Customer retention is characterized as the act of keeping existing clients to continue buying products from any business. A good Customer Retention Strategy is made-up of clear costed & timed goals, retention measurement & timetable, closed loop feedback process and communication & activity calendar outbound. We provide customer retention strategies, which are very useful for your company or business growth including better Return on Investment (ROI), more sales stemming from customer loyalty, affordability, getting more valuable feedback and increased Customer Lifetime Value (CLV). We can boost the revenue value and improve the customer retention via right pricing strategy. Pricing is a fundamental part of marketing, which creates the revenue. Price of an item or product considers its production cost as well as the profit margin that a company wishes to charge from its clients, which would be its significant kind of revenue. An organization considers three aspects when determining the product’s price, i.e. cost, competition and consumer demand. Additionally, as the product moves through its life-cycle, its pricing strategies are changed accordingly. Generally, Pricing Strategies Assessment is very significant because it serves as a bridge between our company and clients. This assessment is a method of pricing a business uses for determining how much to sell their products or services for revenue. It is one of the most frequently overlooked & undervalued revenue levers in the business. Carefully choosing the right pricing strategy takes a profound understanding of your product, market, and your clients. Three most common pricing strategies are: competitor based pricing, value based pricing and cost plus pricing. Competitor based pricings strategies are based on competitors pricing. Value based pricing strategies are based on it’s perceived worth. In addition, cost plus pricing strategies are based on the cost of products or services plus a markup. Companies basically choose two strategies: price-skimming strategy and price penetration strategy. In price-skimming strategy, a high price/cost is initially charged for the product, with the aim of skimming “cream” from the market. Additionally, in penetration pricing strategy, the innovative products are introduced at a very low price in the market so that it penetrates the market as promptly as possible. Penetration pricing strategy is effectual when definite conditions are present in the market. Price Skimming vs Price Penetration strategy defines the difference between price skimming and price penetration strategy, which are described as follows:
Purpose: Price-skimming strategy seeks to obtain the greatest profits by charging a high-markup for the product whereas the price penetration strategy seeks to obtain a greater share of the market by offering products at very low prices.
Price sensitivity: In price skimming strategy, there is very low price elasticity, and clients are ready to pay high prices to obtain the product whereas in penetration pricing, the market is very sensitive to pricing. Low price leads to privileged share of the market as clients prefer to use the low-priced products.
Profit margin: Profit margin for price skimming strategy is very high whereas very low for penetration strategy.
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Ankur Gupta, Head Marketing & Communications