When it comes to digital marketing, the power lies with the consumer, who is behind a screen interacting with your content and free of physical communication which is a powerful avenue for marketers to convince them.
With the wrong strategies implemented, a marketer’s energy and efforts applied for months or years will be fruitless.
But with the right strategies, you can rest assured that your online assets will protect you from the unforgiving marketing terrain.
One of these protective strategies is using the 5 C’s criteria when pricing and marketing your products.
The 5 C’s of pricing serves as a method of helping professionals, including digital marketers, focus on what matters when pricing products and selling them online.
I came across this concept reading Implementing Value Pricing: A Radical Business Model for Professional Firms by Ronald J. Baker.
Baker discusses how the most common processes businesses use to price products are backward, flawed, and designed to fail.
They start with thinking about the product or service then derive a price out of the production cost. Then, they consider the value it offers before finally examining what the customer needs are.
Indeed, it’s selfish to think about your needs before others. And it’s a bad strategy to have in a business. Markets are way advanced now, and people are spoilt of choice.
If you fail to satisfy your customers, your competitor is on the roadside ready to pick them up, and they will run to his arms like they had seen a ghost.
To begin with, understand that most customers make decisions out of emotion because they don’t know how much a product or service should cost. Once purchased, they justify their decision logically.
So as a digital marketer, your goal is to get to them in the emotional realm and appeal to their needs.
When users visit a company’s website, one of the first things they want to check out after understanding the services offered is the pricing. I, for one, check the landing page and jump straight to the pricing page. Only then will I consider finding out what value it offers.
So your pricing ought to be well thought out to resonate with your ideal customers and make them want to learn more. And setting prices is no cinch. You can select a price so high that it cuts most prospective customers or a price so low that you leave money on the table.
Strive to strike a perfect balance. Set a price that accounts for most of your customers’ willingness to pay to maximize your profits.
How do you do that?
It starts with understanding your customer.
Know your customer very well to anticipate their needs and exceed their expectations?
Be very attentive while interacting with prospects on your website, social media platforms, niche forums, and other places. Take a hard look at the things they discuss. Look for common themes.
Put yourself in their shoes. What value do they want? Which issues do they need to be solved immediately?
A customer does not buy a product or a service; they buy the value that the product offers them. Coca-Cola sells happiness, Nike sells a lifestyle, and Rolls Royce sells exclusivity.
This is why using the normal pricing model of product-first and client-last puts companies out of business. Because you ponder so much about how good your product can be, yet all a customer needs are to feel better after using a product.
Once you have a good grasp of your customer’s values, group them into needs and wants. Needs matter, but not as much as wants.
Most people don’t understand what they need. They’ll only wonder how they lived without a product after it solves their challenges.
But they have mastered what they want. And that’s what matters to them and most certainly to you.
Knowing what your customer wants sets a precedent for how you’ll charge them.
Armed with a comprehensive understanding of who your customer is and what they want, you can now contemplate how you can create this value.
Your goal is to improve their experience through your products or services. Start with focusing on the primary challenge your product solves. For instance, a hosting company solves bloggers’ need to create websites and publish content for readers.
Does your service solve that challenge? Does it empower bloggers accordingly?
If not, invest your time and resources to ensure your product or service solves your customers’ challenges.
Anytime a customer has complaints about the basic functionality of a product or service, the business behind it will crumble as it lacks a good foundation.
Set the foundation well before you focus on value.
Now, having in mind what’s in for the customer, design your product or service to address their requirements effectively beyond what they’d expect.
For instance, one of the challenges bloggers would have with hosting is a complicated user interface. They’d want a modern and functional dashboard that lets them access each feature with a few clicks.
Top hosting companies like GoDaddy, Bluehost, and Cloudways have custom hosting interfaces offering unique experiences because it matters to customers. The price they set for the packages comes with experience in mind.
If the customer is time-starved, make the interaction fast and easy. If bored, make its use exciting and engaging. If uncertain, sell hope. Even a price-sensitive customer will overlook the cost (if reasonable) to get that experience.
