The retail space has certainly long known that pricing is a key factor in a customer’s decision whether to purchase a given product or service. However, while how much something costs is far from the only element influencing the sales process, pricing strategies continue to evolve as the marketplace becomes more and more crowded with emerging retailers. In particular, discount pricing — itself a tried-and-true method of boosting sales — has become less about simply dropping price points and more about strategically adjusting to fit the ever-changing nature of the market.
As the leading online retailer, Amazon has played an integral role in shaping the future of the industry, and if the site’s current practices are any indication, automation may be the key to navigating the rocky waters of retail sales. For instance, discount pricing may sound like a no-brainer, but without the right process in place to support it, even this approach may not yield the results your business deserves. Yet, applying automation to discount prices is fast becoming the way of the future, allowing businesses to both streamline their processes and boost sales at the same time.
What You’ll Need
Because every niche features vastly different needs, automating your pricing is far from a one-size-fits-all endeavor. The particulars of your business will dictate how much and how often to drop your prices, but even so, there are a number of key ingredients to the process that are essential in designing the optimal pricing system for your business.
- Buyer personas: Knowing your customers is the first step to designing an automated system that will fit their specific needs. To that end, the creation of buyer personas — representations intended to create a clear perception of the type of individuals your product or service is targeted to — is a proven way to decipher how you can purposefully use pricing to boost sales. After all, if knowledge is truly power, then few data sets will be as invaluable to your business as buyer personas.
- Price floors: Discount pricing may be among the most obvious ways to generate interest in your business, but there’s also an inherent danger in relying on plummeting prices to win over prospective customers. To avoid the slippery slope, identify the lowest price you’re willing to set for a given product. This precautionary measure will ensure that your discounts never cut into costs, sacrificing profits to the point that your business has an even steeper uphill battle to make it into the green.
- Testing systems: The whole point of automated pricing systems is to eliminate the guesswork involved in delivering the best possible price for your customers. So it’s imperative then to implement detailed testing to ensure optimal prices and strategies are in place. The most common approach is often A/B testing, which places two separate price points in place at the same time. By alternating between these offers, you’ll be able to ascertain which one is most effective and then institute the winner into your pricing.
- Brand protection: Discount pricing — automated or otherwise — should never adversely affect how customers perceive your business. The most important aspect of your company is its reputation. So be sure that dropping prices doesn’t do any harm to your brand’s image. The data you gain from testing, buyer personas, and the like can help shed some light on how your current and prospective pricing may affect your brand as a whole. Just be careful not to let your pursuit of sales damage your brand’s promise.
Automate to Innovate
Early on, embracing automation may seem like a particularly daunting task. After all, it does involve surrendering some of that absolute control over every element of your business, a step that itself demands a certain amount of faith in the system you’ve established. However, such innovation is paramount in keeping your business thriving and relevant for years to come, especially as today’s technology empowers customers with a greater ability to evaluate their purchase options.
Automated discount pricing takes the guesswork out of positioning your business for sales success. By establishing a system to tailor your offers, you’re better able to keep the customer experience at the forefront and ensure that your business priorities remain focused and strictly in line with your long-term goals.
For more details about how pricing can directly impact the success and reach of your business, check out our new eBook, “A Comprehensive Guide to Competitive Online Retail Pricing Strategies.”