Sounds daunting, doesn’t it? Especially for those of us who have been through it, or are going through it right now.
Let’s say your business has been around for a short period of time. Maybe less than a year. Hopefully, it has delivered according to expectations most of the time.
It follows that there should be some degree of trust in your business brand if you are still in business.
But, is it that rigid? Is it only about social proof?
What do you do if you are a new business and need to build brand trust sooner rather than later so you can stay in business?
What strategies can you use until you get the sales and the positive reviews?For instance, can we get away with presenting facts and hope to build brand trust if the business is new?
I will explain an approach that you may find useful and offer 10 practical tips to move forward.
Let’s start off with some background information.
The three brand trust questions you may be asking about your business’ brand
Many businesses face three questions around building brand trust:
Do you always have to earn brand trust in advance? Or, are there other approaches to getting trust that is not based on past experience?
Is brand trust only based on that which is obvious? For instance, are clients basing brand trust on the criteria that we would expect them to use, such as service levels?
Are there complementary approaches to building brand trust we should consider? Are we missing an opportunity to build trust by only chasing after what we’re used to working on?
This article discusses scenarios where these questions are relevant. It also provides practical examples of how to answer these questions.
Some background about the relationship between a brand and brand trust
Brand trust is essential if you wish to make it easier to get and keep clients.
That’s because brand trust suggests that various financial, performance, and social risks associated with buying that brand have been relatively well managed.
Brand trust also helps you charge a price premium. When facing tight margins, this becomes critical to long-term business success.
But, brand trust is not easy to get if you are a new business.
So, how do you address these challenges?
Here are 10 ideas to handle the brand trust issue for newer businesses
Given that there is a limited track record, there are several options to pursue.
Get past the brand trust issue by limiting perceived competition.
Yes. I know I said that I would offer tips on building brand trust. But, the strategist in me feels compelled to offer this as the first piece of advice.
If no trust, or limited trust, due to a limited time in business, puts you at a disadvantage relative to your competitors, change the game. Do something that positions you in a way that limits your perceived competitors.
For instance, offer something that nobody else has and pair this with some of the options below. Remember the adage that you should not compete where there is competition. The internet has made it easier for a niche business to become viable, especially if you are a service business.
If you cannot achieve this, then use the following nine tips below…
Offer whatever limited social proof you can get.
Work with the reviews and recommendations you have until you can get more.
If you are delivering as promised, keep improving the process of doing this. This improves perceived quality and leads to a consistent habit of improvement. This leads to more, happier clients who are willing to put in a good word for you without being asked.
Automate where possible to collect more social proof. We find that this process is often neglected until social proof is required. Remember to make this process credible so that the reviews are perceived as being true.
There is significant advice on how to do this better. Don’t reinvent the wheel.
Amplify positive word-of-mouth through paid posts if possible.
Somebody credible may have had a great experience with your brand. But, if nobody sees the post on your social media page, it’s lost to your audience and is a lost opportunity.
Some brands pay to amplify selected posts if it’s worth having a great brand rub off on your brand.
There are several instances where one positive review from the right person catapulted a brand from obscurity to recognition and trust.
Use positive brand associations.
Do you have channel partners or affiliates with more credibility? Leverage them to get momentum. Many marketers swear by this approach. I have seen many instances of this being done successfully if you are noncompeting by virtue of your industry, category, or place in the value chain.
At times, being in a trusted ecosystem or on a trusted platform, such as an online marketplace where sellers are vetted, can help to provide association credibility.
In addition to the trust effect, the scaling effect can help you magnify the effects mentioned in points 2 and 3 above.
Offer a money-back guarantee if possible.
This is obvious as it lessens the perceived risk if things go wrong. But, there is a less obvious trust-building effect that also takes place. If clients can see that you are willing to make this offer, it implies that you are sufficiently competent to make this financially viable. Hence, it is more likely that you are trustworthy.
Also, skip the fine print if you can. You’ll be familiar with the “No questions asked” approach which is so appealing. It suggests that you have faith in your own competence.
Make sure you are contactable.
How often have you not bought something because there is no phone number, no address, or no business name beyond a brand or domain name? I’ve often rejected potential suppliers that seemed competent, but have gone to painstaking lengths to not be traceable or accountable if something goes wrong.
Makes you wonder if the brand’s owner is credible, doesn’t it? We’ve all seen the ads belonging to those businesses that do not seem to want accountability.
Show that you can be found and are accountable. Contact details and some sort of a business number related to the region you are operating from helps a lot.
Be transparent about your policies.
What is regarded as “Fair?” You and your prospective client may have very different views depending on the country’s laws and culture you come from. Be very clear. Not only does it inspire faith by reducing perceived risks, but it also indicates you have thought about the issue. And you are willing to put your neck on the line because you have faith that the negative event in question is unlikely to take place.
If something goes wrong, what will it take to make things right? We’ve all been here before. If a prospective client believes that it would be more pleasant to have their teeth extracted, than getting what was promised, you have a problem.
Showing that a problem is easy to rectify is essential. And it lowers shields because you are perceived as having integrity.
Be transparent about your processes.
How do you operate?
Do you have people or technologies that are better or faster?
How is quality built into your processes?
I’ve had great results when using processes as a topic for demonstrating why a brand should be trusted. It’s useful for lowering perceived financial, performance, and social risk. (There’s a link to an online DIY tool below to make this process easier for you.)
Be transparent about your standards.
How fast do you deliver?
What are your service levels like?
Who is available if things go wrong?
Is there an independent 3rd party to keep you honest?
