A robust and intelligent pricing strategy is a firm foundation for customer loyalty, and if you’re not achieving this then you could be putting customer relationships at risk. Particularly during the pandemic, product and service pricing came under a lot of scrutiny. Not only is the UK public dealing with the financial aftermath of the pandemic, but the cost of living has been rising since early 2021. This means the wrong pricing strategies are leaving businesses vulnerable to their competitors – three quarters of consumers say they encountered unfair pricing during the pandemic and were less likely to shop with that business again as a result. Customers, through their own choice and externalities are becoming increasingly sensitive to price. This is especially true for people bearing the brunt of the rising cost of living. The wrong pricing strategy could quickly force consumers to change brands despite their loyalty. Illustrating the importance of pricing research, as the price adjustment to a product or service will likely see a better return on ROI then keeping prices high and excluding customers.
A hyper-competitive market
There is barely enough space to swing a shopping bag in many markets today and customer loyalty, while it might be hard won, is very easily lost. There are always alternative brands to consider, cheaper products and better deals and many consumers have no qualms about jumping ship. If your business is getting its pricing wrong then you’re virtually forcing your customers to walk the plank. Recent research shows that if customers feel like they are not being treated fairly on price then they won’t return. Take the grocery sector, for example. During the pandemic, 74% of consumers in one survey said they had experienced price increases they considered to be arbitrary and unfair. As a result, 44% of consumers said they would not shop with that retailer again. In an already hyper-competitive market don’t let a lack of pricing research be the reason your customer loyalties lapse.
Pricing is key to shopping experience
For around two thirds of shoppers, price is either “extremely” or “very important” when it comes to their shopping experience, according to a report by Retail Week. We all like to feel as if we are getting value for money and if you want to ensure your customers feel validated in their spend then pitching the price right is vital.
Does AI have a future in pricing research?
Pricing strategy and models can be something that many industries struggle with – it can be especially difficult to get this right given the speed at which markets change and fluctuate. Technology is increasingly providing solutions where pricing is concerned, and offering opportunities to be more responsive and swift when it comes to getting the pricing right. AI provides the technology and tools to automate the pricing process, removing some or all of the manual elements. There are clear benefits here in terms of accuracy and speed, which could give many more enterprises opportunities to get the pricing right.
Pricing research holds the key to customer loyalty, pitching your products at the right cost to ensure that customers feel your brand offers a positive experience – and one to which they want to return. Key to any relationship, one side doesn’t want to feel the other is taking advantage of them. This is true when pricing is involved. By conducting thorough, in-depth pricing research a product or service can be properly priced to increase profit margins and deliver value to the customer.