Posts for July 2011

Simple pricing sells

The New York Times recently announced its new pricing strategy. Several people have pointed out that it is way too complex for mere mortals to understand. And when pricing is complicated for customers to understand they are less likely to purchase. A great example of a company committed to simple pricing, meanwhile, is Apple.

However, this does not mean that you should not segment on pricing. Let me rewrite that sentence without the double negative. You should still segment on pricing. The lesson from the New York Times and Apple is that we want to present simple pricing to our customers. When customers see simple pricing they are more likely to make a decision, resulting in a sale. When they see complex pricing they are less likely to make a decision, meaning no sale. However, presenting simple prices and price segmentation are not mutually exclusive.

Even though Apple’s pricing appears simple, they are still segmenting. Apple is clearly segmenting on price using the versioning technique. They may also be segmenting in ways we don’t see. Are they offering bulk purchases to some companies at discounted prices? Are they offering lower (or higher) prices in other regions of the world?

Think about shopping for something on Amazon’s website. What you see is the item and a price. It looks very simple. Amazon may have extremely complex algorithms that look at their customer’s purchase history, their postcode, maybe even the credit limit on their credit card to determine what price to charge each customer, but in the end Amazon shows only one price to their customer.  Complex segmentation; simple price presentation.

The New York Times seems to have violated this keep it simple stupid (KISS) rule for their pricing.  The lesson we should learn is that we need to follow KISS when presenting prices to our customers. But don’t take the wrong lesson. Continue to segment on price.

Mark Stiving, Ph.D. is a pricing strategist, runs Pragmatic Pricing and is author of Impact Pricing (due out Autumn 2011).

Read more in our dedicated section on pricing.

Bad reviews can be good for your business

“What happens when someone posts a bad review?”. It’s a question that crops up time and time again and is at the forefront of many small business owners’ minds when it comes to throwing open the doors to online communities.

After all, if you’re offering a service to members of the public or even other businesses, it takes a lot of time to build up a solid reputation, and not much time to break it down if things are starting to go wrong.

No matter what line of work you are in, there’s a fair chance that, from time to time, someone will take issue with your business.

The benefits reviews can bring to a business far outweigh any downsides, but it makes sense to understand how you should approach a bad review if one crops up.

How do I turn a bad review around?

Responding to legitimate concerns and complaints helps build trust with online communities. Remember, everything you post will be visible to everyone.

Think of it as an opportunity to demonstrate the quality of customer service and after-sales care your business provides.

So what makes a good response?

If you, as the owner of the business, take the time to read what the specific reviewer has had to say, have considered why the customer feels how they do and have thought about what might help make them feel happier about their experience, you’re already half-way there.

Responding on the review site in an approachable manner, and looking open to two-way dialogue with users, shows that you are receptive to comments of all kinds and care about the experiences people have had.

Other customers will look upon this very favourably. So if, for example, a customer has a complaint regarding your products or services and feel standards have fallen short of what you would expect, it would be a great idea to leave a comment.

• Start by writing that you are sorry to hear they have had a bad experience, and thank them for highlighting it.
• Explain that you will look into the reasons behind the negative review.
• Offer to take the conversation offline if it feels appropriate or if you are happier doing things that way – and look for actions that might help win the customer back, or help clear the air.

It’s also a good idea to respond when you see the review, even if you haven’t had a chance to look into the issue, just to acknowledge the customer. You can then return and issue a full response at a later date.

It’s worth keeping in mind that the kind of person who contributes to review sites will more likely than not be fully prepared to explain that the issues have been resolved after your intervention.

And what’s the wrong way to respond?

Ignoring legitimate problems that have been flagged up by previous customers does no one any favours, and it appears that complaints are falling on deaf ears.

However, responding with the same generic answer to several separate issues can again appear as if you are not open to listening to problems people may have had.

Trying to undermine a reviewer, by calling into question their integrity, can appear petty and unprofessional too. This can also draw you into an online ding-dong that will be visible to everyone using the website.

Should I respond to good reviews?

If it feels appropriate, there’s no reason not to. But remember this is about customers blowing your trumpet, not blowing your own!

Don’t people only write reviews when they want to complain?

Looking at the stats we have for Yell Reviews, this is not the case. Every business on Yell is reviewable, and 70 per cent of the businesses with reviews have a positive or neutral rating — the average star rating is 3.7 out of 5.

It’s important that good businesses providing a great service have absolutely nothing to fear from online reviews – their reputations will only be enhanced.

Paul Stamp is the community manager at Yell. For small business video guides, advice and information, follow @yellbusiness on Twitter.