Price Matching: The Best Tactic You Aren’t Using

Peter Roesler, President - Web Marketing Pros

By Peter Roesler

President, Web Marketing Pros

price-matchingBusiness owners employ a wide variety of tactics to make their company stand out from the competition. Whether it’s through sales, free shipping, clever ads, etc., marketers are always looking for an incentive that will get customers to buy. An underused tactics that marketers should consider is price matching. According to a recent study, price matching is the second best tactic for getting customers to buy.

BDO USA did a survey among retailers about which tactics brought in the most customers and sales. Price matching was second only to free shipping (the virtues of free shipping were discussed in another article). About one in six (18%) of the retailers surveyed said price matching was their most effective promotional tactic. This is a huge increase from what retailers reported in 2013, when only 10 percent of marketers said this about price matching.

Price matching as a marketing tactic makes sense for several reasons. First, it reassures the customer they have probably found the best price. Any company that’s willing to match a better price probably has low prices already; otherwise, they would waste a lot of time changing the prices on every order.

Second, it makes ensures that a business doesn’t lose a customer simply due to a lower price. Remember, there are a lot of things that have to go right for ecommerce to work. The customer has to trust the seller, like the shipping method, find the exact product they want, and like the price. A seller that doesn’t offer price matching may win on first three counts, but lose the sale if the price isn’t right. Price matching is sort of a safety net for the sales funnel.

Finally, price matching is a way that businesses can align their marketing to the desires of customers. As has been discussed in previous articles, customers used the internet regularly to compare prices to find the best deal. According to data from Thomson Reuters that was cited by eMarketer, “44 percent of US internet users said they shopped online during the holiday season because they could compare prices across retailers, the second-highest response”.

Though price matching is useful and effective, it’s something that businesses need to implement carefully. Just as the computers make ecommerce possible, they also enable people who would use price matching to defraud retailers. A highly publicized incident during the holidays in 2014 illustrates this point. Scammers used fake ads and a glitch in the automated system on Walmart.com to get PS4 and Wii U bundles for $90 instead of the hundreds they usually go for.

To protect against potential fraud, small retailers should probably review each price matching claim individually. Larger retailers that may opt for an automated system, due to the volume of orders, should create safeguards that trigger a hold and review when a submitted price is a certain percentage below the regular price.

Though price matching may cost a retailer a little on individual orders, using price matching as a promotional tactic will increase revenue as more people shop and buy more items. Just like free shipping, it’s sometimes worth it to reduce the profit margin for an item if it increases the number of items sold. As the second most effective promotional tactic, it’s something business owners should try to work into their system.

For more information on things businesses can do to improve their conversion rate, read this article on how adding videos to product pages can increase average order values.

 


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