Are You Reacting or Responding to Your Customers’ Needs During the COVID-19 Crisis? There’s a Difference.
Many of us are struggling to understand what’s happening in our communities, with our families, and to our businesses and customers. It’s an incredibly difficult time. We hope that the people around you, who you depend on and who depend on you, are safe.
There has been a lot of discussion in business circles about the short-term and long-term impact of the COVID-19 crisis and its economic implications. One question that surfaces frequently is what companies should do about pricing.
A few weeks ago, I shared my advice about pricing in a time of uncertainty here on the OpenView blog, with a follow-up post on the Ibbaka blog on pricing under uncertainty and the need for usage-based pricing.
The simplest advice: Don’t react. Respond to your customers’ needs.
To better understand what’s happening, my team at Ibbaka is inviting people to participate in two surveys. We’ll share the results in a blog post later this month so we can all learn from each other.
Survey #1: What pricing actions are you taking in response to the COVID-19 crisis?
This is a short survey focused on pricing actions that will take no longer than three minutes to complete. It asks what actions you’ve taken or plan to take both now and once the crisis is over.
Survey #2: What scenarios are you planning for?
This one goes deeper and will take about 10 minutes to complete. Working through this survey will help you think through the critical uncertainties that you need to prepare for.
There are three main themes:
- How long will the COVID-19 crisis last, and what will happen when it’s over?
- How could market dynamics change? (What will happen to price elasticity of demand and cross price elasticity?)
- How will customer perceptions of value change? When there is a material change to economic conditions, customers can change how they think about value. This can lead you to change your marketing segmentation, value metrics and pricing metrics.
You need to understand these three groups of critical uncertainty in order to develop options and align your pricing strategy with market and customer realities.
Communicate with your customers
No matter what pricing actions you’re considering, you must first understand the impact that COVID-19 is having on your customers, their business, their people and their communities.
Now is the time to reach out to customers and ask how you can help them. It’s also reasonable to ask how they can help you. We are in this together. We will find a path through together.
Reacting to COVID-19 means taking short-term pricing actions, be these price cuts or price images, that are not thought through. Every action will provoke a reaction. Understand what the reaction to any pricing action will be by your customers and competitors. Think through the long-term implications.
Responding to COVID-19 means that you begin by understanding the situation your customers are in, what you can do to help them, what they can do to help you. How can you and your customers come out of the crisis in better shape than you went in?
In 12–18 months, what will people remember about how you responded? What can you do now to shape the outcomes after the crisis passes?
Phase II of the crisis is likely to be more chaotic and confusing than the work-from-home lockdown of the past few months. Leaders need to prepare their teams for the marathon that lies ahead.
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The success of our businesses will largely be determined by our ability to let go of old assumptions and habits, many of which have served us well, and create the dynamic conditions that allow us to speak to our customers in ways that are personal and important to them.