You’d expect customers to automatically see the value your service or product offers, right?
Your customers won’t get the message unless you send it correctly.
If customers don’t think or know they’ll get value for their money from using your product, you cannot convince them, let alone maintain them.
The incentive to purchase a commodity is determined by the difference between the value and price. Considering the many alternatives customers have in markets, your customer’s motivation to buy your product must exceed the incentive to seek alternatives.
There are two levels of this; communicating what value your product offers the customer and why it’s the best value they can get in the market.
Communicate your value by
- Being simple and consistent: Using formal (read serious) language with technical jargon to show how well you understand your stuff will get them rolling eyes.
- Share a story: A story is a powerful tool to connect with your customer. If you’ve done customer research well, you can sell a story they deeply relate to and hook them in.
- Use visuals: Visuals can transform complex concepts into tiny little bits they can gobble up with ease. Not forgetting how captivating and memorable they are.
- Inspire or evoke emotion. Feelings took over the world. Sad, but you can be the optimist who leverages the opportunity to inspire emotions in customers.
Outdo your competitors by actually making your product valuable. In addition, differentiate it from your competitors’ products while focusing on you unique customers’ needs.
You can communicate your product’s value and elaborate its benefits over the competitors’ products, but extra efforts are needed to convince them to get into their pockets.
When dealing with the average consumer, price matters a lot.
Price sensitivity stops many inexperienced marketers on their tracks. The moment a customer complains about the price, you struggle to justify your price. Yet all they want is just a good deal. To save a few bucks for candy.
But in the digital space, you’ll rarely have time to explain yourself. They’ll check out your competitor’s pricing. You cant prevent them.
But you can influence them.
To influence a customer, you must have confidence which is built through mastery of your product/service and the value it offers. Know the what, how, and why; Golden circle of your product.
Product mastery takes time and experience. Be your own customer, use your product, and know how it feels.
If you’re proud of it, you created a great product. If you’re happy with it, your product gives value for real.
Have family, friends, and colleagues test it out and get feedback.
Once you’ve established that it serves its purpose, then you’ll have the confidence to tell a customer why that price is nothing compared to the value they get from it.
On your website, this confidence can be illustrated through customer testimonials.
A prospect who has seen the value they get from your product will read a testimonial of a successful customer and picture themselves equally or more successful. Next minute they’re begging you to take their money.
The final and most crucial part of this criterion is capturing you, customers. If it goes wrong, all the effort invested will go for nothing.
You cannot capture customers if you have not understood them, created a valuable product, sold them the value, and convinced them that it’s all they need to solve their pain points.
Capturing customers is all about effective pricing, connecting the value a product or service provides with the target customer’s willingness to pay. It goes beyond considering the cost of production and adding a 25% markup.
Smart pricing is based on perceived customer value. That’s why the value foundation is essential. If customers don’t see themselves deriving value from using your product, your marketing strategies aren’t working.
Start by creating buyer personas. Your market will comprise different types of customers. Know them well and what they value in common, then target each persona with specific pricing and features that service them.
Creating an effective price structure lets you include a wide range of customers, which means business opportunities. The typical basic, standard, and advanced plans system serve from low-budget, price-sensitive customers to big corporations without alienating anyone.
However, this approach is not best for everyone. A business that’s more concerned with value than profit should focus on a specific type of customer, e.g., startups and slightly differentiated but inclusive prices.
It’s better to have a few high-paying customers you can serve very well than thousands of low-paying customers that drain you and your team’s energy.
If the product can only accommodate one price, like online video courses, then play with psychological marketing principles like FOMO and Anchoring to get the customer’s emotions involved.
Digital marketing is a never-ending wilderness; there’s always something new to discover. Having an open mind to new concepts can be a game-changer.
You obviously know that offering value to customers is the ultimate tip for success in digital marketing, but have you ever used a strategic approach to offer value.
With the 5 C’s of pricing in mind, you will strike the sweet spot of value addition to your customers and maximum profit for your business.
All the best.