Value Based Pricing
The core of our business and most of our projects are around Value Based Pricing. In contrast to other Pricing methods, Value Based Pricing is more longer term oriented and starts at the Value the customers want. Once known, and updated regularly, the entire organization incl. channels and operations should be directed to deliver exactly on these Values. Increased bottom-line can than not only be derived by better pricing, but also lower churn driven by higher customer satisfaction.
Customer Value Proposition
Similar to Value Based Pricing, the starting point for Customer Value Propositions is the actual Value the customers seek. Here, however, the approach is slightly more driven by optimizing the performance of a product (portfolio), rather then the company as a whole. Special focus lies here on the messaging towards the market and the Customer Experience to deliver on the promise. The aim is to elevate the product into a new space where the proposition delivers more Value than the product stand-alone.
A reality of business is that prices sometimes need to be changed. Usually needed to go up driven by several factors, among others increased salaries, investments or the aim for an increase in bottom line. Sometimes, competitive pressure may force us to reduce our prices to achieve more volume. However, it's not only important to identify the price sensitivities of your customers through a rigid customer centric and data driven approach, but also to execute these well by incorporating the right level of Value Communication.
Packaging your products and services requires finding the right Value for Money balance from a customer perspective that gives you enough advantages against competition to create and convert leads, whilst not triggering heavy competitive reactions, and at the same time managing positive margins from new and existing customers. It hence also starts with understanding the Value customers seek, ideally per segment and building packages with pricing that are interesting for a big number of customers.
Products should ideally be developed with the customer need in mind, Customer Research should hence be the starting point. In order to introduce the new product commercially in the best way, a market conform pricing needs to be chosen that optimizes both, volume from new customers as well as optimizing impact from existing customers (Increasing Up-selling & Cross-selling while minimizing Downgrades). Next to the packaging and pricing, also the channel execution needs to be optimized.
Marketing Strategies need to combine all available data sources such as customer needs, actual customer behavior, effectiveness of the current strategy, competitive activities, market trends as well as financial performance of all market players. In order to define the right Marketing strategy, all of these data points need to be connected and used as a basis for the Marketing Strategy discussion. In order to assess the best strategy, a financial assessment/ business case needs to help with decision making and execution alike.
Account/ Base Management
A crucial part of realizing set commercial targets is being able to realize the changes with existing customers. In order to achieve that their current services and prices need to be carefully analyzed against any planned changes to product, packaging and pricing. We need to ask ourselves: “Do we think our customers will change their behavior when we change our packaging?” The answer to that question should be “Yes, we believe they will up-sell/ cross-sell more and churn less”.
Value Based Margin Mgmt.
Value Based Margin Management helps optimizing own margins while maintaining or improving the customers’ Value for Money perception. In order to achieve that an understanding of the Value Customers give to different parts of the offering is needed as well as identifying the cost drivers of your business. Combining those two allows for identifying win-win optimization potentials. Execution with customers is a crucial area to realize the planned margin improvements.
Many organizations become successful with a strong focus on product performance and/or channel execution, but due to competitive pressure need to move more towards a customer centric organization. Collecting customer feedback and integrating these well into the processes is usually not enough then, as it's also a cultural change. We usually include key employees from all levels of the organization in the process and make sure to engage them to continue working customer centric also after our assignment finishes.