This was originally published last week, but because of good ‘ol Microsoft installing IE9 and maybe some leprechauns at WordPress, it disappeared into the ether. The original motivation for the post was one from the Kellogg School, which I thought was rather narrowly focused. Here were my comments:
1. No deals for new customers. We don’t recommend doing price cuts just to attract new customers, because most of these people are coupon clippers, who might leave and not return when the coupon expires. Keep your pricing in synch with your USP and your brand.
2. Offer deals to existing customers. If you’re going to do off price deals, offer them to existing customers, too. If newbies get deals, the existing folks might be irritated because they didn’t. Offering is easy in this electronic age…..just send them an email.
3. Stable prices on retail and the internet. Many large retailers offer better prices on the internet than in their stores, basically because the overhead on the internet is less, so the prices are less. So, of course, customers go to the internet, and the retailer is left wondering what happened to store traffic. Duh. Keep ’em the same. Which pinches margins, because retail overhead is higher, but put it all in the pricing equation.
4. Keep prices stable when commodity prices are fluctuating. This can be a little unnerving, if you’ve got products that are highly dependent on commodities, or a bunch of service trucks, for example. Yes, your margins will be pinched, but your customers will be more loyal.