I’ve used this strategy successfully over the last 20 years for new brands and existing brands that have faced trust challenges due to their past or the industry that they operate in. I have also noticed that this approach has attracted clients who may have never even considered our brand. Especially when none of our competitors were willing to do the same.
Be visible.
All things being equal, familiarity builds some trust.
Communicate whenever possible as long as you are being relevant.
Try to be of service by providing useful information. If done well, this positive attribute will rub off on your reputation.
Read more about the DIY, online tool to further develop the ideas mentioned in points 7, 8, and 9 above to build brand trust.
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
A key part of a pricing strategy is determining how to differentiate your brand. “What?”, you may ask. Isn’t brand differentiation normally accommodated in the communication strategy arena? This is true. However, it is also very strongly linked to a pricing strategy. This is because brands that are able to differentiate effectively are generally able to compete on a basis other than price.
Opportunities for brand differentiation
How then do we differentiate a brand? There are several paths to get there, but one powerful enabler comes from benefit segmentation. Traditionally, brands have used various forms of segmentation such as demographics (age, income, gender, et cetera), psychographics, geography, and other approaches.
Benefit segmentation and pricing strategy
Benefit segmentation typically involves finding benefits that are relevant to the part of the market, and which potential customers will pay for. Benefit segmentation can typically cut across other segmentation bases such as demographics, psychographics, or geography. Benefit segmentation is also useful in that it is easier to communicate.
The basic idea is that differentiating a brand along the lines of benefits lessens competing alternatives, helps make the brand more relevant to prospective customers, and in doing so allows a pricing strategy that is not necessarily based on low prices, but rather on a premium pricing basis.
Benefit segmentation can typically be expressed at three levels, namely functional benefits, emotional benefits, and self-expressive benefits.
Functional benefits
These benefits are typically intrinsic to the product or service being offered. Examples may include:
being the most economical
safest in its class.
most convenient in terms of location.
open after hours.
externally certified processes to offer high levels of quality.
designed by a world-famous designer.
a proprietary technology.
top rated advisers to give you the best advice.
You will notice that all of these benefits are relatively easy to communicate. They can be used to differentiate a brand. Ultimately, they can assist you to charge a higher price if your competitors cannot offer these qualities while you can.
Emotional benefits
Emotional benefits are more complex. They are typically derived from functional benefits or directly from assumptions made from a brand’s communication strategy. Emotional benefits are rather useful in that they are more difficult to replicate should a competitor wish to copy your communication strategy.
Typically, emotional benefits may also be based on several other benefits and can provide a positive halo around your brand that lets you charge more for your products or services. For instance, a functional benefit offering top-rated advisers to give you the best advice would lead to an emotional benefit such as peace of mind. The bottom line is that it provides a vehicle to let you charge more for your products or services.
Self-expressive benefits
Self-expressive benefits are generally the highest level of benefit based differentiation. They may be derived from functional benefits or emotional benefits but ultimately are an enabler that customers of a brand will use to say something about themselves. This is a very powerful form of benefit and is typically quite difficult for competitors to replicate.
It can also rely on forms of brand building that focus on causes. This could leverage digital communication channels that do not necessarily promote the product or service directly, but offer timely and relatively lost cost forms of brand-building and pricing power for you. Generally, brands offering a desirable self-expressive benefit have the potential to charge premium pricing.
After having seen the variety of options open to you, it may be worth rethinking how you associate features with benefits for your products and brands to have greater pricing power and profitability.
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
Many businesses face three questions around building brand trust:
Do you always have to earn trust in advance? Or, are there other approaches to getting trust that is not based on past experience?
Is brand trust only based on that which is obvious? For instance, are clients basing brand trust on the criteria that we would expect them to use, such as service levels?
Are there complementary approaches to building brand trust we should consider? Are we missing an opportunity to build trust by only chasing after what we’re used to working on?
This article discusses scenarios where these questions are relevant. It also provides practical examples of how to answer these questions.
This article is intentionally comprehensive to provide you with many practical, useful examples.
If your time is limited, you can find a link to an online tool at the end of this article to replicate the thinking described below.
Scenarios where your business needs to build brand trust
A newer brand with limited brand trust.
Let’s say your brand has been around for a while and has delivered according to expectations.
It follows that there should be some degree of brand trust if you are still in business. But, is it that rigid? Is it only about social proof?
What do you do if you are a new business and need to build brand trust sooner rather than later so you can stay in business?
What strategies can you use until you get the sales and the positive reviews?For instance, can we get away with presenting facts and hope to build brand trust if the brand is new?
A brand with a troubled past having brand trust issues.
What if our brand’s reviews are not ideal and we need to show we have changed our ways and are on a different course? Sometimes it seems easier to have no reputation than a bad reputation. But, there are ways to address these challenges.
Is there an approach to do this? You’ll see some ideas below that help you provide proof points around how you have changed, and why you should be trusted.
A poor industry image where the category or industry is not trusted.
What do you do if you are from a category or industry with a poor reputation for trustworthiness? We can all think of a few of these in an instant. Although it can be challenging, it provides an opportunity if most of your competitors are not trusted by their clients.
Where are the opportunities to build brand trust and differentiate your brand? What do you do if you need to show you can be trusted. Usually, this means showing that you are set apart from your category or industry. But this takes some creative thinking.
I will explain an approach that you may find useful under each of these circumstances.
Let’s start off with some background information.
Some background about the relationship between a brand and brand trust
Brand trust is essential if you wish to make it easier to get and keep clients.
That’s because brand trust suggests that various financial, performance and social risks associated with buying that brand have been relatively well managed.
Brand trust also helps you charge a price premium. When facing tight margins, this becomes critical to long-term business success.
