Pricing

Is Driving Price and Customer Loyalty an Oxymoron? Part 2: Step-by-Step Methods

By Joanne Smith
August 13, 2014

In my previous post, I demonstrated the direct correlation of price and customer loyalty. In this post, I will focus on the specific steps to drive and measure both efforts.

The goal of value-based pricing is to refine an offering to meet a specific customer’s needs at the right price. The goal of customer loyalty is to refine the offering to better delight the customer and garner their loyalty. Done well, it creates more value and thus enables you to charge more. As you explore the steps in both initiatives, you’ll quickly see they are nearly mirror images:

Step-by-Step Value-Based Approaches

From a pricing perspective, there are seven steps to value-based pricing:

1. Identify your customer needs and values

2. Segment your customers by their needs

3. Design and refine your offering choices: tailored for each segment

4. Quantify the value

5. Price per value

6. Communicate your value

7. Measure your price performance

From a customer loyalty perspective, you would:

1. Identify your customer needs/values and points of dissatisfaction

2. Analyze for segment needs

3. Improve your offering/experience to better meet needs

4. Communicate your value

5. Measure your customer loyalty score

Whether customer loyalty or pricing, it comes down to first identifying what your customers value and creating a total offering, delivering this value, and capturing it in price.

  • B2B Pricing , customer loyalty , optimal price , price premium , pricing , Value-Based Pricing

    Joanne Smith

    Joanne Smith is the president of Price to Profits Consulting and author of The Pricing and Profit Playbook. Joanne is a former DuPont Corporate Head of Marketing, Pricing and Customer loyalty. She was instrumental in creating the pricing organization which transformed DuPont from weak to outstanding pricing performance. In her six years leading price, the company achieved close to ~$1 billion of pricing uplift for most of those years. Joanne brings over 20 years of global business, marketing, pricing and consulting leadership experience.