Which Tactics Will Increase Willingness to Pay?
This episode might reference ProfitWell and ProfitWell Recur, which following the acquisition by Paddle is now Paddle Studios. Some information may be out of date.
Originally published: July 9th, 2019
To answer this question, we looked at the data from just over one million different subscription consumers and just under two thousand companies. Here’s what we found.
Your price is the exchange rate on the value you’re providing. A phenomenal aspect of the subscription and SaaS economy is that we now have the ability to build features and other value adding functionality into our products extremely quickly.
Yet, understanding what your customers or target customers value and making sure you’re using data to get to persona-pricing fit can take quite some time, as it’s an ongoing process of continual price optimization. We all know that, especially if you’ve read almost anything we’ve published.
To answer this question, we looked at the data from just over one million different subscription consumers and just under two thousand companies. Here’s what we found.
But first, if you like this kind of content and want to learn more, subscribe to get in the know when we release new episodes.
First up, one of the highest impact drivers of willingness to pay is getting your brand and support in order. When measuring a customer’s affinity for a company’s brand and then cross referencing that data with the customer’s willingness to pay we found that those customers who perceived a company’s brand positively had between a 16% and 41% higher willingness to pay than the median. Those on the negative perception side had 15-33% lower willingness to pay. Based on this data, brand not only drives higher willingness to pay, but also can very much detract from your ability to sell to your customers at the level necessary to succeed.
Similarly on the support front, those customers who perceived a company’s support positively had between a 12% and 36% higher willingness to pay than the median. Those on the negative perception side had 8 to 16% lower willingness to pay. This indicates that bad support isn’t taking away from willingness to pay as much as good support is driving willingness to pay.
If you need a more tactical focus on willingness to pay, you should attack your value proposition. In a previous set of studies we looked at a fake B2B sales product and a fake B2C fitness product, we kept all copy and descriptions the same except we varied the value proposition. For both products we found that the value proposition caused a large variance in willingness to pay.
For the B2B product, certain value proposition were able to decrease willingness to pay by 20% while other were able to increase willingness to pay by 20%.
Our B2C example saw the same effect with a negative 10% to a plus 15% swing based on the value proposition. Essentially, how you position your product can greatly influence the value perception from a customer.
Finally, make sure you revisit the social proof you’ve implemented around your product and purchasing funnel. In both B2B and B2C displaying customer logos and providing testimonials increased willingness to pay considerably.
On the B2B side case studies increased willingness to pay by 10 to 15%. In B2C these case studies boosted willingness to pay from 5 to 20% with specific case studies having the biggest effect.
Remember with all of these tactics your aim is to make sure your prospect or customer understands the value they’re getting when it comes to your product. Since price is the exchange rate on the value you’re providing, these pieces of communication allow your prospect and customer to understand your value at a deep level, which ultimately allows you to get what you’re worth.
Want to learn more? Check out our recent episode on How to Increase Expansion Revenue Quickly and subscribe to the show to get new episodes.
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You've got the questions,
and we have the data.
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This is the ProfitWell Report.
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Hi, Neil.
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This is Leo, head of business
intelligence at Chartbeat,
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and I wanted to ask you
which tactics will increase
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willingness to pay.
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Welcome
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phenomenal aspect of the
subscription and SaaS economy
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is that we now have the ability
to build features and other
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value adding functionality into
our products extremely quickly.
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Yet understanding what your
customers or target customers
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00:00:35,570 --> 00:00:38,770
value and making sure you're
using data to get the persona
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pricing fit can take quite some
time as it's an ongoing process
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of continual price optimization.
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00:00:44,715 --> 00:00:45,435
We all know that,
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especially if you've read
almost anything we've published.
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While you're doing this,
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what tactical things can you
do to increase willingness to pay?
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00:00:53,320 --> 00:00:54,360
To answer this question,
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00:00:54,360 --> 00:00:57,005
we looked at the data from
just over one million different
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subscription consumers and just
under two thousand companies.
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Here's what we found.
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First up, one of the highest impact
drivers of willingness to pay
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00:01:05,390 --> 00:01:07,950
is getting your brand
and support in order.
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00:01:07,950 --> 00:01:10,510
When measuring a customer's
affinity for a company's brand
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00:01:10,510 --> 00:01:12,955
and then cross referencing
that data with the customer's
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willingness to pay,
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00:01:14,395 --> 00:01:17,435
we found that those customers
who perceived a company's brand
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positively had between a
sixteen and forty one percent
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higher willingness to
pay than the median.
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Those on the negative
perception side had fifteen to
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thirty three percent
lower willingness to pay.
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Based on this data,
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brand not only drives a
higher willingness to pay,
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but can also very much detract
from your ability to sell to
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your customers at the
level necessary to succeed.
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Similarly, on the support front,
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those customers who perceived
a company's support positively
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had between a twelve and thirty
six percent higher willingness
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to pay than the median.
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Those on the negative side
had eight to sixteen percent lower
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willingness to pay.
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This indicates that bad
support isn't taking away from
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willingness to pay as much
as good support is driving
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willingness to to pay.
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If you need a more tactical
focus on willingness to pay,
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00:02:01,260 --> 00:02:03,500
you should attack your
value proposition.
48
00:02:03,500 --> 00:02:04,700
In a previous set of studies,
49
00:02:04,700 --> 00:02:07,785
we looked at a fake b to b
sales product and a fake b to c
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00:02:07,785 --> 00:02:08,985
fitness product,
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00:02:08,985 --> 00:02:11,545
and we kept all of the copy
and descriptions the same,
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except we varied the
value proposition.
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For both products,
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00:02:14,905 --> 00:02:17,110
we found that the value
proposition caused a large
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variance in willingness to pay.
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For the b to b product,
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certain value propositions were
able to decrease willingness to
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pay by twenty percent,
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while others were able to increase
willingness to pay by twenty percent.
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Our b to c examples have the
same effect with a negative ten
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to fifteen percent swing based
on that value proposition.
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Essentially, how you position your
product can greatly influence the value
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perception from a customer.
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Finally, make sure you revisit the
social proof you've implemented
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around your product
and purchasing funnel.
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In both b to b and b to c,
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00:02:46,735 --> 00:02:49,935
displaying customer logos and
providing testimonials increase
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00:02:49,935 --> 00:02:51,915
willingness to pay considerably.
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00:02:51,970 --> 00:02:53,170
On the b to b side,
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case studies increased willingness
to pay by ten to fifteen percent.
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In b to c,
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these case studies boosted willingness
to pay from five to twenty percent,
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with specific case studies
having the biggest impact.
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00:03:04,875 --> 00:03:06,635
Remember, with
all these tactics,
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your aim is to make sure
your prospect or customer
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understands the value they're getting
when it comes to your product.
77
00:03:12,810 --> 00:03:15,610
Since price is literally the
exchange rate on the value
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you're providing,
79
00:03:16,650 --> 00:03:20,545
these pieces of communication allow
your prospecting customer deep level,
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00:03:20,545 --> 00:03:21,603
which ultimately allows you
to get what you're worth.
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Well, that's it for now.
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If you have any questions,
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send me an email or
video to neil at profilol
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dot com.
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And if you got value here or
any other week of the report,
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we appreciate you sharing
on Twitter and LinkedIn because
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that's how we know if we
should keep doing this.
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I'll see you next week.
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This week's episode is brought
to you by Chorus dot ai.
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Chorus dot ai is the market
leading conversation cloud
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your customers
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Chorus dot a I.
