The E-commerce market can feel like a concert venue. It’s crowded, and everybody’s there to have the best experience.
If you want to stand in such a gigantic crowd of online merchants, you really have to know how to use pricing as a tool. We’ll talk about 4 pricing strategies that can help you build hype around your Magento store and how they’re useful to your business.
You’ll see that pricing is central to your relationship with your customers, including in the long run.
Offering great deals on best-sellers
Popular products are really incredible in driving traffic to your store. If you’re a consumer electronics retailer, for instance, you know that a good deal on MacBook Pros can turn people’s attention to your store.
And once those first-time visitors land on your website, all you have to do is to make sure they’re having a seamless experience – be it navigation, checkout, delivery, or customer service.
But the brilliant thing about this pricing strategy is not its immediate benefit. In the long run, it can help you achieve something bigger. Not surprisingly, something we’ve learned from Amazon.
The CEO of Commerce IQ and former Amazon business leader Guru Hariharan explained this in an interview using these words:
“Set a low price for a TV that everyone wants to buy and perhaps increase rates and earn higher margins on an associated product, such as a connecting cable. Few customers will fret about this because they’ve bought the TV, the more expensive item, at a good discount.”
The thing is, how shoppers perceive your store in comparison to others—which is your brand positioning—can be influenced by such a simple yet effective pricing strategy.
And price comparison sites like Idealo, Bizrate, Kakaku, and Tweakers, have huge traffic that can help you boost sales and increase your store’s visibility at once.
Price drop alerts
Another smart pricing tactic that improves a store in several ways is sending price drop alerts to your customers.
With a simple CTA button, ask your customers to leave their name and email address to get notified when the price drops. Not everyone has the same spending power or habits. Doing this will help you reach segments you normally put little marketing effort into – because you now have the data you need to do so.
One great advantage of running a Magento store is having more control over design, right? Why not at least test it? This is especially true since Magento Open Source and Adobe Commerce provide this feature at no extra charge. That’s right – price change alerts are a native Magento feature!
Of course, there’s no harm in personalizing the message a bit. There are email, SMS, and push notification automation tools out there to add a personal touch. These include solutions like Listrak, Rejoiner, and Wigzo. In fact, the more customer data you can collect with consent, the merrier.
Depending on the marketing suite that you select, you can use historical purchase data, real-time on-site data, wish lists, browse data, abandoned cart history, and so on.
These data sets will allow you to target your marketing efforts based on what your shoppers have shown interest in. It’s incredibly valuable information to leverage.
You can start small and test the concept first. Find the most popular items that appear again and again in many customers’ wish lists, offer a special deal on them. See if it works for you.
If it works, dive into the browse data. Depending on your budget, you may prefer testing them all simultaneously.
And you can always integrate pricing and marketing automation tools, which will relieve you from manual labor associated with running these campaigns. Pricing software makes sure you’re positioned wherever you want—like the cheapest, 5% more expensive than cheapest, etc.—and the email automation tool carries the news.
A more sophisticated pricing strategy that uses customer data is offering personalized discounts. Tailoring your offer to shoppers’ interests and preferences is a great way to tell them “We value you as an individual.”.
That’s probably why an Accenture study found that 91% of shoppers are more likely to shop with brands that remember them and provide relevant offers and recommendations.
You’ve tried to find what your customers are interested in when sending price drop emails. This time, you’ll try to learn more about their willingness to pay, price sensitivity, spending power, and habits.
Say you’ve got this long-time customer, Lilly. Lilly has been shopping with you for over 2 years, and she’s bought over 170 items from your store.
What Lilly has purchased from you and for how much—this is important information. Is she a big spender? What’s her average cart size? Historically, have only big discounts persuaded her to shop with you?
You can even go as far as to seek a correlation between how close she is to her payday and the percentage of the discount that’s enough to entice her to buy.
But there’s no need for that because simpler algorithms actually work better. Just collect as much data as you can—with permission, of course! Build and test several simple—max 6 input—algorithms and find out which one works best.
You can also consider using personalization software that can offer the right discounts to the right shoppers at the right times directly on your website. Examples include HiConversion and Justuno. Similarly, marketing suites like DotDigital, Emarsys, Klaviyo, and Omnisend can help you to send targeted offers to segmented lists of shoppers They can even send triggered messages automatically based on the data you’re collecting.
Discounted custom bundles
Bundles can look enticing to shoppers and are known to drive consumers to buy more than they originally intended. This is especially true when it comes to discounted bundles. Then again, when you give shoppers the freedom to create their own bundles, that can increase interaction and generate more sales too.
Think about it, wouldn’t it be amazing if you could just go to your favorite store, put 3 of your favorite items together and get a discount on your combined purchase?
As a Magento user, you’ll benefit from the ability to create Product bundles/kits natively. This includes functionality to create rigid pre-determined groupings of products that you’re selling together as a set. It also includes features that can allow shoppers to choose between products that they’d like to add to their bundle – allowing them to create their own unique grouping of products. It’s like being able to create a gift basket, where shoppers can choose exactly which items will go into the basket.
To see if bundles generate more sales for you, just set up a few tests and share them with your loyal shoppers to see if your customers want to take advantage of your bundled offers
We’ve talked about the ways you can use pricing as a tool to get closer to your customers, have greater control over your price positioning, and by extension your brand positioning. You can also use it to expand your reach and increase your store’s visibility.
Most of those strategies we’ve mentioned work in several different ways and can deliver incredible ROI. Even if you’re on a tight budget, you can start small by using Magento’s out-of-the-box features, and invest a little more as you go.