Pricing has always been a dreaded word in organizations. It is hard to get it right, pricing complexities when you have hundreds of products can become mindboggling and sales people are always pushing for price decreases and promotions. Because, you know, price is always of the biggest importance for customers, right?
Not always. Research by Stax shows that it is the top priority for 18 % of consumers and is among Top 3 for 47 %. If you look at it from another angle, this means that for more than half of consumers price is not a Top 3 priority. Especially in B2B industries post-sales service, quality of products and the personal approach of sales personnel are much more important. I have reconfirmed this finding in research in several industries I have worked in. Yet, selling on the base of low price seems intuitive and the easiest thing to do, but it works only if you can keep your low pricing constant. So when the time for price increase comes – because of increase of price of raw materials, general inflation or simply because you were selling too cheap in the first place – many organizations do not have the right approach to this process.
Withings is clearly not one of them. I bought a Withings Scan Watch in 2021 to track health functions of my body and my activity, and have been very satisfied with the watch. It is elegant, reliable and performs accurately. The company displayed excellent customer service when I contacted them regarding a small problem with the watch’s strap. Instead of replacing the strap only they replaced the whole watch with a newer model and did that efficiently and without delay. I was therefore becoming more interested in other Withings products like smart scales, sleep trackers, etc. and subscribed to the Withings newsletter. The prices of Withings products I would classify as “reasonable” as they are below these of Apple but higher than those of other brands and the price-to quality ratio is very good. On the other hand, it was clear that sooner or later the company would have to raise its prices in the light of the current inflationary situation and the obstacles in the logistic chains. Instead of, however, simply raising the prices on their website and let their existing customers face a “take it or leave it” situation, they decided to turn it into an opportunity to solidify their connections with existing customers. They sent a message to all of them to inform them of the price increase in advance and remind them to buy products at the old prices before the clearly defined deadline comes. This message was followed by a reminder.
By doing this they achieved several things:
- Generated additional sales and, presumably, still made some profit on them.
- Increased the number of Withings products owned per customer. As these products are interrelated by software and functions this can be expected to lead to even more cross-selling in the future.
- Created goodwill based on the displayed honesty and straightforwardness
- Finally, they made existing customers feel special and like members of an exclusive group.
These are all great targets to achieve. How much did it cost the company? Nothing, if you do not count the efforts in creating and sending the newsletter. It is just a good idea that is well implemented.
I have to admit that I did not use the opportunity to buy new items from Withings as I have not decided on what exactly I need from their products yet. I will certainly buy from them in the future. I am sure, however, that many people did buy based on this message. It is just a price increase communication done properly. If life gives you lemons, make a lemonade.