But, brand trust is not easy to get if you are a new brand or have experienced previous complications.
So, how do you address these challenges?
Let’s begin with an overview of some key brand trust considerations before proposing options:
A brand contains a bundle of qualities that affect brand trust.
Some of these qualities rely on promotional communications by the brand owner.
Some of these qualities rely on experiences with the brand or the people who represent it.
Unpaid communications, such as word-of-mouth in social media, may expose undesirable brand qualities based on perceptions or negative experiences.
When done right, a brand can represent trustworthiness on its own. There may be a limited need to talk about anything else. For instance, consider the success of Apple in selling products based on reputation.
This means that brands are purposely shaped over time. Sometimes the way we want them to be shaped. Sometimes not.
It also suggests that it’s an ongoing process that can have unexpected influences.
Let’s have a look at some of those unexpected influences that may provide you with opportunities.
Building brand trust is not always based on what you would expect
A copywriter with an enviable track record had an opinion on using a logical argument to sell more.
He suggested that, when creating a sales message, we should not enter the conversation in someone’s mind. Rather, we should enter the emotion in their heart and gut if we wish to sell more.
In other words, appealing to emotion can be more powerful than appealing to facts:
We can all relate to using “gut feel” when deciding whether we trust someone or something. We have all had the experience when facts were not enough to make a sale. Even when those facts relied on indisputable logic.
Many of us have had the experience of a sale based on emotion win over a sale based on logic.But, it turns out that emotions rely on very sound logic. So, even when you appeal to emotion, there is a sound rational basis for this approach.
Talking about emotional benefits rather than functional benefits grows successful brands.It is more difficult to imitate a competitor’s brand built at an emotional level. Copywriters will tell you that an emotional hook is essential in your messaging to build a brand and make a sale.
Getting this right helps to differentiate your brand in a more sustainable manner. So that you can sell more and sell at a higher price.
Not convinced? Consider why you bought that expensive brand when you could have done the job with a much cheaper brand.
Let’s talk about gut feel, how to use it and whether it’s only based on logic
The role of the subconscious mind in decision-making is becoming a popular topic:
It is relevant since many decisions happen without deliberate thought. Automatically, in many cases.
This implies that a person may not understand the reason for their decision to buy in a particular way. They may attribute brand trust to intuition.
Adam Grant has noted that intuition is subconscious pattern recognition. In other words, we may come to conclusions based on patterns we are observing.
One might argue that addressing subconscious concerns or fears could support brand trust. This may explain why people buy using emotion while sometimes ignoring rational selling points. Like those shoes or the car, that you had to have…
The communications industry has used this fear-based approach with success for years.The idea is that people are more responsive to an appeal that prevents some sort of loss.
This approach of preventing a negative outcome seems to be more powerful than an appeal based on gaining something of similar value. Copywriters and negotiators also keep emphasizing this point.
If this approach is useful, do we know what these concerns are?
Yes. There is research on these concerns.Some of it is formal, and other sources list what is most likely to get sales based on actual experiences.
There are at least thirty-three concerns and I will discuss some of them here.I will also include practical examples of how to use them on individuals or in businesses.
It may be that some of these concerns rely on experiences within a category or industry. They may also rely on solving an individual’s concerns.
You will find that they may overlap with the idea of Moments of Truth, a concept used to assess service quality. For example, did service delivery meet or exceed expectations on an empathy criterion?
Any way you look at it, you will find that there is an opportunity to redefine your category or industry.
You may do this by redefining what matters. By introducing new ideas that your competitors may not have explored. You can use this to create and own spaces in a person’s mind through your communications.
You can also use this to build better, valued, and unique processes in your business.
Practical applications
We wish to address concerns and thereby earn brand trust in advance. At least thirty-three categories of fear or concern exist:
These are areas where you can solve problems or “pain points” to earn brand trust.
These concerns may relate to current or prospective clients.
This could happen through your communications.
It could also take place through the processes or products or services you develop.
There are two broad areas where the thirty-three categories may apply. They are either:
Concerns that they are currently facing that you can address. For instance, a person would need motor vehicle insurance in the event of damage or loss to their car. The fear of loss is a concern that short-term insurance could address.
Concerns about doing business with your organization, your category, or your industry. For instance, someone needing insurance might wish to avoid the short-term insurance industry based on previous experience or word-of-mouth. This may hinge on uncertainty due to the industry’s claim payout ratio.
Here are five examples – out of the thirty-three categories – that could arouse deep emotions at a gut-level:
1. Being seen by others as having made a poor decision
Examples of applications are:
Buying something that most people would regard as being in bad taste. Build brand trust by lowering the risk of a poor choice. Review features and examples of popular items could be one way of doing this.
Business colleagues noting you have appointed a consultant without the appropriate skills. Build brand trust by showing the bio of the consultant in question. Include an opportunity to see case studies of that person’s work.
Buying a product that is not friendly to the environment. Build brand trust by showing sourcing policies that are friendly to the environment. Publish your organization’s values. Show how these relate to environmental policies. Showcase studies of how you get your raw materials.
Exposing a business to risk by not taking out the necessary insurance cover. If you are an insurer, build brand trust with a process to ensure clients get insured with the right policy. If you are the organization, explain your insurance management processes to mitigate risk.
2. Disappointment at not having your expectations met
Examples of applications are:
Not being able to retire due to poor investment advice.Financial advisors can build brand trust by showing a trustworthy process. For instance, a model that assesses a client’s financial needs. Brand trust can also be generated through case studies or reviews.
Losing money due to inadequate legal advice. Build brand trust by showcasing the people involved in giving advice. Brand trust can also come through case studies. For instance, this might show the process involved. It might also show the results achieved over time. A client list can also generate brand trust.
