I recently received a direct mail piece from one of my favorite retailers with a massive ad in that proclaimed "We Beat Internet Prices." Now, I am a big fan of straightforward and robust value propositions, but these types of brand exclamations are antiquated and add little value to customers, mainly because they simply reward customers for being good bargain hunters. Instead of simply stating you beat your competitor’s prices, employing strategic pricing and customer engagement initiatives creates real distinct value to your customers by:
- Showing them you can execute on your low price promise and not just talk about it. Employing a holistic pricing strategy meets your customer’s price expectations can indicate to your customers that you are truly ‘walking the walk’ when it comes to offering the lowest price.
- Building your credibility. Understanding your customers’ needs and offering solutions that facilitate decisions and generate engagement builds credibility. Simply shouting that you match Internet prices does little to build credibility with your customers.
- Helping them with real problems. Shoppers don’t need guidance on finding the lowest price — they need to understand how your brand and solution help them compared to your competition.
eBusiness leaders can help lead the charge on creating a robust pricing and engagement strategy by:
- Providing analysis and insight to the merchandising team that compares the behavior of website browsers against product pricing. Any significant changes to specific product conversion rates after you have adjusted your pricing higher may indicate a pricing issue and may be a first-alert system that your pricing is out of whack. Alternatively, if conversion rates of specific products suddenly fall even though your product pricing has not changed, this might indicate that your competitors have adjusted their pricing lower and are more competitive than your price points. This tactical guidance can help your merchants understand commodity products that need to be the low-cost leader versus unique products that can retain higher margin.
- Employing dynamic pricing within marketplaces and comparison shopping engines. Many online retailers employ dynamic pricing, frequently adjusting prices in marketplaces, such as Amazon’s Marketplace and eBay, and other digital channels throughout the day. In peak seasons, commodity retailers may re-price products hundreds of times a day based on market conditions and their overall inventory position.
- Helping the broader organization define their unique value proposition by understanding customers’ behavior online. A recent Harvard Business Review blog by Michael Schrage of MIT makes the point that brands build credibility by helping customers make decisions, rather than being assertive advertisers. This approach can be applied to engagement with your digital channels. Measuring and creating initiatives to improve engagement metrics such as dwell time or social sharing can be more impactful to customer satisfaction than in-your-face “We Beat Internet Prices” ads.
This strategic view of the eBusiness role will help your organization execute on a product pricing strategy that will strengthen your credibility rather than just your vocal chords. What are your thoughts? Please comment below or reach out to me with your feedback.