Pricing

How To Work With Captive Customers

By Ben Blaney
April 18, 2012

Continuing the sporting theme we’ve seen on this blog recently, I was interested to note that the fairly dismal soccer team I fervently support entered into a Groupon deal to fill the stadium with supporters enjoying very cheap tickets. This led to a lively philosophical and practical debate among the faithful. Some thought that it was a terrible move by the owners, to heavily discount to customers who are the least loyal. Other fans thought it was a great idea – they enjoy the benefit of having the same seat for every game, and are happy that more fans are able to attend to support the team, and (hopefully) spur them on to less-miserable results.

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This situation got me thinking about captive customers, and how we can work with them in B2B organizations.   Some customers will be pragmatic about their situation – they will understand that they are stuck with a certain supplier because of proprietary technologies, exclusivity arrangements, or other circumstances. But this is no reason to make them feel price-gouged on a particular transaction. For these customers, we should continue to over-communicate the strategic strength of the relationship as well as the value provided.

Other customers will be resentful, and may express negative perspectives about the organization. With reference to Jennifer Maul’s recent blog post about NPS (Net Promoter Score), we must exercise great caution in managing these customers. It may be that these customers could understand and enjoy differently – bundled offerings. If warranty terms require that servicing and maintenance of equipment is conducted by the vendor on a set schedule, perhaps that could be offered as a pay-upfront, one-time deal, for example.

– Ben Blaney

    Ben Blaney

    Ben has 10 years experience in the pricing space, managing people, processes, and projects, delivering operating income improvements in excess of $50MM. He leads Commercial Excellence at a division of Colfax Corporation. Prior to that, Ben led pricing for a division of General Electric, worked at Vendavo, and ITT Corporation. He is a Certified Pricing Professional, a Six Sigma Black Belt, and holds both major project management certifications (PMP and PRINCE2).