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Personalized pricing – here’s how it’s done

Jundong Song, VP of 89 Degrees

For clients of 89 Degrees, a US-based marketing service provider, reducing expenses, increasing revenue and executing effective marketing campaigns is business as usual.

89 Degrees specializes in data- and analytics-driven marketing solutions and services. VP Jundong Song leads a team of database and marketing analysts, statisticians, and computer scientists who use big data, analytics and digital marketing technology to build customer engagement and deliver ROI for clients.

I recently interviewed Song and wanted to share some of the exciting things he and his team are doing and what he’s seeing in the industry:

What are the biggest changes you seen in marketing in the past year?
Song: Marketing went transactional and personal. The boundaries between marketing and sales became increasingly blurred thanks to price transparency and comparison enabled by digitalization and mass intelligence.

For consumers, shopping is no longer just which brand to buy, but when to buy and at what price. Marketing has to not only attract customers to their brand, but must also offer the right price at the right time on the right channel for the right person. 

Personalized pricing and optimization across channels is the trend that picked up speed last year. And it can’t be done accurately unless you’re utilizing big data, analytics, and algorithm-based marketing in speeds approaching real time – that’s how you transform a customer’s total experience with your brand.

Marketers who moved first have seen positive results. For example, Safeway armed its “Just for U” loyalty card program with personalized coupons and pricing over a web portal and smart phone application. It was rolled out last June and has significantly improved Safeway’s earnings and stock price for the most recent quarter.  

What do marketers need to do now to adjust?
Song:
Personalized pricing speaks to consumers’ individual needs and shopping habits. It requires an integrated data and marketing platform — and business processes that discover and act upon customer intelligence. It is about achieving a single view of customers across channels and data points. It is about mining big data and discovering patterns and habits specific to customers as segments or individuals. And it is about a marketer’s ability to act on those findings with speed and precision. 

Committed marketers need the right technologies and talents to collect, integrate, and analyze data. Then they need to clearly communicate actionable insights. They need to design a working strategy and execute it flawlessly over an integrated platform across all communication channels and customer touch points.

And most importantly, marketers need to view customer data and intelligence as an enterprise asset, and analytic-driven marketing as an enterprise approach. Commitment and support has to come from the top down and spread across and beyond the marketing department. Safeway’s CEO Steve Burd has been the driving force behind the company’s “Just for U” program.

If you could give one piece of advice to Chief Marketing Officers (CMOs), what would it be?
Song:
Be numbers-oriented and a two-way advocate for customer-centricity, speaking with well-defined and simple metrics that can be easily understood across the C-suite. 

A CMO’s job is customer-centric by nature: attract customers to your brand.  Big data and analytics have offered unprecedented opportunities for CMOs to make a difference in promoting customer-centricity beyond marketing and into a firm’s business strategy. With technology and data available to count customers and identify their transactions and activities, CMOs and CFOs are getting much closer in agreement on how to view their firm’s performance from a customer-centric perspective. Number of customers acquired and retained; number of trips a customer made to store; and amount of money spent once a customer was in store — a CMO should have those KPIs at his or her fingertips for decision-making conversations with C-level peers.

CMOs also need to be aware that building a platform of big data analytics and running smart marketing requires money. Most of the benefits will be long-term in nature and a CMO needs to justify spending with a concrete return on investment. To get the support needed — and address customer-centricity — CMOs need to look at a customer’s lifetime value and equate return on customer with earnings per share and return on equity, for CFOs and CEOs.  Justifications like return on marketing campaigns are good, but will barely get attention from CFOs and CEOs who tend to look forward to the long term big picture at a high-level.

Read more from Song on the 89 Degrees blog

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