Intersection Small Business Marketing Blog

Can Pricing Strategy Affect Your Brand?

Can your pricing strategy affect how your clients perceive your small business brand? I read an article yesterday about soaring fuel costs in the travel sector and how Canada's much maligned national airline (Air Canada) will be implementing a series of fees to recoup costs. Here are a couple of my favourites:

• $25.00 fee to check a second bag (regardless of weight)
• $15.00-$20.00 fee to select your seat in advance
• $25.00 fee to book your flight by phone instead of online

The problem with this type of pricing strategy is the effect it has on your ability to build brand equity. In the article, Joseph D'Cruz, a professor of strategic management at the University of Toronto, questions Air Canada's strategy. "They're trying to squeeze every last cent of revenue out of the customer. Are they sacrificing customer goodwill by nickel-and-diming the passenger...my sense is that they are probably doing so."

Think Like a Consumer

A good practice to embrace during the development/review of pricing strategies is to think and feel like a consumer. A client of mine recently used "price empathy" during a review to determine whether or not to implement a minimum fee for a "pay as you go" service. The group put themselves in their customers shoes and realized they were better off removing the minimum fee - The decision was based on how each employee would feel if they were presented with their own pricing policy. The decision has proven to be a good one - the service has taken off due to no minimum payments.

"Price Does Not Include Batteries"

We're all familiar with the disclaimer "price does not include..." Not including certain features, services, options, etc. make sense with some types of products. However, I would urge your small business to be cautious with respect to "a la carte" pricing. If consumers have an expectation that your product or service should include something, then charging for it on top of the base price will likely cause friction. For example, it would be logical for consumers to assume the price of an airline ticket would include the ability to book flights by phone or reserve seats in advance.

I wonder if executives at Air Canada thought about how customers might feel when they get charged for "basic" services on top of the original price of their ticket. An apparent lack of price empathy will not help your brand - it can only strain relationships with your customers and serve to erode any goodwill or equity your company has developed.

Offer Good Value

Many businesses succumb to the pressure of trying to compete on price and then attempt to regain margin by adding fees. Would it not be better to charge a slightly higher price and include a few extra features/services? Give some thought to the effects of pricing policies on your brand. Offering good value will help your small business build a positive image, develop goodwill with your customers and, over time, build brand equity.

Using Customer Service to Generate Incremental Revenue

In my experience, sales and customer service roles within most small to mid-sized organizations tend to be defined as follows...

• Pre-Sale: The salesperson or sales team interacts with potential clients during the business development process. Communication occurs through prospecting, proposal writing, sales presentations and negotiation. Sales team objective: revenue generation.
  
• Post-Sale: A Customer Service Representative (CSR) or Client Services team assumes the role of customer relationship management. Communication occurs through training, help desk support, etc. Client service team objective: customer service.
  

This business model is standard in many industries and has proven to be a successful way to manage the sales and customer service functions - but is it the best way to maximize revenue for your small business?

In a recent strategy session, I had the opportunity to brainstorm ways to generate incremental revenue with the CEO of a small software company. We discussed how the customer service/client relationship may be well suited to creating new revenue streams. One idea that stood out was the perception your clients have towards sales vs. customer service.

Perception is Reality

Regardless of how honest, professional and customer centric your sales team is, your clients may still be applying mental models or stereotypes when they communicate with salespeople i.e. Is the salesperson really interested in my needs or are they try to take advantage of me? Do I really need that feature/product/service or is the salesperson just trying to sell me something? Is that really a fair price? Clients tend to have their "guard up" when dealing with sales.

On the other hand, the perception with client services is probably different because of the nature of the relationship. From the onset, the customer service/client relationship is based on providing assistance, as opposed to "selling". For example, if your customer service representative discusses the benefits of a new product/service with a client, that client is likely more engaged because the intention of the CSR is to help  them provide a solution rather than selling them a product/service.

Leveraging the relationships that have been created by your customer service department will create new sales opportunities for your organization. Getting your client service team to begin presenting beneficial solutions to customers will help develop incremental revenue and help fuel the growth of your small business.

What is eDNA and How Can it Affect Your Brand?

Have you ever written anything online that might cause someone to question the integrity of your company or brand?

Think about all the imprints you've left online over the last few years - emails, blog posts, forum comments, articles, etc., essentially an eDNA trail that leads back to your small business. 

As I recount the following story, consider what kind of impression your eDNA might have on your brand - will it be positive or negative...

A few months ago I was alerted to a forum post about one of our products. A prospect was asking for feedback about our system on a popular forum - someone responded with a series of negative comments about our product and proceeded to suggest a competitor (that it appeared they represented) as a better alternative. I responded accordingly with some actual facts and a few client testimonials. I felt it was an adequate rebuttal and left it at that.

A few weeks ago, I received an inquiry from a gentleman expressing interest in re-selling our products in South America. Can you guess who it was? Bingo, the same person that tried to sabotage us a few months prior!

My point - take the ethical high road in all of your online communication and remember that your words and intentions are a reflection of your brand. The next time you post something online remember that your eDNA stays out there - use the opportunity to give people a positive insight into your brand as opposed to a reason to stay away.

Using the Phone to Gain a Competitive Edge

How well does your organization answer the phone? It may seem like an odd question, but it could be very relevant to the success of your small business.

I was speaking to a prospective client recently - after our conversation I asked how he found my business i.e. online, word of mouth, etc. He had discovered my business though a Google ad...but had called the company listed above me in the rankings - they didn't pick up the phone so he proceeded to contact me. That small business lost a great opportunity to start a conversation about their brand with a prospect that was interested in their service.

It's not realistic for customers to get a live voice at the other end of the line every time they call. In fact, in the voice mail era, I would suggest that most people expect the opposite - an endless loop of auto attendants. As a small business it might be difficult to offer personal accessibility at all times. There will be gaps, but it's critical not to underestimate the value of personal communication.

In his book "What Were They Thinking - Unconventional Wisdom About Management", Jeffrey Pfeffer notes a study stating 94% of the people surveyed were frustrated to hear a recording instead of a human voice when calling a company. I am aware of a few organizations that make a point of trying to answer every call - the strategy has become a competitive advantage, with many clients stating "the ability to get through to a live person" as one of the reasons for choosing their product or service.

Technology is awesome, and there are so many great tools available to help small business owners become more efficient in the way they communicate with their clients i.e. BlackBerry, VOIP, etc. However, I suggest that you avoid the urge to over-automate your telecommunications. A simple thing like answering the phone could become a point of differentiation and develop into a competitive advantage for your small business.