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How to Create Positive Pricing Experiences
Can the topic of price actually enhance the business-to-business (B2B) customer experience? We’re not talking about delighting your customers with a steep discount—we’re referring to a price-point, pricing model, or pricing process that strengthens customers’ perception of your business and builds loyalty and trust. In other words, an approach to pricing that removes the hassle and stress from the purchasing experience and replaces it with a sense of value and satisfaction.
Pricing can be a daunting topic for parties on both sides of the transaction, but it doesn’t need to be. There’s a strong (negative) correlation between margins and poor customer experiences: companies, figuratively and literally, pay a price when the topic of price sours the customer experience. Yet, firms that proactively manage pricing strategy with the right tools in place can produce significant top- and bottom-line results. They’re using price to enhance their customer experience.
Throughout our work with clients on pricing, two themes have emerged that can help to translate pricing into a positive element of the overall customer experience:
- Value reigns. Consider this quote from Warren Buffet: “Price is what you pay. Value is what you get.” Focusing on solutions, outcomes, and results—and not necessarily price points—is one way to address what really matters: what the customer cares about.
- The process matters. When the price is right but doing business with a company leaves little to be desired—this is something that can be managed to avoid problems.
Promoting Value, Not Price
Over and over, observing the flow of the sales process, the focus on value disappears when the discussion turns to price. It’s almost as if a gate slams shut, closing off all the valid reasons that had previously been communicated to the customer when the discussion shifts to price. Consider these three approaches Blue Canyon clients’ have taken to overcome this:
- Moving down the Good-Better-Best spectrum to the product that matches the price request made by the customer, carefully pointing out the tradeoffs that are implied by that choice. This allowed our clients to show respect for the customer’s price request while sharing the value contributions associated with the high-priced product, first and foremost. This also helps link value and price in the mind of their customers and keeps the experience focused on the benefits of their solution.
- Emphasizing that not every price challenge is a real threat. There are segments and customers in just about every market that are willing to pay for product and service superiority—they’re not holding out for the “lowest price.” Reinforcing the non-price advantages (i.e. value) that they offer enabled their sales team to avoid unnecessary participation in the vicious cycle of price-based competition.
- Giving customers an option that they could refuse. This strategy offers the best of both worlds. The firm didn’t take a major risk because it continued to offer a low-priced option, but it gained upside potential from customer segments that wanted more and were willing to pay for it. Their message emphasized the value associated with the high-priced option, but implicitly told customers that the decision on price was theirs—and that either way, they would get what they paid for.
“Create value to capture value” is an enduring lesson, one that can help to ensure that the discussion about pricing becomes a positive element of the customer experience. If your firm is delivering value to your customers, you can be rewarded for it, through a price premium or otherwise, and customers can be comfortable with that fact as long as they see the link between value and price.
Streamlining the Process
Often, it’s the pricing process, not prices per se, that trigger negative reactions from customers. Customers “run through the gauntlet” in order to make a purchase: delays, approval processes, duplicative paperwork, information gaps, and more. Even if the price itself is pleasing, the customer’s experience is oftentimes more influenced by what they perceive as being put through the wringer.
How have our clients transformed their pricing processes to deliver a better customer experience? Quite simply, by being “easy to do business with.” This might mean shifting a meaningful portion of their products/purchasing opportunities online, where the buying process (and pricing) can be more straightforward and convenient. In Blue Canyon’s white paper, Business-to-Business eCommerce: A Call to Action, our understanding of these effects emerge because of the phenomena involving transference of expectations—B2B buyers expect to have a similar, more simplified digitally-enabled experience that they enjoy as business-to-consumer (B2C) buyers.
Pricing will always be part of the customer experience, and ensuring that it’s a positive part will become more and more critical. Firms that take a proactive approach to pricing and find a way to explicitly link price to the value delivered to their customers are going to be rewarded. And pricing processes that are customer-friendly and that value the customer’s time are ones that will increasingly become “table stakes” for many suppliers. The rewards from making pricing a positive part of the overall customer experience can be enormous.