Posts filed under ‘Dynamic Pricing’
The notion of treating the customer journey as an ongoing cycle resonates for me in Why Experience is Key to Customer Loyalty. The cycle puts wheels (oops sorry) on the notion of maintaining and building ongoing loyalty. The more times successfully around the journey cycle imbues a momentum of loyalty and that great human trait of habit can take hold. (By the way, I am not sure what Lego has to do with it.)
I have touched on the journey idea before in Mapping The Customer Journey.
It is interesting the concept of ‘fairness’ that is introduced by Valeria which is put in context in her linked post re: Lufthansa as “transparency”. This reminds me of an article Tim Baker of Baker Richards and The Pricing Institute recommended written by yet another Tim, Tim Hartford The Undercover Economist, Enough Whingeing About Price Gouging. Tim discussed the concept of dynamic pricing which is the darling of many an airline’s Revenue Management strategies. After mooting dynamic pricing as a way of better managing the finite supply of Easter Eggs to less garden watering bans to the need for a lottery to allocate Olympics tickets, one of the comments by a reader raised a very interesting extension of dynamic pricing that highlights the question of fairness. We are used to passengers paying very different prices for an airline seat depending when it was bought in response to demand and the finite supply. Just imagine the extension of dynamic pricing to the equally scarce commodity of storage for hand luggage, yes you can take on that hatbox madam, but it will cost you $100 extra. Whoohoo, that would cause some air rage (well ground rage ) and accusations of price gouging, before they got airborne. BUT it would help solve the problem of luggage locker hogs on planes and provide space for the rest.
Another poster, Joanna mentioned an application of dynamic pricing that was new to me, street parking in San Francisco. At peak times around special events parking charges on meters are raised in response to the increased demand and finite supply. The result is that if you want a car park you can find one … but you will pay a premium for the privilege. That reminds me of the car park outside a tax office somewhere in Scandinavia (I think) that wanted to ensure that the bays were only used for dropping off tax returns, not parking. Rather than higher charges and fines, they used the Nudge: you could park as long as you liked as long as your car lights were left on, otherwise you would be towed away. Guess what problem solved.
Roger spotted this research conducted by Turnkey Intelligence.
For the second time, Turnkey has surveyed 141 sports teams in the: US MLB, MLS, the NBA, the NFL, and the NHL. The findings are summarised in the report The State of Data Systems in Sports & Entertainment.
The study focused on four areas:
- CRM/database management
- Market research
A major issue here and a common refrain in marketing, is the lack of integration between ticketing and CRM, let alone real-time integration.
“The ability to integrate CRM with other systems (ticketing, etc.) is a critical driver of CRM manager satisfaction (or, in many cases, dissatisfaction).“
“Users of both systems identified “uptime”, customization capabilities, and access to an open API as the platform features most important to them/their organizations …Ticketmaster users expressed dissatisfaction with their system’s lack of integration and customization capabilities“
So am I correct that there are no published API’s for Ticketmaster to facilitate integration?
“a consistent theme among respondents was the importance of system integration. Today’s users expect all systems – CRM, ticketing, lead-scoring, merchandise databases, web forms, etc. – to integrate with each other easily and seamlessly, and to enable the clean, simple exportation of data.“
The use of the term ‘exportation’ worries me. Surely these days we are after real two way integration and beyond the ferrying of batches of data between stand-alone systems?
It was interesting to see how well Microsoft CRM rated:
“Microsoft scored relatively well on CRM users’ biggest satisfaction drivers (ease of use, reporting capabilities, and integration with other systems), whereas Archtics performed markedly worse, especially with regard to integration potential.“
Over 70% of respondents use Ticketmaster and Archtics is a Ticketmaster product that they say is an “integrated solution” , yet it appears that users have another opinion. OW!
The article concludes reinforcing the importance of integration:
“Overall system integration, seen as having a direct relationship with increased efficiency and better business, is becoming more important every day. The systems that can continue to adapt to this reality quickly and cost-effectively will gain market share, while more rigid, stand-alone platforms will suffer.“
Oh pullease … my ass
Add on fees for “convenience” et al are just that .. convenient ways to squeeze more out of the consumer.
Here is a good comparison of airlines and concert tickets. They are both interested in yield management and revenue maximisation, but responsible behaviour comes down to one thing: … TRANSPARENCY
While it is currently only for a handful of cities (including New York, Chicago, Los Angeles, Dallas and Minneapolis) and for a few airlines (namely Delta, JetBlue, Continental and American Airlines) … oh and only the US – the introduction of Flight Search will be very interesting to watch as it is rolled out further.
In theory, Flight Search will allow you to search for flights by a variety of criteria including price, location and other combinations including duration, stopovers, even loyalty program etc. It has a simple and intuitive Google Maps style interface and lets you iteratively filter and fine tune an airfare search. This would get even more powerful if Google integrated tools like Street Map, Hotel search and so-on.
An early iteration was launched in May 2011 following Google’s purchase in July 2010 of ITA for US$700M. ITA is the developer of the airfare search and pricing system QPX that is used by major airlines. There are no clues yet whether this will follow a similar business model as Orbitz, TripAdvisor or Kayak which use QPX and whether Google has or will strike deals with airlines and prioritise ‘searches’ accordingly or whether Google Flight Search will remain definitive and neutral.
What has this got do with Entertainment?
