We’re living through a historic moment right now. You don’t need me to point out to you how COVID-19 has influenced everything this year. Not only is the pandemic unique because no event has influenced global society so profoundly since World War II, but also because we’ve never faced an economic challenge of this magnitude.
Although we may be wishfully inclined to look at the pandemic as something with a definitive end that will come soon, that does not appear to be the case. The situation is still changing and will be evolving for weeks and months to come, if not years.
As Irish economist David McWilliams aptly put it, we are living through a pandession. As novel as this coronavirus is, so is our approach to dealing with the outbreak. This is the first time that countries have locked themselves down, imposing social distancing and forcing many companies to digitally transform in a matter of days — all in the name of mitigating the effects of the pandemic.
This new reality has created a new set of challenges for product and pricing managers. Inspired by a McKinsey article on pricing in a pandemic, I’m going to share our thoughts on how you can “be there” for your customers during the pandession, and how EPIC Conjoint can help you achieve that.
DO: Through-cycle view of customer relationships
Instead of making rash decisions, do your best to keep a long-term perspective. Reinforce customers’ trust by tracking their evolving needs and by demonstrating your support for them during these tough times.
We recommend conducting monthly Quantitative Surveys to ensure that your products or services continue to meet your customers’ needs. If you discover that your product is falling or has already fallen out of favor, a rapid Conjoint Analysis to test propositions and prices that resonate strongest with your customers’ evolving needs will help you get back in the game.
DO: Strengthen value-focused messaging
Depending on your industry, your customers’ price sensitivity may have changed significantly.
With EPIC Conjoint you can run a quick Conjoint Analysis to determine if customers’ willingness to pay has been altered by the COVID-19 shock. This will enable you to take necessary steps to show the value you can provide to them during the pandession.
DO: Create flex pricing
To remain relevant and outperform competitors, address customers’ short-term pain points, while keeping long-term value front and center. This can mean temporarily cutting prices or changing volume.
At EPIC Conjoint we recommend doing a short Quantitative Survey to identify which short-term interventions resonate best with customers, yet have the fewest negative effects on your revenue.
DON’T: Avoid relying on old price-sensitivity research
In a market that is constantly changing because of the pandemic, price tests become obsolete after just a few weeks or months. To better understand how the price points change, companies should run pricing-sensitivity research and market price tests more often, particularly for higher-volume products and offerings.
EPIC Conjoint recommends a short series of rapid Conjoint Analyses to determine the degree to which customers’ willingness to pay and preference for product features are evolving with the ebbs and flows of the crisis.
DON’T: Slash list prices without considering other options
Your approach to price reductions can make a huge difference in your ability to keep and build value over time. Instead of just slashing list prices, you may want to think about running temporary promotions, non-monetary discounts, or discounts that help build volume.
Some customers are more price sensitive than others. Avoid leaving money on table by offering overly deep discounts or the wrong promotion. EPIC Conjoint recommends a quick Conjoint Analysis to determine customer price sensitivity and preference for different types of promotional offers.
DON’T: Attack competitors without preparing for their response
Do not jump into making a strong competitive move before you are sure you understand your company’s position in the marketplace and can anticipate competitors’ likely reactions. Price cuts may be easy to replicate, and they can also change buyers’ long-term perceptions of brand value.
It is critical to understand how much pricing power your brand wields in the market. EPIC Conjoint recommends a Conjoint Analysis to survey the current competitive landscape with a particular focus on understanding customers’ perception of brand value and willingness to pay vis-a-vis competitors before implementing a market-impacting change.
To help you endure the pandession in the best way possible, we have prepared cost-effective survey bundles, so you can quickly run several Quantitative Surveys and Conjoint Analyses to make sure your business decisions are based on most recent customer insights.
Seasoned commercial marketing professional with over 20 years of Pricing, Product, and Segmentation experience. A firm believer in the power of Conjoint Analysis, Matt had grown frustrated with the time and effort it took to conduct studies and how prohibitively expensive they can be. Borne out of this frustration, he founded EPIC Conjoint in 2016.