Not meeting business targets due to ineffective marketing consultancy. Build brand trust by showing a proven process. Showcase studies with video testimonials if possible. Provide a money-back guarantee under certain conditions.
Not getting the job done because your business hired the wrong person. Build brand trust if you are a headhunter by using a tested quality control process. Also, provide a money-back guarantee within a specified period under certain conditions. Allow for the person to be part of a project team first before hiring.
3. Feeling isolated or abandoned
Examples of applications are:
Dealing with a financial institution after experiencing credit card fraud. If you are a financial institution, build brand trust by showcasing how fast you can respond. Explain your policy of fairness. Show how there may be an external 3rd party to settle claims if necessary.
Dealing with a short-term insurer when your claim is not paid out. Short-term insurers can build brand trust by having a transparent claims process. Publish your payout ratios relative to the industry. Show how a client can get recourse if a claim is not paid.
A small business after its IT system has a cybersecurity issue. A cybersecurity company can build brand trust by showing how they can end the problem. They can also show their preventative measures though their policies and software.
A business that cannot raise the necessary financing to stay in business. Generate brand trust if you’re a lender by showing how you differ from banks. Provide testimonials if necessary. Explain exactly how your process works ahead of time.
4. Failing or appearing to be a failure
Examples of applications are:
Not succeeding in a profession due to inadequate education. An educational institution can earn brand trust by showing alumni successes. These could include hiring organizations. They could also include salary surveys.
A business failing to expand into a new market after investing a lot of money and time in these efforts. A consultancy could earn brand trust by showing how it has got new market wins for other clients. They may show their process for ensuring a higher chance of success. They may even show their team members’ records and partner networks in other markets.
Not living in a desirable suburb. An estate agent could build brand trust by introducing people to the best suburbs for them. This could happen to those new to a country or area. This person could also get them the most affordable deals to do so.
A business that loses several key accounts through its own negligence. A consultancy could earn brand trust by introducing processes for key account management. They may also enable the appropriate training. Finally, they may assist with screening and hiring the right people for the job.
5. Issues arising out of complacency
Examples of applications are:
A business not staying up to date with changing customer tastes. Earn brand trust by providing up-to-date market trends to them. Provide them with a platform for the right feedback before they enter production.
A business not retaining its best employees. Earn brand trust by showing how you have created programs to keep employees. Communicating policies to promote leadership hiring from within the organization.
Not planning for your financial future, such as marriage or retirement. Earn brand trust by providing accessible solutions to plan investment alternatives. Showing how investments can be tax efficient.
Not planning for risks that could have far-reaching consequences. A consultancy could earn brand trust by providing a simulation framework. It could also audit their disaster planning contingencies. The board could also show how their non-executive directors actually do add independence.
Effective communication requires structure
Identifying these concerns is a start. Persuading people your brand is trustworthy is more complex. There are three stages you wish to go through for each concern you addressing. These include:
A warmup stage. This is where you create likeability and show why your message is meaningful.
A stage to reduce uncertainty. This is where you use social proof and create authority for your message.
A stage to motivate action. This is where you get someone to move in a particular direction. For instance, a free trial. In some cases, creating scarcity may make this process work faster as long as it’s done with care.
Do the three stages above seem familiar to you? If you have ever bought something online, you will recognize them.
Think of how they created empathy with a problem you faced.
Then they demonstrated expertise in solving the problem.
Then they showed you how easy it was to act. And how it was risk-free. But, you needed to move fast…
Some of these communications, while effective are blatant sales pitches. Others manage to do the same job to build trust and get a sale. But, they do it in a less obvious way.
Addressing the three scenarios where you need to build brand trust
1. A newer brand with limited brand trust.
Given that there is a limited track record, there are several options to pursue.
Here are 10 ideas to build brand trust:
Get past the brand trust issue by limiting perceived competition. For instance, offer something that nobody else has and pair this with some of the options below. Remember the adage that you should not compete where there is competition?
Offer whatever limited social proof you can get.
Work with the reviews and recommendations you have until you can get more.
If you are delivering as promised, improve the process of doing this.
Automate where possible.
Remember to make this credible.
There is significant advice on how to do this better. Don’t reinvent the wheel.
Amplify positive word-of-mouth through paid posts if possible.
Somebody credible may have had a great experience with your brand. But, if nobody sees the post on your social media page, it’s lost.
Some brands pay to amplify selected posts if it’s worth having a great brand rub off on your brand.
Use positive brand associations. Do you have channel partners or affiliates with more credibility? Leverage them to get momentum. Many marketers swear by this approach.
Offer a money-back guarantee if possible.
This lessens the perceived risk if things go wrong.
Also, skip the fine print if you can. You’ll be familiar with the “No questions asked” approach which is so appealing.
Make sure you are contactable. How often have you not bought something because there is no phone number, no address, or no business name beyond a brand or domain name? Makes you wonder if the brand’s owner is credible, doesn’t it? We’ve all seen the ads belonging to those businesses that do not seem to want accountability.
Be transparent about your policies.
What is regarded as “Fair?”
If something goes wrong, what will it take to get compensation?
Showing that it is easy to do will be even better.
Be transparent about your processes.
How do you operate?
Do you have people or technologies that are better or faster?
How is quality built into your processes?
Be transparent about your standards.
How fast do you deliver?
What are your service levels like?
Who is available if things go wrong?
Is there an independent 3rd party to keep you honest?
Be visible. All things being equal, familiarity builds some trust. Communicate whenever possible as long as you are being relevant.
2. A brand with a troubled past having brand trust issues.
A brand with a troubled past may have even more difficulty than a brand with no reputation.
