How Price Can Help or Hurt CX

Customers don’t base their loyalty solely on the price or product itself. According to Forbes, companies that excel in CX outperform laggards by 80%. The experience received during an interaction now plays a large role when it comes to staying loyal to one company over another. An improvement in CX can allow companies to increase their price but will an increase in price improve a company’s CX? In this blog, we will examine the relationship between price and customer experience. 

How does CX affect Price? 

Customer experience plays an important role in a company’s pricing decisions, which shapes its strategy and design choices. Creating a positive customer experience is incredibly important, with 77% of consumers stating that a company’s CX is just as important as the quality of the product itself. Almost three-quarters of consumers are somewhat likely to buy from a company solely based on the experience received when interacting with them.

There is a positive relationship between Pricing and Customer Experience. Creating a positive customer experience can greatly influence spending, with customers being likely to spend 140% more after a positive experience than those who had a negative experience. Companies that prioritise the customer experience bring in 5.7 times more revenue than those that do not. 

CX can greatly influence a consumer’s willingness to pay (WTP). If customers feel the experience was positive, their WTP increases, meaning they can be charged higher prices. According to Forbes, consumers are willing to pay 17% more to purchase products from a company that is known for its exceptional service. Likewise, if a customer feels the experience was negative, their WTP will decrease, and companies may have to offer discounts in return for poor CX.

How does Price affect CX? 

It is common knowledge that price often affects a customer’s perception of a product. However, what is interesting to know is if rising costs would positively influence metrics such as NPS?

When companies price their products below competition, it affects the customer’s sentiment and satisfaction. Rather than feeling enthusiastic about a lower price, consumers are instead left feeling sceptical as they focus more on the product’s shortcomings.

How a price is displayed has been shown to have an effect on a customer’s experience. 

Retail stores like Costco are best known for displaying their pricing in a manner that makes customers feel a part of the experience. They never advertise, and the maximum markup price is 15%. They are not sloppy with how they display their price tags, instead, they educate their customers with the necessary information to make decisions more effectively. Costco helps its customers with particular symbols and prices to identify the products they’re about to run out of, have been marked down or desperately wanting to get rid of.

There is no “one size fits all” approach when it comes to the customer experience and choosing the correct price. Customers have different needs and, therefore, will have different perceptions regarding the value of your product or offering. Gathering feedback from your customers will provide valuable insight which can help you tailor the customer experience and set the right price. Making a conscious effort to improve CX will allow companies to boost revenue while failing to do so will leave companies at risk of losing both customers and income.