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By Chen Katz, VP of Sales, Sagarmatha
Sir Martin Sorrell of WPP, the world’s largest marketing communications company, said at a recent conference that personalized pricing is on its way to brick-and-mortar stores. While I have the utmost respect for Sir Martin, I’d like to offer a different perspective -- I believe that personalized pricing is actually already here.
Consumers are already using it beyond any retailers’ control. They can instantly compare prices on their phones – they may be at your pharmacy and discover that another store has the same item just cheap enough for them to go across the street or drive across town to get it. (As we are all aware – we’re not always rational. Sometimes we go to great lengths for the best bargain – even if it means a greater investment in time than the financial gain offsets).
Retailers need to acknowledge that the tools to implement personalized pricing are already available – and many of you have them.
Here are some tips so you can take advantage of personal pricing opportunities:
Better leverage your existing price optimization technology.
Many of you are already optimizing the prices your customers pay, working to increase your shoppers’ share of wallet while ensuring decent margins. Take that to the next level. Your shopper loyalty program is sitting on millions of data points. Start analyzing customers’ behaviors and purchase history and predict what they may want or need to purchase the next time they are in the store and provide related digital coupons via traditional and digital channels.
Go beyond segmentation
Take your optimization analysis to the next level – Instead of analyzing segments, supplement your system with personal analysis to deliver individual pricing. Linking the distinct prices to the customer’s loyalty membership number allows for easy implementation directly into any register software, streamlining the entire process.
Consider Sam. Sam buys prepared foods from the frozen section at a volume of four prepared meals per week. You recently opened a freshly prepared meal department where meals are at the ready daily. Based on Sam’s purchase history, the retailer has decided to offer Sam a $2 off coupon – making the price lower on a higher margin item. Once Sam has been “indoctrinated” into the task of buying fresh, you can reduce the amount of the coupon – or not – until he is used to paying full price, as he did for his frozen dinners.
Review the possibilities of beacon technologies
Implementing beacons can accelerate personalized pricing. Within one-to-one customer data, such as previous purchase history and price paid for specific items, you can automatically generate the tipping point to induce spontaneous purchases. Your beacon tells you that Jane is about to walk near the ice cream freezer. She usually buys Nestle brand’s Dreyer’s ice cream, $2.99 for 1.5 quarts. Nestle has offered you special incentives if you can move more Haagen Dazs off the shelves. Based on your real-time analysis of Jane’s previous Haagen Dazs purchases, you know that she’ll buy if it is at a price point of $3.25 or lower. Real-time, one-to-one marketing combined with beacon technology allows you to immediately send Jane a personal price of $3.20 for a container of Haagen Dazs via text or your app. You can do this without beacon technology, of course, in your regular communications with Jane – if you have one-to-one marketing in place.
Don’t forget your kiosks
While kiosks are “old fashioned,” any time your customers are using them, they are immediately ready to take action. Ensure your kiosk is tied to your personalized marketing infrastructure, so you can delve into her purchase history in real time and deliver personalized pricing on the spot.
Mass market retailers actually have the advantage with regard to truly personalized pricing. Consumers generally compare notes on how much they pay for big-ticket items, but we usually don’t discuss how much we paid for a 12 pack of toilet paper – so retailers don’t need to worry about consumers comparing nickels and dimes.
In mass market retail, personalized pricing is here. It’s just a matter of how ready you are to take advantage of it by implementing truly individual marketing.
Chen Katz is VP Sales at Sagarmatha, a market leader in providing mass market retailers with the solution they need to offer true one-to-one marketing to individual customers. www.sag121.com. You can reach Katz at [email protected], US: +1 646 934 6149; +972 9 7445410, Mobile: +972 50 6767139