Improve Customer Loyalty with your Pricing Strategies
Do you attract visitors to your e-Business and creat a sustainable traffic? Well, the next step as you can imagine is to convert those visitors in actual customers who will buy from you and keep them loyal to your brand, so they would come back to make another purchase. If you succeed in creating customer loyalty and your customers are making a second purchase, the chance of making the third, fourth purchases are high. According to a research by RJMetrics, the likelihood of a third purchase jumps past 50% after the second purchase.
According to consumer’s psychology, it seems that online customers are always facing pain when they finalize a purchase. Namely, they may be thinking about spending too much money, or they are anxious about not getting the correct product for their needs. If you can help online shoppers to get rid of the above pain points, it most certainly means that the first step toward a long-lasting relationship has been made.
With increased customer loyalty, online consumers are motivated to visit your e-shop in a more consistent base, spend a greater amount of money, feel satisfied and positive about their shopping experience and become an ambassador of your brand among their friends and family, which will in turn lead to an amazing word-of-mouth effect.
Therefore, customer loyalty can be perceived as a puzzle. Different components, such as quality of product, prices, support, incentives, packaging etc., construe customer loyalty as well as customer retention. Nonetheless, among all these components, pricing and pricing strategies play an important role.
Concentrate on top selling products
If one of your strategic goals is to compete better with the rivals and keep your position in the market share, there are 2 things you should do; keep existing customers coming in & attract new customers.
A good way to achieve the above is by implementing a pricing strategy which focuses on your top selling products. In more detail, to keep existing customer satisfied and at the same time acquire new customers, it is wise to price equal to or very close to your competitors top selling products in each category.
This pricing strategy allows to consumers to evaluate your e-Businesses prices across other e-shops and therefore, they become aware that your prices are reasonable. As a result, your brand’s value as well as customer loyalty will be increased and last but not least, you will be able to compete more effectively with other retailers in the industry.
After concentrating on the prices of your top selling products, you may then price differently other products in various categories in a way that can help you make up for margin lost on items that are more aggressively priced. In a nutshell, we advise you to improve customer loyalty and brand value with top-selling products while increasing your margins with other products.
Everyday low price (EDLP)
The every day low price strategy provides a commitment to customers to always have the lowest prices from your e-shop. It is embraced by a promise to match the offers of competitors on identical products. This pricing strategy will give you the opportunity to create your marketing campaigns around the notion that you are always offering the best deals. Thus, instead of creating discount days you may focus on your one and only message!
From the customer perspective, the everyday low price tactic is a beneficial way to establish customer loyalty. This pricing strategy simplifies the purchase decision of online shoppers as they do not need to spend their time to find the lowest prices in the market. Consequently, customers do not have to wait for special shopping offers and post-purchase regret is refrained. If consumers are searching for a specific product at a low price, they will know where to search for it.
At this point, we need your attention. If you decide to proceed with this pricing strategy, you should know your customer’s profile. This strategy can be best linked with consumers who make their buying decisions based on price.
However, don’t just set for one time off and leave alone your everyday low price products. There might be the case, that they are too competitive relatively to your closest competitor so even increasing the price by 5% or 10% wouldn’t really affect the efficiency of your competitive position. On the other hand, it might be an opportunity to examine the impact of a price increase by improving your profit margins and still be the best deal in the market.
Differential pricing is a concept in which a product is priced differently based on various segments like customer group, location, age, type of product, different circumstances (i.e. birthday) etc. As every e-Business has different customer segments based on different criteria, giving discounts randomly will not be a logical and long-term way to gain loyalty. However, by applying differential pricing, and therefore by customizing your discounts/ rewards towards different segments, the possibility of boosting loyalty will raise.
Some examples of a differential pricing strategy are the following:
- Provide 30% discount on chairs for customers who bought a table in the last 2 weeks
- Give 20% discount for consumers who had not made a purchase in last month
- Give 30 extra loyalty points for next purchase for customers who have their birthday
With this pricing mentality, your e-Business will be able to cultivate a strong relationship with its customers and bring them back for a second purchase. Let’s be honest, if an online shopper knows they can get special surprises from you, they will certainly be more willing to be loyal.
If you wish to make customers return to your e-Business again and again, all you have to do is to help them overcome any barriers and satisfy their needs by treating them in a different and more personalized way.
Original Article Written by Prisync!