Apart from that, 87% of shoppers surveyed say knowing they are getting a good deal is important when deciding what and where to buy. Price is a top priority for modern shoppers.
What if I told you there was an effective way to meet both needs? By merging email and pricing automation strategies, you can boost sales, improve profit margins, create hype around your brand, and make your customer relationships last.
By reading this easy-to-follow guide, you’ll learn:
- How to track competitor prices and set competitive costs
- How to gather customer behavior data
- How to use the data you collect in creating an email campaign
If you’re ready, let’s dive in!
Why price tracking is a must
In the fast-paced digital world, price tracking is necessary to the survival of a business. Ignoring competitors and sticking with a price for too long will underlie your business’ competitiveness and eventually result in getting left behind.
Simon-Kucher & Partners 2019 Cross-Industry Global Pricing Study reveals that over two-thirds of the companies surveyed have experienced even greater price pressure in the past two years, with 57% stating that they are currently in a price war.
Price intelligence is a must for online businesses, for two reasons: price transparency and the increasing frequency of price changes.
A lack of price intelligence may cause many companies to struggle with one or several of the following problems:
- Pricing too high
If you’re not the only seller of a product or the single provider of a service, what you sell can be found on other websites (many other websites, in most cases). Whether B2C or B2B, modern shoppers are price sensitive and often don’t buy a product/service before searching the web for competitive prices.
Above is a screenshot of a comparison shopping engine (CSE). Now, who’d pay an extra £500 for the same item?
- If pricing is too low, money is left on the table and may potentially start a price war.
As shown here, this store could increase the price by £10. Still, they’d be the most competitive store, and would have made £10 more per unit.
- Wrong positioning, due to lack of price intelligence.
If your target market is luxury consumers, you know they’re not looking for the best prices. What they’re shopping for is the emotional benefit they get from possessing an exclusive item.
However, this is not a luxury item but a mass market product, so the significant price difference might not seem fair to the consumer. It’s a sign of misaligning this seller’s marketing and pricing strategies.
How to track competitor prices
Most digital businesses track competitor prices with one of the three methods below.
Manually collecting 100 product prices from 10 competitors takes 12 hours on average. Online prices change so frequently that by the time you finish, the data becomes outdated, and your efforts are in vain.
At least some level of automation is necessary.
In-house pricing engine
You can hire a web scraping service to build you an in-house engine and customize it freely.
Keep in mind that it takes a lot of resources and technical knowledge to build and maintain any software.
Price tracking software
The last option is to use price tracking software, which relieves you from the workload of building and maintaining the software.
You can customize a tool to a limited extent, so if you have complicated and difficult-to-meet requests, building an engine of your own might be a better option.
In any case, using price tracking SaaS is more affordable than building one.
Apart from this, price tracking software allows you to set dynamic pricing rules, such as:
- My price should be 13% cheaper than my cheapest competitor, but not lower than 10% + my cost.
- My price should be 5% cheaper than the average price, but not lower than 5% + my cost.
- My price should be $10 higher than the most expensive competitor.
These smart pricing rules make sure you’re positioned where you want to be in the market.
Before seeing how you can use pricing automation in your email campaigns, let’s see why you also need behavioral data to create well-targeted email marketing campaigns.
Why and how to track behavioral data and use it in personalized email campaigns
Offering a personalized shopping experience is an enormous step toward building a long-lasting relationship with your customers. Personalization brings you closer to your shoppers and gives them a sense of belonging. How can you leverage the power of personalization in your email campaigns?
When you track the metrics of how shoppers engage your content, product pages, landing page, etc. at the individual level and use this data in email campaigns, it’ll work much more efficiently than a general campaign.
Macy’s Director of Advanced Analytics Daqing Zhao explains how they designed an algorithm called preference matching for an early e-commerce store, which they used in testing a one-to-one email program.
Zhao highlighted the importance of customer behavior data:
“We found that purchasing data were the most important in recommending wines that customers are more likely to buy again.”
The one-to-one program resulted in an increase in revenue up to 300% relative to the control cell.
Naturally, not every business has enough resources to invest in developing an algorithm to collate, organize and analyze customer data. Luckily, there are numerous consumer behavior analysis tools that collate data from various channels and organize it for you.
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Types of customer behavior data you need to track
- Products previously purchased
- Amount/volume and frequency of purchases
- Order/subscription value
- Time of purchase
- Products abandoned in the cart
- Browsing history
- Wish lists
If you don’t want to use a customer data management system, you can start collecting quantitative data via a combination of:
- Web Analytics Tools (e.g. Google Analytics)
- Website cookies/mouse-tracking heatmaps
- Tracking pixels placed in emails/newsletters
- Recording customer support communications
- Recording purchase transactions
How to use email marketing to offer personalized experiences
Send cart abandonment emails with price drop notifications
If a shopper browsed a product, added it in their cart but abandoned the cart for some reason, it’s highly likely that they will purchase it sometime. There is a good chance that a price drop notification would entice these reluctant shoppers to come back and purchase the item.
Now that you’re monitoring competitors and setting competitive prices, it’s time to turn your prices into a competitive advantage.
You don’t want to announce every single price change—that’s why you’ll segment your audience.
Create lists of cart abandoners who’ve left the same product in their cart and send them automated price drop emails. Start with the most popular products to track the performance of your campaign. Expand the campaign to smaller audiences who’ve shown interest in less popular products if you get good results.
When you identify the common products, set a smart pricing rule like this one:
- My price should be $15 cheaper than my cheapest competitor.
Of course, the percentage or the price difference between you and your cheapest competitor should depend on several factors. For example, if the original price is $1000, a $15 price difference won’t create the same effect that a $50 difference would.
But you also don’t want to start a price war or sell at a loss, so make sure to add a cost-based rule like:
- My price should never be lower than 17% + my cost.
Remember that this strategy helps you build a loyal relationship with your customers. You’re luring cart abandoners back into your store, while showing them that you’re paying attention to their interests and needs.
Send emails with personalized discounts
The data you’ve collected reveals the products customers are interested in based on their previous purchases, browsing history and wish lists.
On top of that, behavioral data shows you the type, amount or the percentage of the discounts they’ve previously used, giving you a better understanding of what would be a strong enticement for them.
With this information, you can create the discounts that customers are actually looking for.
For example, if a shopper has recently browsed an item or it’s on their wish list, send them an email saying they can use a discount code on that particular item. Make sure to mention the discount is an exclusive offer. Pay attention to the type and amount of discounts they had previously used.
Keep in mind that discounts are great to entice shoppers, but if you discount too much, people will become reluctant to buy products/services at their original price. Limit the frequency and the amount of these discounts. Instead of frequently offering storewide discounts, use your pricing intelligence to make sure your products/services are always competitively priced.
Pricing and personalization are key factors in the growth of a digital business. Regardless of whether they’re B2B or B2C buyers, the modern consumer is price-conscious, and prefers that online prices are transparent.
On the other hand, many B2B and B2C companies embraced personalization so successfully that shoppers’ expectations have skyrocketed over the past few years.
By merging pricing optimization and personalization in one-to-one emails, you’ll kill two birds with one stone.