Here’s some fascinating research from Strawhecker. Tracking leading US acquirers, they show that new customers are paying 20% less than existing ones for the same service.
This result is consistent with the mystery shopping research I carried out in the UK late last year in which retention teams readily knocked 20% off the bill to keep a customer.
This isn’t new. It’s a normal financial services practice to entice new customers with low prices and then to take advantage of the customer’s lack of knowledge to put them up later. Here’s a particularly creative example from WorldPay highlighted by Cardswitcher. Another tactic common in the UK is to hit the client with PCI charges. I found one small dry cleaner paying £50 a month to Global Payments for non compliance.
This sort of practice can’t persist in the digital world. Not only are sites like Cardswitcher throwing a welcome light on the industry but new entrants such as Credorax and EVO will help to drive down prices overall.
Instead of eking out their margins by bamboozling their clients, acquirers should be investing in new products and services that genuinely add value to their customer relationships. Here’s three good examples:
No doubt Barclaycard will come up with something equally interesting following their purchase of The Logic Group.
Price transparency is coming to the payment industry. When it does, the winners will be the providers with the widest product portfolio, the strongest brands and the best customer service; not the ones with the tricksiest pricing teams.
A while back, I put together a thought-leadership checklist to evaluate how well any material I produce is likely to perform. Here’s a reminder:
Relevance – does the content discuss real problems for target customers?
Interesting – will it hold peoples’ attention?
Novel – is it new or will our customers have seen this somewhere before?
Differentiated – is this different to the material my competitors are producing?
Brand enhancing – will customers think better of my brand after reading this?
Call to action – is it clear what customers should do next?
Lead generating – is the content linked to an end to end campaign?
You’d be surprised how much B2B content misses the mark but here’s a great example of some material (not from me) that ticks all the boxes.
It’s new white paper from Boomerang Commerce that discusses how online retailers can set prices to beat Amazon. It’s a dense read but don’t let that put you off. Even if you’re not in this abstruse corner of the software world, you should download the document as a masterclass on how B2B marketers should produce thought leadership.
Some background. I’ve been looking at pricing intelligence software recently. There are a number of vendors, each making largely undifferentiated claims and, in this kind of market, one elegant way to stand out from the crowd is to lead the customers’ thinking. I suspect that the future market leaders will become sources of advice, as well as products, and a thought leadership white paper is a typical way to substantiate this value.
Boomerang have analysed Amazon’s pricing strategy and come up with a methodology to help online retailers fight back against the Internet giant. What I particularly like is that Boomerang has used its own data (the data that new customers will be paying for) to offer some very specific and actionable advice. In doing this, it makes itself look both clever and helpful. If I sold HDMI cables, I’d give them a call.
Even better, they have introduced a new concept called the Price Perception Index which will they would be able to exploit for ongoing press stories and pre-sales consulting.
If Carlsberg did thought leadership it would look like this. Read and enjoy.
Omni-channel retail requires omni-channel systems. That much is clear. Retailers that implemented point solutions to trade online are now demanding that their vendors offer joined-up solutions that facilitate the sharing of key information – price, promotions, stock and basket details – across all customer touch-points.
This is why the e-commerce vendors have been steadily bought out by the (generally larger) enterprise application or EPOS vendors. From the top to the bottom of the market, we’ve seen a steady consolidation which began in the UK with the acquisition of Fresca by BT Expedite in 2008.
One e-commerce vendor has bucked this trend. Demandware this week announced that it had paid $65m for Tomax Group which trades as Retail.Net. This business provides API’s, middleware and a presentation layer that allows retailers to trade across multiple channels with a consistent set of data. This is achieved without the need to upgrade enterprise applications or replace the existing EPOS.
This is an intuitively attractive proposition for retailers and Retail.Net claims 50 enterprise customers including Hallmark and LL Bean.
There is clear strategic logic for Demandware here. By incorporating the Retail.Net capability within the overall Demandware offer, it can position itself at the heart of its customers architecture. This will make relationships stickier and should permit Demandware to claim a higher share of its clients’ IT spend. It also means that Demandware can properly claim to be omni-channel which is helpful when talking to sales prospects.
However, Demandware has paid a stiff price. Tomax’s made $24m sales in 2014 split between licenses, professional services and subscription/hosting fee. This puts the purchase multiple at 2.8x revenue. Revenue is split into thirds – licenses, professional services and subscription/hosting fees. Gross margin was c.$13m and “it has historically been running at breakeven profitability.” It has 170 staff.
Contrast this with Sanderson – a British ERP vendor, which bought One Iota, which does roughly the same things as Retail.Net but is rather smaller, for £5.4m. One Iota has performed really well since the acquisition – revenue and profit doubling in its first year of ownership – and it does look like Sanderson bagged a bargain.
A standard B2B tactic is to produce marketable research. Run a survey of your customers’ customers, get a bit of PR, produce a white paper to share with customers and produce a slide deck to show at conferences. And an infographic. You simply have to have an infographic in 2014.
The good news is that the basic research has got cheaper. Online panels cost a fraction of telephone or face to face interviews. The bad news is that the supply of marketable research is growing alarmingly. Cut-through is getting harder and harder. And the competition isn’t just coming from a single sector with lawyers and accountants joining tech vendors and consultants in the bombardment.
Retail is one of the more over-analysed areas. Here’s just a sample of papers quoted in the December issue of Retail Systems magazine and it should give B2B marketers a pause for thought. Producing material that is impactful, interesting and clearly differentiated is a real challenge.
Everyone’s talking about iBeacons but remarkably few retailers have the retained customer intelligence needed to make use of them. The technology has no value to a business that simply doesn’t possess the capability to come up with a useful, location-based message.
I’ve posted before about iBeacons. This is an interesting new technology that can help retailers communicate time and location based information to their customers.
I walked past the Hawes and Curtis store in Jermyn Street this morning. It’s my favourite shirt shop. It is also a trial site for the Iconeme iBeacon product.
If you look at the windows, there’s a very strong promotional message based. It’s January, after all.
As I was looking at the sale poster, my phone pinged with quite a different proposition.
Welcome to our store. Good, I like that.
Launch our app. Why? I’m outside the store. What’s the point of opening an app when I’ve got the merchandise within reach. Invite me in!
New collection. Eh? The windows have ten foot tall messages about the sale. Why not remind me about the bargains to be found inside?
My guess is that the head office marketing team are excited about the new collection and want to tell everyone about it. Meanwhile, the retail operation has stock to clear.
Joining up departments and joining up customer messaging will be vital if iBeacons aren’t to become a high-tech turn-off.