INDUSTRY OUTLOOK
Once a customer is secured , the focus shifts to ensuring their satisfaction and willingness to pay more for the value provided . This involves re-evaluating how the product ’ s ROI is conveyed and avoiding comparisons with lower-tier offerings that could diminish its perceived value . In essence , understanding and adapting to the market ’ s perception while strategically positioning the product can be the key to overcoming the challenge of low average contract values .
Churn : Pricing to the wrong metric
High customer churn rates can often be attributed to a misalignment between pricing strategies and the metrics driving success for a particular business .
If a company has sold a thousand seats for its product but only has 50 active users , customers may consider churning because their perception of success is anchored on the notion of having a thousand users . However , if the pricing model is structured per user , this can create a disincentive to scale .
This misalignment can lead to dissatisfaction among customers and ultimately result in churn , even if the actual ROI delivered to the business is high . By closely examining customer behaviour and individual preferences , businesses can pinpoint the root causes of churn and determine if it is indeed a metric-driven problem .
Identifying the specific challenges and making necessary adjustments to pricing or product offerings can help reduce churn and enhance overall customer satisfaction . Reconsider your pricing metric and explore alternatives that align with the customer ’ s long-term success rather than discouraging growth .
Conversion slumps : Packaging for different groups
One of the most telling signs of a pricing strategy in need of adjustment is a conversion slump .
Picture this scenario : once you boasted an impressive 80 % conversion rate , you ’ re now witnessing a meagre 5 % success rate . Alternatively , perhaps you ’ re dealing with a specific market segment , such as midsized Tier 2 European banks , which used to convert at a respectable 60 %, but now it ’ s your smaller counterparts , the buyside Asset Managers , struggling at a mere 20 %. These fluctuations in conversion rate may raise critical questions about the alignment of your pricing strategy with the diverse needs and value expectations of your customer segments .
The crux of the matter often lies in how your product is packaged , particularly in www . intelligentfin . tech
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