivering the junk offer.
- This can of course be accomplished by good customer data and insights. According to our very own Sir Keith Mills, “If data and insight can help you tailor your proposition on a one-to-one basis with the consumer then you’ll see your best return. In the future, the one-size-fits-all model won’t provide companies with the same sorts of returns. You might as well do mass marketing.”
In the end, it all comes down to this: companies that don’t know who their customers are, or what their customers are buying, are at a competitive disadvantage. Yes, the majority of customers are sensitive to price, but they are also sensitive to the fact that their favourite retailers or brands don’t take the time to know who they are and what they really want.
We believe that retail winners stay relevant to what the shopper wants. What are you doing to stay relevant to your own shoppers?