Here are 10 ideas to build brand trust:
New management? New ownership? A new approach? If there is a change, talk about it. If the past difficulty links up to people, ownership, or processes you must show some change. This is a start, but it helps if there are toxic aspects of the past that needed to go. New leadership brings its brand attributes along with them. Then, pair this up with some of the options below.
Get past the brand trust issue by limiting perceived competition.
I have worked with troubled brands and have introduced something different and valuable.For instance, offer something that nobody else does.
You are changing the playing field to change the game by introducing a new variable.
Familiarity with the thirty-three concerns that clients have could help you find ways to be a game-changer.
Offer whatever limited social proof you can get.
Work with the reviews and recommendations you have until you can get more.
If you are delivering as promised, improve the process of doing this.
Automate where possible.
Remember to make this credible. It will be difficult at the start.
Remember that new groups of people enter the market without prior perceptions about being your client. I’m often surprised at this, but it happens.
Amplify positive word-of-mouth through paid posts if possible.
Somebody credible may have had a great experience with your brand. But, if nobody sees the post on your social media page, it’s lost.
Some brands pay to amplify selected posts if it’s worth having a great brand rub off on your brand. I’ve seen brands doing a turnaround where this kind of approach drives great campaigns that deliver results.
Be visible.
I’ve worked with brands in trouble with extensive communications during a turnaround.
When the message is relevant and truthful and believable perceptions can change faster than you might expect.
Use positive brand associations.
Do you have channel partners or affiliates with more credibility? Leverage them to get momentum.
I have found that this helps if there’s a belief that this will make you accountable.
At times this also helps if these partners fulfill the functions you cannot do well, thereby eliminating those processes from your value chain that previously tarnished your brand.
Offer a money-back guarantee if possible.
This lessens the perceived risk if things go wrong. It’s also a great incentive for you to make things work better,
A “No questions asked” approach, if possible, shows you’re sincere.
Be transparent about your policies.
A poor reputation may have stemmed from a lack of clarity. Be clear. Your clients having less knowledge of your industry may hold a different view of what is fair or reasonable behavior.
It also shows that you have thought about a policy in advance. This is important as it reveals your state of mind, logic, and preparedness as an organization to prospective clients.
Be transparent about your processes.
Talk about the quality built into your processes.
Show why clients will have a great experience.
Use this to prove why they can trust you this time around. I’ve used this approach many times before and have seen it being used successfully by others.
Be transparent about your standards. (This approach can be very successful.)
You have a reputation that needs changing. Talk about the standards that they must expect.
What are your service levels like?
Who is available if things go wrong?
Is there an independent 3rd party to keep you honest?
Show how they will be safe, even under an adverse scenario.
3. A poor industry image where the category or industry is not trusted.
Brand trust may be an issue at a higher level than your organization. There is much opportunity to excel when the bar is set low. It may be a sign that many of the concerns mentioned above are not addressed.
Here are 10 ideas to build brand trust:
Change the game. Show what has changed. New processes? New technologies?
Be aware that this needs to be believable.
Sometimes a new and unrelated brand may become necessary to achieve this.
Use proof points.
Why is the change an improvement?
Prove the claims that you are making. Use external third party experts or testimonials or surveys if necessary.
Be transparent about your processes.
Category or industry differentiation often derives from process change. Talk about the quality built into your processes.
Show why clients will have a great experience. Use this to prove why they can trust you.
Amplify positive word-of-mouth through paid posts if possible.
You may need a client to talk about how you have changed the category or industry to be credible.
Active participation in online groups is a useful activity to get content.
Use positive brand associations.
Do you have channel partners or affiliates with credibility? Let them do the talking to their client base.
Showing how they work with you to improve their clients’ lives improves their image too. They may also give you ideas you had not thought of.
Be visible.
All things being equal, familiarity builds some trust. Communicate whenever possible as long as you are being relevant.
Try to be of service to your market. If nobody knows you have changed and are better than your peers, you don’t get to build trust.
Talk about leadership if possible.
It is usually an outsider that reimagines a category or industry.
If there is new thinking in the business, talk about it. Remember to communicate in simple terms. This is essential as prospective clients may not understand your industry jargon in terms of why you have changed.
Talk about how your policies are different.
Stodgy categories or industries have set policies. And they usually do not favor the client.
Show how your policies are different and client-friendly. I have used this approach often with much success.
Talk about how your standards are different.
What changes have you introduced?
Why are they better than the rest of the category or industry? (Often, there will be a change in technology to achieve this. Consider how financial technology brands disrupted the financial services industry. These introduced higher standards at a lower cost.)
Make a deliberate effort to have a well thought out media strategy.
This may seem out of context in this discussion. Yet, it’s not. Categories and industries with poor reputations may arise through limited competition. They may also have outdated business models that force them to operate at low margins. This often reflects in their media strategies.
If you plan to be a disrupter, show this in your media strategy. Disruption is often based on technology. Good digital media strategies can assist you in this regard to target communications. (This may seem obvious but is surprisingly often ignored.)
Summary
What I’ve described above may seem complex. In some places, it will take time to implement.
I suggest you create a list of opportunities and consider the impact and ease of implementing each one and move forward accordingly.
By the way, if this thinking appeals to you, there is also an online tool to execute these ideas faster or come up with new ideas to build brand trust.
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
Why should you have a call to action? Is a call to action just about generating a sale? Let’s start off by defining a call to action.
According to Wikipedia, a call to action refers to any device designed to prompt an immediate response or encourage an immediate sale. A call to action most often refers to the use of words or phrases that can be incorporated into sales scripts, advertising messages, or web pages that encourage consumers to take prompt action.” For instance, a button that invites people to sign up for a free newsletter is a call to action.
