Pricing Power: the art of raising prices without reducing demand
According to our study on data-driven revenue growth, nearly 8 in 10 leaders find it challenging for their companies to gain pricing power. Yet, most feel that doing so will be "very” or "extremely important" to driving profitable revenue growth in the next 12 months.
Something has to give.
Commoditized products and one-size-fits-all solutions are obstacles to overcome. With events, these include square footage, branding and activations and attendee experience. In digital businesses, commodities and all-purpose approaches are found in lead generation, data subscriptions, display advertising, programmatic advertising, and in some cases, content subscriptions.
Regardless of your model, optimizing pricing to reflect the value delivered can be a valuable driver of growth and revenue without incurring additional expenses. However, perceived value depends on the customer segment and the account.
It’s important to find the right leverage points. Leverage can be gained with specific types of customers, offerings, programs and audiences.
To shed light on these leverage points, media, event and information businesses must thoroughly understand:
- The needs of advertisers, sponsors and/or exhibitors
- The needs of audience members, site visitors, event attendees, subscribers
- The customer journey and experience required to excite, delight, engage and retain
- The activation framework that successfully ignites meaningful connections
- The decision-support tools, integrations, and platforms customers need to improve how they do their jobs every day
- The unique advantage that can be delivered to each
Pricing Power in Action: Sell-Side
Let’s review a few examples of pricing power on the sell-side of the customer equation for a company that provides digital advertising and lead generation. (Most of these principles also apply to event companies driven by revenue from exhibits and sponsorships, since they are all about delivering audiences too).
Lead Value
Using algorithms to determine audience value and charging accordingly. Not all leads are worth the same. In fact, the same lead may be worth much more to one sponsor segment than to another.
We suggest using an algorithm that includes five core buckets of data:
- ICP/BP to Your Brand: Demographic data by industry, size, location, title and function mapped to your brand.
- ICP/BP to the Customer Segment: Demographic data by industry, size, location, title and function mapped to the customer segment.
- Brand engagement: digital engagement, event attendance, direct monetization, and indirect monetization. Each engagement point has a value which compounds with increased engagement.
- Buyer intent: engagement with first and third party content, search activity, and workflow activity such as product information saves and shares, submissions for more information, lead conversion. For complex purchases such as enterprise software, buying activity by additional contacts from the same organization should impact the score.
- Recency & Demand: The value that audience members bring to the table is not fixed but, rather, varies depending on factors such as time and sponsor interest.
These things matter because, to marketers, not all leads are created equally. Some agriculture manufacturers, for example, will pay dearly to reach farmers who are planning to grow more acres of a certain crop next year.
Enterprise software and high tech companies will pay top dollar to reach VP plus titles in critical buying roles that work within specific sectors of the business. SAP’s manufacturing industry vertical wants to find in-market buyers in Cargill’s Industrial Division across the manufacturing, finance, and operations VP functions. But guess what, so do Oracle, IBM, and Microsoft. Demand should drive up price and also provide a barrier to over engagement with a very high quality, sought after lead.
Data Wraps
Wrapping existing products with data in the form of insights adds tremendous value for advertisers, exhibitors and sponsors. Data wraps not only allow you to command higher prices and create compelling upsell opportunities, data wraps create new customer experiences, improve satisfaction and increase lifetime value.
Reports, alerts, dashboards, visualizations to complement products and delight customers.
Performance Dashboards: For event businesses, sponsors can improve their lead generation efforts through the right mix of booth space, branding activations, and marketing programs. With real-time dashboards and reports, you can keep a finger on the pulse of performance and gain valuable insights about what works and what doesn't. Invest in timely monitoring of program stats to refine elements that make your campaigns thrive. Dashboards can provide marketers with real-time insights into highly engaged prospects that may also be attending the event they are exhibiting at. Their sales teams can then take action and schedule appointments with prospects most predisposed to meeting.
For digital businesses driven by lead generation and advertising, dashboards on campaign performance, insights on audience engagement, intent, demographic/firmographic profiles and metrics synced with internal data from clients all add value.
Real-Time Data Cleansing & Feeds: Real-time data cleansing and feeds works well for lead generation customers who require things like net new, in ICP/BP target zones, email verification and data mapping to CRM fields. Take this a step further and offer the API to send cleansed leads directly into their CRM in almost real-time. Game changer and customers will pay for it.
Data-Enhanced Lead Generation:, Enhance leads with additional data culled from purchase intent behaviors in addition to structured data fields. Additional data can include scores based on how many people from the company have also visited your website and done similar searches, engagement with competitive assets, and buyer activities such as saving, sharing, and comparing competitive products side-by-side. Think ZoomInfo data but in your owned environment. You can offer lead generation programs in two levels: basic which includes the regular data you provide and enhanced which includes the “extra.”
