Five simple, but critical elements of a Pricing strategy
The Thursday after next marks the start of Spring in Australia. Lawn mowers will be heard and barbecues will have their winter cobwebs blown away, in anticipation of sunny days just around the corner.
These activities obviously beg the question: what would a Pricing Spring clean look like? Here are five suggestions…
#1. Revisit your Market Segmentation
Many companies miss the point of market segmentation. They give their customer segments great names and descriptions, but if market segmentation is not actionable (i.e., you advertise differently to them, you price differently to them), then it’s not worth the paper it is written on.
Take a moment to re-run all your customers through your market segmentation model and recalibrate your segments. This is an exercise the Royal Bank of Canada do every month, actioning the results with segment-specific offers, marketing collateral, and the like.
#2. Optimise Discount Schedules
Customers these days, in both B2B and B2C markets, love a bargain (and accompanying bragging rights) just as much as they love the hunt for that bargain.
There’s no point optimising list prices when no one is paying list price. Instead, take a look at (and fine-tune) your discounting schedules to maximise revenue.
#3. Get Ready for Summer
Many businesses have a seasonal element to them, often most pronounced over the summer. What are your forward bookings or reservations like? Do you have to prepare for the obligatory Boxing Day sale? What are you going to do if your competitor launches their Boxing Day sale earlier than you?
These are all contingencies that businesses should start to think about, and plan for, now.
#4. Scan the Competitive Market
Winter is a time when a new competitor may have been preparing their assault on your market, or existing competitors have been working on a new product initiative.
Do a quick but thorough scan of the market for new or potential competitive threats, be they companies or products.
#5. Go on a Ride-Along
Pricing is not about economic theories: it’s about human (customer) behavior, and you can’t see that behaviour from corporate headquarters.
Spring is a great time to be out and about. Go down to the call centre (if its still in Australia) and listen in on some calls by the telesales staff. Better still, jump in the car with a sales rep and go visit a customer. See how her business if fairing in this tough economic climate. Better still, spend ‘a day in the life’ of a customer.
As with a Spring clean at home, once you get into it, you find there is so much more you can, or have to, do. Your Pricing Spring clean won’t be any different.