A call to action can play a variety of roles in developing your brand and business. Marketers often only see a sale as an indicator of success. This however neglects the fact that potential customers may not be ready to buy from your category where longer sales cycles exist. They may not know about the category or have not yet decided on which brand to buy. A call to action may therefore be an attempt to create a sale. More often, however, it may simply be used as a precursor to making a sale, so as to start to influence a potential prospect by identifying them for future, permission-based communications.
It pays to identify those people who have shown some sort of interest in your category or brand as they may either be prospective customers or influencers that will play a role in your future success. Identifying them helps us to communicate with them directly and on an ongoing basis.
The call to action may also be a mechanism to better define what a prospective client may be interested in as it relates to your business, so as to communicate with them in a more targeted manner. This could sometimes be done by tracking the links they click on, if permission is granted to do so, and then automating customized responses to this through relevant content.
Therefore the structure and role of a call to action need to be carefully considered. A call to action can take the form of a direct response communication, such as a Google Pay-Per-Click (PPC) approach that attempts to create a sale once a person clicks on the ad. Use the necessary analytics and testing tools to determine what works best.
It can however also take a less obvious form such as asking a person to provide an email address to receive future communications relating to the brand. Just be sure to comply with the necessary laws to ensure that your actions going forward are permission-based. e.g. GDPR.
Social media provides many opportunities for calls to action as well. For instance, liking and sharing help with the influencer process. It also assists to create a database of followers that has a permission basis with a particular digital media channel environment. Therefore, ensure that your tone, manner, and content fits in with that channel. e.g. Facebook, LinkedIn, Instagram, etc.
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
The importance of developing an understanding of your brand, product or service
What are the attributes you wish to communicate about your product, service or brand? Once you know what these are, and how they are unique, it becomes necessary to have a sense of where gaps exist in terms of what your target market understands about your offering versus reality. The objective behind developing an understanding is to fill in those gaps.
Attributes pertaining to your product, service or brand may sometimes be complex to explain. Under such circumstances it may be worth considering which type of creative execution and media channel would be best for the job. For instance do you require a video for a product demonstration so that people can see what you’re talking about?
When you’re dealing with more complex, abstract concepts, copy intensive communications may do the job best. A White Paper or email communications may be the way to go. It is often not appreciated that doing this is strongly linked to a pricing strategy that does not rely on discounting. Put simply, if you don’t wish to discount, help your prospects and customers understand why they are receiving true value relative to what they are paying you.
This is especially relevant for complex, costly decisions whether they be B2B or B2C purchases. Remember that it is key to develop an understanding of what you are offering. If this does not take place you will have a challenge in justifying the prices you charge should prospective customers not understand your value proposition.
Remember that this process can take time. Also remember to use the best media channel for the job at hand so that your communication isn’t hamstrung by your media channel, and vice versa.
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
The importance of creating and maintaining awareness
You can’t expect someone to be your customer if they do not know about you. Therefore creating awareness of your brand, product or service is essential. This facilitates the early stages of a sufficiently large pool of prospective customers who you can talk to for purposes of a sale, a consideration of your offer or a referral.
Even though awareness building is only the start of the sales process, studies show a strong correlation between awareness and sales.
You should have some idea as to whether your target market buys your product or services regularly, or on a very occasional basis. Knowing this will shape the frequency and nature of your communications when building awareness. This is because you sometimes may not know when someone is in the market to make a purchase from your category, but still need to balance awareness building with a limited communications budget.
Receptiveness to a communication can depend on whether the person you’re communicating with is in the market for what you are offering. Typically, people are more likely to pay attention to a communication when they have a need for your product or service.
Search based media strategies help you to be found by consumers when they need to buy from your category. Search engines help to address this issue. This partially helps manage the issue of being able to afford awareness building on an ongoing basis for new category buyers or potential brand switchers.
There will however be circumstances when it pays you to have ongoing communications with prospective customers so that your brand will be top-of-mind when they do decide to buy something in your category. This is where lead nurturing communications come into the picture.
Understanding how to use paid media (such as Google Pay-Per-Click ads, or Facebook ads) versus unpaid media (such as Google SEO or Facebook posts) will affect how successfully you achieve awareness and translate this into a communication that is regarded as being credible.
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
Anyone who has done Economics 101 will have seen a demand curve with a price on the one axis and demand on the other. The principle is to demonstrate that demand declines as price increases, except in some unusual circumstances. Along the way, you will have learned that price elasticity is an indicator of exactly how price changes affect the volume sold.
In practice, I’m asked about the price elasticity of a particular product or service, and how it impacts on pricing and brand strategy. The reality is that there is no specific price elasticity that applies in all cases. Although this creates more complexity, it also provides you with more opportunities to grow your profitability. Furthermore, in certain smaller markets, such as B2B markets, circumstances may be such that it may sometimes be difficult to get the data to calculate price elasticity at a specific point in time.
The following principles are therefore worth considering under such circumstances.
The relationship between the price charged and the quantity sold is often not linear. Therefore price elasticity is often not linear. Use this to your advantage.
When alternatives to switch to are increasingly costly, an increase in price won’t always necessarily have a specific decrease in quantity. Understand who your competitors are likely to be and how difficult it is for customers to switch to these alternatives.
The area of pricing indifference should never be ignored.
Pricing visibility, switching costs, and inconvenience – these are all issues that add friction when customers consider your price increase. For certain items, not everybody knows or cares about knowing what your prices are at all points in time. Therefore, indifference can be advantageous to you as long as pricing changes are done within reason.