For event companies, value can be added by providing customers with intent data on attendee engagement and interests:
- Pre-event, so exhibitors and sponsors can prioritize prospect meetings in advance.
- During events, so exhibitors can know if attendees visited their competitors booths, which sessions were of interest and more.
- After events, so customers can know if attendees and leads expressed any changes in intent after their event experience.
Pricing Power in Action: Buy-Side
Let’s dive into the buy-side.
VIP Experiences at Events
Keynote Speaker Meetups: Who doesn’t like some extra attention? Creating unique experiences specifically for important customers (or attendees) can make a big difference. One approach is to give exclusive access to hear high demand speakers with interactions in a more intimate setting. Content Marketing World is known for its outstanding speakers, but the real treat is the VIP experience where guests enjoy one-of-a-kind speaker interactions with people like Mark Hamill. Not only do they get information that has never before been presented by the speaker, they get to experience it in a much smaller group, offering everyone a chance to have their questions and comments addressed.
Tiered Attendance Levels: One of the best events I ever attended was a sales conference called Outbound hosted by Jeb Blount, Anthony Iannarino, and Mark Hunter. It was back in 2019 and I even wrote a LinkedIn article about it called, It’s All My Fault, which you can find here. What I loved about this event was how smart they were about attendance and getting people to not only PAY more but also how they used onsite FOMO to drive upgrades and attendance commitment for the following year - including payment - onsite.
Three attendance tiers were offered starting at $ 300 and ending at $2,750 (don’t quote me on the exact dollar amount but it was in that range.) The lowest tier gave you access to the general conference and conference networking. The mid-tier provided access to workshops. The top tier, the bomb of all tiers, took this 10X further. And of course, that’s the one I paid for.
The top tier offered me access to:
- A special all day event before the general kickoff of the conference at the Porsche Driving Center in Atlanta. The sessions were very collaborative and I not only was able to participate among other attendees, I made some nice professional friends that I would engage with through the rest of the conference.
- I skipped the line to collect my special badge
- My swag was 10X better than everyone else’s and I still use some of it today
- I had a reserved seat in the front of the room in general session with special tablecloths and water bottles
- Meals and networking also took place in designated areas.
What made the FOMO so powerful is that this VIP treatment was visible to everyone and you could hear, “how do I get in?” To add some pretty flowers to this already delicious cake, here I am today, still raving about it. When that event resurfaces in 2024, I will definitely be going.
Given that hybrid and virtual events are here to stay, the same philosophy about VIP experiences applies to them too. After an online event, how about offering an extended session with a prominent speaker to marquis sponsors? Doing so can present new sponsorship opportunities and be part of premium packages.
Premium Digital Experiences
Companies that offer tiered subscription or memberships can also squeeze more revenue from their offerings.
For example, Business insider offers a higher priced subscription that is ad-free. In the B2C world, Tinder is developing an exclusive new dating subscription service that will cost $500 a month, or $6,000 a year, according to Fast Company. The working name is called Tinder Vault, which is being planned as “amplification” of Tinder’s current technology, rather than a completely new segment.
There are many other ways to gain pricing power, and I am happy to brainstorm if you want to share 30 minutes with me over a call.
The Bottom Line…
Companies that invest in understanding the intricacies of power pricing deliver the right value to the right customers. They know how to leverage existing assets to drive that value and how to ensure execution and delivery.
They tend to have higher customer satisfaction, loyalty, and long-term profitability, ultimately setting them apart from competitors who adhere to traditional cost-based pricing strategies.
Most key strategies to increase pricing power are data-driven. Leaders in the Media, Information and Events industry are responsible for creating value by monetizing data. To gain pricing power effectively, you need to know the costs, risks and benefits. However, most platforms do not empower you to do it well.
Want to increase your pricing power?
Our platform, Insightify, is purpose built to uncover insights that can inform pricing decisions and more.
Our Product Innovation solutions will help you extract more value from current operations while planning for the future.
Look out for other topics we are covering in this series.
- Reducing Customer Churn
- Increase Win Rates
Upcoming topics:
- Managing Discounting and Value-Add
- Increasing Expansion and Cross-Sell
- Identifying and Eliminating Revenue Leakage
- Tightening up Sales Cycles
- Aligning Revenue Critical Teams
- Developing Leading KPIs for Growth
- Using Predictive Analytics to Control the Business
