How To Leverage Customer Experience Data To Increase Pricing & Margins
We as consumers seldom realize the euphoria when fair price, great product quality, and a stellar customer experience (CX) throughout the entire purchase process are in synch. Why can’t this be an everyday occurrence? After all, these are the seeds for growing customer loyalty and competitive brand differentiation.
Providing a positive CX with each interaction (proactive and reactive) has long-term benefits for consumers and for the brands they engage with. For every consumer, knowing where they can obtain the products they need from a retail store within an acceptable travel distance, at a competitive price, and receive a great and memorable CX really is the trifecta of building retail brand loyalty. For a business which consistently delivers good CX, they will likely find themselves in the enviable position of being able to charge a price premium versus their competitors who underperform in CX.
To better understand how price, quality, and CX fit together Phoenix Marketing International and its strategic communication and marketing partners (Direct Choice Inc. of Wayne, PA and Boston-based HaloEffect) recently asked US consumers across four age generations about their CX expectations overall and to identify recent interactions with brands that fell short, met, or even beat their expectations.
Their answers gave us new insights into:
- Top-of-mind overall CX assessment of 32 major industries;
- Brand CX rankings within each industry;
- 315 most memorable brands ranked top to bottom by our CX Excellence Score;
- CX best practices that drive brand re-consideration;
- Brand-specific CX interactions that exceeded or fell short of consumer expectations and WHY; and
- All of the above, comparing generational differences (Millennials, GenX, Boomers, and Seniors).
In addition, the 2,415 participating consumers answered their willingness to pay various levels of a price premium if they could be guaranteed a good overall CX. Their answers were fascinating. Overall almost 11% said they are willing to pay up to 5% above list price and nearly 8% will pay a premium of between 6% and 10%. A future blog post will share consumer willingness to pay a price premium by major industry.
% Who would pay extra if doing so guaranteed a good overall customer experience?
n=2,281 n=1,939 n=1,862 n=938 n=7,560
How Much of a Price Premium Would be Paid by Those Willing to Do So?
So back to the primary question for retailers today: How to leverage CX data to increase pricing and margins? There are at least eight milestones that will equip retailers with needed market knowledge of competitive pricing, product quality, and their brand reputation for consistently delivering (or not) good overall CX.
For example having online interactive access to local competitive pricing is a must. Also is the ability to filter this information by travel distance from a specific brand outlet to nearby competitor locations, by key product attributes such as size options, or whether the product is part of a bundled offering or not.
These insights will support price elasticity and other economic modeling for making informed pricing decisions and for developing unique marketing programs to boost sales and optimize profitability. Plus the desired outcome for many retailers of optimizing price in the local market rather than universally on a national scale.Back to learn