Segmentation can be your friend when pricing.
In addition to what you’ve read above, sensitivity to price can vary widely across customer segments. Clear strategic thinking should guide you regarding segments where you should compete – due to relative price insensitivity, and segments that you should avoid at all costs – due to price sensitivity.
It is also worth mentioning that our analytics have uncovered instances where ongoing price promotions in specific channels and segments have had the effect of seemingly converting price-insensitive buyers to price-sensitive buyers over relatively short periods of time. Always think carefully when running a sales promotion that is price-based. Although it may build your volumes on a short-term basis, it needs to be considered in conjunction with your brand strategy to avoid long-term brand damage and profit margin damage.
Don’t ignore your communication approach when promoting a price.
Humans are surprisingly inefficient when it comes to converting a price to a standard rate. Although legislation exists in certain markets and industries to force clear pricing (e.g. per kilo), it does not exist in many other industries. To this end, pricing on a daily, monthly, or annual rate can be surprisingly effective at managing price sensitivity.
Time can change a lot.
Markets can change a lot over time. Needs and preferences change. Technology that affects who our competitors in a particular industry are can also change. To this end, it is worth reviewing how price sensitivity is changing over time. Equally importantly, understand which disruptive new technologies may change the competitive landscape so markedly, that discussing minor price changes becomes an irrelevant exercise when your business faces extinction! (Hint: Consider Uber vs. The taxi industry, or Newspaper advertising vs. Google.)
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
Do profitability and market share not always come together, you may ask? To some people this question is heresy. To others, it is simply obvious. The reason for this is that most business people have been brought up to believe that market share needs to be grown constantly, even if prices need to be kept at constantly low levels.
The prevalence of this thinking appears to be based on a logical theoretical underpinning. Most business school students since the 1970s have come to learn that growing market share leads to various scale economies leading to lower costs and hence greater profitability. Hence, the thinking goes, price lower to build market share and you’ll be fine from a profitability perspective.
Does it make sense to keep growing market share at the expense of profitability
However, this view has changed. Companies are increasingly questioning whether this logic is in fact always correct. Some have suggested that the theory was based on a somewhat flawed conclusion from a study that found that market share and profitability are correlated. Yet, a correlation between market share and profitability does not mean that market share necessarily leads to profitability. Clearly correlation and causality are not the same things, as many statisticians will concur.
Additionally, the notion that high market share results in ever decreasing costs and therefore higher profitability is also debatable. In the 1970s this may have been the case. In fact, this may still be the case in certain industries. However, we have all seen price wars to build individual competitors’ market share, that does not leave the overall industry, or most of its competitors, any better off than when they started the price war. Besides the obvious disadvantage of too much production capacity chasing too few customers in a market, other considerations such as evolving technologies also play a role.
How technology is changing the competitive playing field
As technology changes, the need to produce large volumes to constantly lower cost is no longer always a prerequisite. More to the point, the fact that products and services can, in fact, be customized more easily, and at a lower cost with emergent technologies, suggests that they have the potential to be more differentiated and can, therefore, command higher prices than their competitors’ offerings.
For instance, consider how 3-D printing has allowed manufacturers to produce cheaper molds for injection molding in short periods of time. This provides them with the benefit of being able to customize their products for different segments rather than being forced to provide one product only due to the high cost of producing an injection mold.
Consider also how 3-D printing is enabling sports shoe manufacturers to customize shoes for the individual customer, and in so doing produce the product on demand. This creates substantial product differentiation while lowering the potential for customer switching. It also removes the need for offshore production facilities thereby reducing potential obsolescence, logistics-related costs, and production lead time.
Bring segmentation into the picture to adapt your point of view
If you take this thinking further, and you start asking whether highly differentiated products that can be made at relatively low cost, operate in the same market, you may conclude that they do not. Therefore, the very notion of growing market share in one large market that is perceived to be homogenous may not be ideal. In fact, there may be several submarkets within one larger market as a result of technological advancements that are able to successfully adapt to particular consumer needs. This makes the original question of market share versus profitability redundant.
Furthermore, the idea of treating customers as a largely homogeneous group of people is problematic. Competitors that are able to segment a market into several profitable sub-markets can generally differentiate themselves more effectively and command higher margins within each of these sub-markets. Several progressive organizations have latched onto this idea and largely abandoned the market share paradigm to pursue a sustainably profitable future. How do you plan to reconsider this in your business?
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
Pricing is possibly the biggest profitability lever in your business! At first glance, this finding is often surprising. We know that pricing affects competitiveness and overall profitability.
Yet, shrewd pricing can often be the fastest way to improving growth and profitability. This is because the mechanisms around pricing need not necessarily require other complicated processes to work, to achieve success. Many of us would be familiar with the studies that have shown that a 1% increase in price can result in operating profit increases that may range from 16% to 155% across a variety of Fortune 500 organizations.
However, many of us will acknowledge that pricing is often something we consider last when compared to the more exciting aspects of doing business” such as launching a new product or developing an ad campaign. In fact, pricing is often done on a relatively arbitrary basis in many organizations. Some organizations have however noted the opportunity and acted on it.
Pricing can play a key role in a business
Pricing at all extremes can yield desirable results. Consider profitable digital businesses that have managed to achieve scale through globalization. They grow their businesses exponentially by charging prices that were previously considered unthinkably low. They have shown what could happen when you price at a level that enables consumers – who would have never considered entering a particular category – to do so.
On the other extreme, consider luxury brands that offer high-quality products or services. Although their quality differentiates them, it has to be acknowledged that premium pricing plays a big role in the cachet which makes them so attractive.
