Lending a hand in difficult times through compassionate pricing programs. How “human brands” follow a pricing strategy that eases lifestyle pain points for customers.
Imagine: After a long and exhausting work day, you plan to go home by train. When you arrive at the station, you see that the transportation system is enormously disrupted. Just before giving up and deciding to sleep in the office, you get a pop-up from Uber on your phone. To ease the pain of the disruption, you get a 50% discount on a drive home. After a short, comfortable and affordable drive you arrive home safely. This example may sound far fetched and unrealistic. However, it is exactly what Uber did after transport disruptions hit London and Boston.
It is an example of a sympathetic pricing strategy. This means offering flexible and imaginative discounts that help ease pain at the right moment, when people need them most. By applying sympathetic pricing, you can turn a negative experience for a customer (public transport disruption) into a positive one (affordable ride home). Lending a helping hand gives the customer a positive contact moment with your company.
How can you apply sympathetic pricing?
Typically we see three types of sympathetic pricing: painkiller pricing, compassionate pricing, and purposeful pricing.
When applying painkiller pricing, companies offer a helping hand to customers to overcome everyday struggles. The case from the transportation industry is a typical example of this type of sympathetic pricing. On rainy days, another company, Nossa, offers discounts on hotel rooms that are in normally sunny destinations. Then there are discounts for air conditioners in hot apartments in Argentina (BGH), and discounts for umbrellas on rainy days.
With compassionate pricing, companies offer support when life treats you rough. By offering discounts or free services, companies can help out. For example, community shop offers discounted groceries for people living below the poverty line. Pressfolios provides a workplace and free access to databases for fired journalists. Lowe’s offers discounted trees at the garden center after a heavy storm.
Finally, purposeful pricing means that companies help groups with similar beliefs, values, or lifestyle by offering discounts, freebees, or rebates. Corendon’s campaign to support the gay right movement in Russia during the Olympic Games in Sotsji (2014) is a good example of purposeful pricing. The airline offered passengers supporting gay right cheaper tickets to Russia. Another example is the French Public Transport Company that offers free or discounted public transport on smog-risky days to combat pollution. Then there are also restaurants that offer discounts for smiling or saying ‘please’ when placing an order.
Why should you consider applying sympathetic pricing?
Applying sympathetic pricing might not have an immediate positive impact on your bottom line. But it can have a positive impact in the long run. Recent research by PR Agency Cohn & Wolfe shows that only a small minority of consumers trust businesses. Sympathetic pricing can, especially in a B2C environment, help to improve trust in businesses and give them a more “human” image. By offering discounts at the right moment, a business can prove it cares about its customers. This will result in an uplift of the business’ image, (re)gained consumer trust and new valuable brand supporters. In the longer run this, and possible positive media coverage, will have a positive impact on your bottom line as well.
So, how will you use sympathetic pricing? Will you offer free transportation or discounted coffees/snacks during traffic jams? Will you give discounts on healthy products to people on a diet struggling to meet their goals? Or will you give discounts to companies that show they are trying to reduce carbon dioxide emissions?
Simon-Kucher & Partners has identified seven pricing trends:
Trend 7: Sympathetic Pricing: Create brand supporters