Customer-Centric Approach Focuses on the Data
Pereira cited the example of a young couple who are loyal customers to a supermarket. While they might not currently represent a tremendous value to the supermarket as far as spend, their potential spend stands to increase if the couple has children. By knowing this and basing marketing plans around this data, the retailer can optimize the spend of that couple.
It’s also important to identify and segment your customers based on loyalty, again grouping them into four categories: nonshopper, occasional, secondary, loyal. The use of loyalty cards are a good way to capture transaction history, helping you to better segment your customers.
Sometimes it’s necessary to go outside of your existing product assortment and pricing to obtain new segments, Pereira advised. He cited the example of a catalog company whose secondary and loyal customers were established, but were aging. In order to grow the brand, the cataloger needed to capture a new customer segment. By developing a new product line and adjusting price points, the cataloger was able to attract a younger customer segment, and thus grow the brand.
5 Strategic Pricing Areas
Pereira listed five key areas to align your strategies in a customer-centric marketing approach regarding pricing:
* customer segmentation — identify, quantify and understand your customers;
* customer strategy — priority segments, top opportunities, segment goals;
* customer plans and tactics — pricing strategy aligned to key segments (product categories, key value indicators (KVIs), price position);
* optimize and execute — reset prices in key product categories, optimize for customer segments; and
* measure and refine — measure the impact of customer-centric pricing on product categories and customers, and refine them over time. Constantly update your pricing model for life events — move, birth of a child, wedding, etc. — and how that affects purchasing behavior.