Sadly, many other businesses in between do not pay sufficient attention to how they price and why they price that way. For instance, some will follow conventional industry practice while others will focus on traditional cost-plus accounting approaches. These are not necessarily wrong, but they ignore so much opportunity.
A common weakness is that many marketers will develop a product or service, price it, and then hope it sells. When the sales do not follow, prices are either cut, more is spent on the communications budget or additional new products or services are developed using the same approach. So how can you rethink your current pricing approach?
An alternative approach to pricing
Some businesses have flipped this problem on its head and started out in the opposite direction. They understand the price point at which they are likely to attract a large concentration of consumers in a category. They then develop a product or service that is desirable at that price. This forces them to focus on what matters and what doesn’t in terms of features.
By doing this, unnecessary features that are often part of any new product or service are culled. This is a strategy that has been adopted for the last century by a number of successful businesses such as McDonald’s and IKEA. Yet, it is an approach that is often not widely appreciated.
Although this approach places pricing first, it is not the only approach to being successful, as not all pricing decisions revolve around prices. Some will focus on features first. What this approach teaches us however is one of the fundamental tenets of pricing strategy that is broadly applicable:
Understand the price at which you can attract sufficient customers to create a viable business.
Understand which features you need to remove to be able to provide a lower-priced option that can be attractive to a smaller subset of potential customers with limited needs and budgets, with the hopes of a future upsell to the mainstream product or service.
Understand which features should be added, at a higher price for those customers who want more functionality and exclusivity.
This starts to hint at segmentation strategies to ensure successful pricing.
Some of the areas where pricing strategy can yield profitable outcomes
Various opportunities exist to use a pricing strategy to boost profitability. These can be accessed by a better grasp of the following issues.
Are our growth objectives based on profitability or market share? Where does smarter pricing and segmentation play a role in this?
Are we too focused on the price elasticity of demand, and getting to a “correct price” while not capitalizing on other opportunities that may be “lower-hanging fruit” that is easier to benefit from?
Are we pricing appropriately to retain our clients? What could we be doing differently?
How are we pricing across our product/service portfolio? Why have we made the choices we have made? Does our portfolio pricing strategy give us an advantage in attracting and retaining business?
How well are we integrating pricing strategy with communications strategy? What should we be doing differently?
Do we use benefit segmentation to full effect to make our pricing strategy more successful? How does one do this in practice?
Have we fully appreciated how a few changes to our discounting policies and strategies could markedly boost profitability? Are we successfully integrating discounting policies within our pricing strategy?
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
Although a client may leave you for a variety of reasons, we generally find that there are two key drivers of defection that a pricing strategy can address.
The first is when clients feel they are not getting value for money. The second, more worryingly, is when they actually feel that they have been cheated by a brand and actively take steps to leave, possibly even badmouthing the brand afterward.
Addressing these issues, whether you are selling a product or service is essential. In the case of products, it means that the client will not buy from you again. In the case of services that are being delivered on an ongoing basis, it means that the client will not use your services in the future.
Therefore, this requires some thought around what the client understands that value proposition to be. This is relevant because the promise and the delivery based on those expectations will help the client to ascertain whether they are getting value for money, based on the price they paid.
Key areas to consider:
What value proposition are you offering? Have you linked the value proposition to the correct client segment so that it is relevant to them? This issue is a key contributor to misaligned price-value equations.
How are you communicating this value proposition? Has the client understood your value proposition? They need to value what they are paying for! If it becomes evident that the client did not understand your communications, has there been an effort to make the client understand what they are getting? Alternatively, has there been an effort, if feasible, such as in the case of a service, to upgrade or downgrade the client to a related service that will better meet their needs?
Have you considered having additional products or services positioned above and below the product or service in question, so that prospective clients can easily understand what they are getting and not getting for the price being paid? Sometimes, it is an easier communications job to show these alternatives so as to convince a client to buy into the desired option.
Does the pricing strategy encourage “loyalty” or desirable buying traits? This may be promoted through benefits such as easier access to senior employees at short notice, some services being temporarily bundled with a primary service at a reduced price, etc.?
Success at this approach can be visible through:
Repeated purchases over a period of time by the client.
Successful cross-selling helps to make it more difficult for the client to leave suddenly due to the effort in switching over to suitable replacements.
An increase in the client’s share-of-budget relating to how much the client buys within the category.
As you will have noticed in the discussion above, there is so little emphasis on cutting prices to make a client more loyal to you. Consider the variety of alternative options open to you to implement some of these concepts in your own business.
About the author
Alan Ohannessian started WisdomInc in 1999.
He has broad-based experience in how marketing strategy and analytics are practically integrated with other strategy disciplines for more effective outcomes.
Prior to starting WisdomInc, he started a Customer Relationship Management consultancy within the Ogilvy Group in the mid-1990s and worked within the Ogilvy Group over a 5-year period.
He has advised product and service organizations for more than 70 global and local B2C and B2B brands since 1995.
As a specialist across several disciplines, he is able to provide an integrated view of a solution when providing strategic insights. Areas of specialty have included Marketing Strategy, Brand Strategy, Communications Strategy, Brand Experience Management, and Pricing Strategy.
He has taught Marketing Strategy to MBA students at Wits Business School, on a part-time basis, through the “Marketing in a Connected World” course.
He holds a Master’s degree in Distribution Channel Strategy from the University of the Witwatersrand.
He has also completed a postgraduate dissertation in the area of cost-competitive mass-customization manufacturing strategies at Wits (where he taught Marketing Strategy, Consumer Behaviour, Marketing Research, and Retail Marketing over a 2-year period from 1993 to 1994.)
