Giving Small Businesses the Price Personalization Advantage
Everything I ever needed to know about Small Business I learned from Charlie and Jimbo Dowd, the recently retired owners of Everything But Anchovies in Hanover, NH. Over 30 years, as their point of sale went from a paper receipt, to a swipe terminal, to a sophisticated integrated tablet solution, and as their customers went from cash to card to phone, one thing remained constant: Throughout every change, without fail, Charlie, Jimbo, or their sisters were at the register greeting their customers.
The personal touch. In the age of the mass-produced latte, it seemed to be going the way of the dinosaur. Well, as we head into this year’s Small Business week from May 5th-11th, I have some great news.
Personal is back.
Sand Hill Road, the famous street that is home to the world’s top venture capital firms, is abuzz with “personalization.” Companies from McDonald’s to Amazon have launched major personalization initiatives. They all aim to get the right price, to the right customer, at the right time. Artificial intelligence and machine learning, combined with electronic payments, digital wallets, and mobile phones are creating the promise of a new frontier, one in which, instead of all of us conforming to one price, the price will conform to us.
This is all good news for Small Business. Why? At the heart of personalization is an authentic relationship between a business and its customer. This may be the first time in a century that a trend is tilting in favor of the independent small business owners who often live in the neighborhoods they serve (unlike the Wall Street-backed franchise whose shareholders are anything but local).
Now it is time for small business owners to translate the knowledge of their neighborhood into a digital selling strategy that reaches a consumer who wants to shop local yet also wants to use their mobile phones to make purchases and access offers. Surprisingly, small businesses actually have a technological advantage when it comes to this race to price personalization.
What is Price Personalization for Small Business?
Price personalization is pricing that is built around the preferences and profiles of local customers. With personalized pricing, small business owners can simultaneously offer different types of pricing options for different types of customers (from families to veterans), as well as different contexts (from rainy days to busy weekends).
Price personalization isn’t about asking small business owners to discount their goods and services. It’s also not about running promotions just for the sake of it.
Rather, price personalization is about creating the right offers for a specific customer with timed offers that align with your yield management goals. When done right, price personalization should move inventory, fill appointments, book classes, and bring new neighborhood customers into a business. Offering personalized pricing builds loyalty and trust with many different and new customer segments.
Ironically, size prevents major chains from taking advantage of the price personalization wave. Whereas most small business owners have not invested much in technological infrastructure, large retailers have already been investing in single-point solutions that need to work together in order to translate data stored in one place into pricing managed by a different system, and to integrate that price into communication created by a different platform and published by yet an entirely different set of technology. Small business doesn’t face these challenges when it comes to the end-to-end integration required for price personalization.
Current Trends — and Limitations — to Small Business Price Personalization
There are some serious headwinds for the small business owner.
Providing an omnichannel option is key to competing for today’s consumer. Yet, many local services like salons, dog groomers, personal trainers, and other businesses that don’t ship goods in a box to your door don’t easily lend themselves to online selling.
Online listings like Angie’s List and Yelp can be a great way to validate trust with new customers. But these platforms are the opposite of personalization. Businesses are often stuck competing with other similar businesses in the area and fighting to stay on top of the ranking pile.
Coupon and rewards programs such as Groupon or Five Stars can help incentivize new customers, but they lock businesses into a set program that’s built for general audiences, rather than their specific business. Even worse, on many of these platforms, businesses end up paying for the “privilege” of discounting their services.
Small business platforms, up until this point, have created another layer between business owners and their customers, taking away from that personalized touch consumers expect from an independent business. Too often small businesses are trading control over pricing and promotions for exposure. A new infrastructure is required to help small businesses capitalize on the power of price personalization.
Small Business Price Personalization In Action
For small business owners who don’t want to give either their budget or flexibility to major platforms, running price personalization on their own can be untenable. Many different tasks and technologies are in play at all times. From configuring a POS to intaking new pricing structures, to training staff on new promotions, to creating social media announcements — it’s too much for one person to manage on top of the day-to-day responsibilities of running a business.
What small business owners need is a way to automate price personalization while retaining control over promotions and direct interactions with their customers. I recognized that small businesses were missing a platform to turn this into a reality. So, I set out to create it.
At Fanbank, we’ve automated all the manual steps involved in setting up, managing and fulfilling price personalization offers, so, for the first time, small business owners can translate their knowledge of customer and neighborhood into a pricing strategy that maximizes profit and customer satisfaction.
With the Fanbank platform, businesses can:
- Set the terms of pricing for a range of promotions from one website and run multiple custom offers simultaneously.
- Select the types of customers who will see their customized pricing online.
- Create and run automated social media ads to promote the pricing offers to those customers without spending time on graphic design, printing, or online advertising setup.
- Use custom pricing to drive in-store or in-person sales.
- Continuously refine and optimize based on data.
With this functionality, we enable small business owners to launch the right price personalization without shouldering the burden of setting it all up themselves. We believe that small business owners should be able to create offers that align with their values and customers, not another platform’s business model.
Small business owners are scrappy, savvy, and sophisticated in serving their customers and neighborhood. They need specific tools that won’t hamstring them into programs or technologies that limit their control or get in the way of customer interactions. Small business technologies should bring the customer and business closer together, not farther apart. As we roll into Small Business Week, it’s high time for small business tools to evolve to capture that customer personalization so that you can deepen your relationship with your customers and increase your profits and efficiency at the same time.