A step-by-step guide to optimize your pricing strategy: Part 2

Loyalty programs offer more than just rewards for your shoppers. In fact, digital loyalty programs provide a wealth of customer information, including shopping habits and preferences, that retailers are able to use to gain greater insight about their customers.

In my three-step blog series to help retailers stay ahead in the rapidly changing retail landscape, I’m sharing important ways to optimize your retail pricing strategy.

This is the second blog, and in case you missed the first, here’s Step 1: Embracing Change. Keep reading below for Step 2 and check the Shopportunities column in the coming weeks for third and final blog in this pricing strategy series.

Shoppers--and their data--are right at your fingertips

Loyalty programs offer more than just rewards for your shoppers. In fact, digital loyalty programs provide a wealth of customer information, including shopping habits and preferences, that retailers are able to use to gain greater insight about their customers. Think of your digital loyalty program as a tool for you to gain insights into different customer segments, and ultimately inform a strategic personalized pricing strategy. I’m talking about true personalization that enables your best customers to shop with your brand, rather than using blanket marketing and promotions that are meant for macro audiences.

There’s a real opportunity to connect to your customers on a personal level and respond to their specific needs based on real-time data points. By doing this, you instantly become more customer centric. A recent Forrester report on customer centricity revealed that “customer-obsessed” companies have a 93% satisfaction rate--far above the 65% rating received by companies that are not. The report goes on to show that high customer satisfaction lowers operating costs (like reducing customer churn and the cost to acquire customers) and adds value (by increasing new customers and revenue per customer). The proof is in the numbers.

Connect your data to a personalized pricing strategy

LoyaltyOne’s recent research on loyalty programs worldwide found that only 37% of program practitioners use loyalty data to optimize promotions, and only 33% are using it to optimize pricing. That’s a big miss for retailers looking to increase personalization for their shoppers. The reality is that the role of everyday shelf price and shelf promotion is critical--but the role of personalization for price and promotions (using the data at your fingertips) is necessary, not optional.

By leveraging digital loyalty data, retailers can determine optimal pricing for individual customers in key segments and markets. By rewarding your most loyal customers with customized offers, your competitors will have a hard time price matching (since loyalty offers aren’t publicly visible). That’s an easy win for you. 

Start from the top-down. Use an enterprise customer strategy for personalization

How do you start implementing a customer-centric pricing strategy? Here are some of my quick tips:


  • Start by defining critical customer segments from your loyalty data.

  • Identify pricing and promotional sensitivity for those enterprise segments. Segmentation can be used to drive mass price and promotion in store.

  • Leverage customer-level data to enable one-to-one personalization on price and promotion, maximizing individual relevance and value.


Supercharge personalization with digital

One of the most exciting aspects of digital is how it’s enabling retailers to deliver value that best meets the needs of individual customers. While retailers today still operate with specific prices on the shelf, digital is enabling retailers to personalize to the same degree. At Precima, we’re helping one of our grocery clients deliver a next-generation loyalty program based on fully-personalized promotions. This program is able to automatically determine the right items, incentives, discounts and points allocation for the right customers. The results?


  • We see response rates greater than 75% and sales lifts of up to 10%.

  • Over 25% of customers buy items or categories they hadn’t bought before.

  • Almost 50% of them repeat buy.


Again--the numbers speak for themselves.

Providing personalized “value-delivery” to each customer based on the items they buy is a significant step towards the future of retail. The best part of this approach is the virtuous circle that is created: Through machine-learning, as customers respond, the smarter the promotion and pricing system becomes, the better it is able to offer more personalized value over time for a truly sustainable competitive advantage. This leads to real customer loyalty.

Use it or lose it (your customers)

Don’t let your loyalty program data go unused. Maximize the use of program data to increase customer centricity and create strategies based on real consumer behavioural insights. Using segmentation to power overall price and promotion strategy for every day shelf price and mass promotions is the biggest step toward customer centricity. You can take a giant leap forward by leveraging digital delivery and digital loyalty to personalize value for each customer, delivering the true promise of personalization that drives shopper relevance, engagement, growth and retention.

Ready for the next steps? Keep an eye out for the third post in this series, where I’ll cover even more best practices for optimizing your pricing strategy.

More Blog Posts in This Series

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