Technology / 03.22.19
Scoring Big with Dynamic Pricing
With the seemingly endless number of consumer touchpoints currently available, it’s crucial that each interaction with your customer contributes to building a long-lasting relationship. Since a consumer’s journey begins long before they arrive at a venue, the opportunity to make a great impression begins the moment they choose to purchase a ticket.
Modern consumers are seeking transparency, empowerment, simplicity and personalization at every step of the buying process. Although the cost of an item naturally plays a role in determining whether or not to make a purchase, to the digitally empowered customer, the overall experience carries more weight than specific products or pricing in building loyalty and influencing future decisions.
Understanding your customers — from their purchasing patterns to their behaviors and preferences — can help you implement strategies to enhance their purchasing experiences while also driving increased revenue. Tailoring their online experience with your venue helps reassure your guests that you can deliver an exceptional experience on site, building trust from the very first interaction.
By now, nearly all industry insiders are familiar with the concept of dynamic pricing, the ecommerce and retail approach that optimizes pricing based on real-time demand to maximize sales and profit potential for each purchased item. This practice has proven to be greatly beneficial to businesses and organizations, as it allows them to stay up to speed with the ever-evolving competitive landscape as well as the behaviors of their customer base.
However, it’s important to remember that, in many ways, your customers are naturally more dynamic than you are. The practice of comparison shopping — searching for the best product, price and reviews — is on the rise and shows no sign of slowing down. By implementing a solid dynamic pricing strategy, your organization can remain flexible and keep up with changes in competitor pricing, as well as the ebb and flow of supply and demand.
It’s important to note that there is a fine line between dynamic pricing and personalized pricing, an ethically questionable practice that can weaken consumer confidence. The common conflation of these two, which comes with the risk of pushback from customers, may lead to anxiety and hesitation for those considering a switch to a dynamic pricing model. However, as dynamic pricing gains popularity across a variety of industries, consumers are becoming more familiar and comfortable with the practice and it is rapidly gaining social acceptance.
To ensure your venue or organization remains “above board” in the eyes of your customers, Gartner Research Director Chris Fletcher suggests three basic rules to follow when implementing a dynamic pricing strategy:
1. Develop Digital Solutions – To ensure seamless operation for both the business and customer, pricing configuration must be algorithmically automated. We are in the midst of a mobile revolution. According to Juniper Research, $32 billion in global ticket purchases will be made via mobile device this year. If your pricing strategy cannot be implemented on a mobile platform, you are limiting your potential.
2. Be Dynamic – You need to be able to adjust the pricing in real time to stay up to the minute with competitive offerings and the behavioral patterns of your customers. Real-time inventory control will also ensure that the number of tickets sold always matches capacity being shown to the end-user.
3. Be Defensible – The methodology and reasoning behind your strategy must be communicated to customers. By being up front and implementing full transparency, you can work to counteract any concerns they may have and explain what’s in it for them.
True dynamic pricing is based on inventory, allowing operators to leverage basic supply and demand to increase their bottom line. This can also incentivize season ticket purchases earlier in the season cycle and provide advance ticket purchasers with rewards for planning ahead.
The practice of rewarding customers through dynamic pricing extends beyond advance purchases, too. With the right dynamic pricing strategy, you can routinely reward your most loyal customers while boosting revenues at the same time. This is especially true for organizations that rely heavily on donors. For example, you can extend top priority to your most valued supporters by offering season subscribers a discounted $20 ticket if they are one of the first 100 to make a purchase. And, while you’re offering your most loyal patrons first access to this special discount, you can still run promotions that target new audiences.
Something as simple as a $5 discount code promoted on social media can make a big difference for price-sensitive potential customers, even if your inventory-based dynamic pricing program has already raised the ticket price after selling out the majority of your inventory. Most ticketing systems will allow you to control the number of redemptions and render a code unusable after a certain time or number of uses, eliminating the need to manage this manually.
Today, technology that supports seamless implementation of a dynamic pricing strategy is more accessible than ever before, allowing operators to drive customer conversion, retention and satisfaction while increasing profitability through pricing based on a variety of factors unique to their business. With the right strategy and supporting technology in place, you can stay at the forefront of the dynamic pricing trend and deliver maximum value in today’s evolving and demanding market.
Eric Petrusic is President of Ticketing at accesso.
You May Also Like
This article was written by an INTIX member. Have a story idea of your own? The Access editorial team is always interested in hearing from INTIX members who have ideas for contributed stories/guest columns. Read through the Access content guidelines for full submission details.
Want news like this delivered to your inbox weekly? Subscribe to the Access Weekly newsletter, your ticket to industry excellence.
Tags: Mobile , Consumer Behavior , Consumer Preferences