I am glad you asked! The ITA/Flight Search model accesses various airline schedules and integrates these to offer one view of the various options. I wonder if Google has considered accessing or integrating with the various ticketing services to offer similar functionality for entertainment? It is an interesting idea that you could search what is on in a city independent of the ticketing service selling the event. That sounds like some of the various individual portal projects like www.seethis.com in Manchester or others from www.artsopolis.com to www.theatrebayarea.org. However, rather than develop such initiatives from scratch, imagine if Google just included such funtionality? The questions that remain is what business model Google envisages for Flight Search and what would the possibilities be for Event Search ™
There seem to be quite a few articles (re-purposed press releases?) about dynamic pricing lately. I wonder if ‘someone’ has decided that it is the answer to extract more revenue from the marketplace.
“‘dynamic’ or ‘variable’ pricing — a ticketing philosophy that has theaters and arenas boosting ticket prices based on hot-selling shows and popular game days. Prices also can decrease based on demand.“
“It’s going to give the buying public more power and more options,” said Sammy Wallace, vice president of event programming at Germain Arena in Estero. “You could pay more for a ticket, or you could pay less. It’s really up to you.”
Is it too cynical to suggest that you could pay more for a ticket or not go, it’s really up to you?
“Overpriced tickets can cut out budget-minded buyers, while underpriced tickets can lead to ticket scalping because some fans are willing to pay much more for the best-possible seats. Dynamic pricing helps correct that.“
I find the concern for the “budget minded buyers” a convenient social equity argument and I wonder how often dynamic pricing goes the other way? Didn’t that used to be called discounting of less desirable seats to acquit social accessibility responsibilities?
“Economics is driving this new ticketing trend. Dynamic pricing is a response to many factors, including higher production costs and artist fees, lackluster ticket and album sales, and the looming specter of ticket scalpers.” I think the real driving factors have been identified here and … sorry … the consumer and better or more equitable service is not identified as a driver.
Yeah alright, the article below is about travel.
Role of travel agencies diminishes as online travel matures
However, it does raise some interesting points that are relevant considerations for entertainment ticketing online.
“…travel agents may well have to find other innovative ways to be of some value to travellers. However, in a country where a culture of full service prevails, the role of agencies is not expected to dissipate any time soon.“ The same can not be said of ticket agency outlets with the rapid adoption of online ticketing for entertainment and sport, even with the cheeky charges for to serve yourself and even print the ticket yourself.
“Online bookings can yield up to seven per cent savings and are alluring to price sensitive customers.” It is a shame the same does not apply for entertainment and sport bookings online. Afterall it is ‘self service’.
It is an interesting prespective that online booking reduces costs for merchant and consumer and facilitates”… dynamic pricing, a practice for which the airline industry is notorious … allows consumers to balance their own ticket features and pricing.“
CEO of Ticketmaster Nathan Hubbard has launched a blog called Ticketology which appears to be part of the parent company Live Nation Entertainment’s efforts at greater transparency.
“We get it — you don’t like service fees. You don’t like them mostly because you don’t understand what the heck they are for.“
The mooted transparency appears to be more a case of attribution, however. Prices are not going down, fees are not being reduced and other than specifying some fees a little earlier in the sales process – the final price paid per ticket is still inflated by a diversity of fees and charges.
“Most of the parties in the live event value chain participate in these service fees either directly or indirectly — promoters, venues, teams, artists and, yes, ticketing companies.“
The promised “all-in-pricing” heralded by Live Nation Entertainment chief Irving Azoff still seems beyond his reach and the current sales process used by Ticketmaster gets in the way of that as suggested by Azoff on Twitter.
READ FULL ARTICLE Ticketmaster’s new blog: ‘We get it — you don’t like service fees’
An interesting innovation reported in the New York Times Sam’s Club Personalizes Discounts for Buyers
Rather than discount coupons, Sam’s (part of Wal-Mart) eValues is offering direct discounts to club members “ … coupons normally had a response rate of 1 percent or 2 percent. With eValues … as many as 20 percent to 30 percent of eligible customers collect the discount they are offered.“
“There’s no clipping coupons,” eValues offers “highly individual relevant offers specific to each Plus member. All they have to do is purchase the product, and the savings are automatically applied at checkout.”
The program targets discounts based on previous purchase behaviour with ”predictive analytics, which uses vast amounts of data to spot trends and anticipate consumer behavior.“
“If you get more relevant to shoppers, you get more loyalty, you get more business,”
“Sam’s Club can vary the message and price in the communication received by the customer … Aside from the cost savings, tailored messages to consumers can also highlight specific product attributes that a particular consumer typically seeks, like “organic” or “environmentally friendly,”“
Yes this article is about sport in America, but get over it We can still learn from it.
The language is interesting for a start:
“Without fans in the stands, sponsorships become worthless …“
“… why these teams, and many others, suffer the indignity of playing in front of half empty stadiums …“
What about the fans themselves? Maybe I am being a little customer focussed here. But, isn’t a half empty stadium rude to them and a handicap to their enjoyment of the event? A live event (whether sport, theatre or a concert) is just that live – with a live audience. Half an audience is only half as exciting.
I find the demand equation mooted by blogger Marty Teller of interest:
(Team Affinity X Performance) / Opportunity Cost (other options) = Price Willing to Pay
“Besides winning, isn’t growing revenue the primary goal of any sports team (and any business, for that matter)?“
Yes, access and equity may be concepts important to not for profit and funded organisations, but a team without fans or supporters is a hobby, dare I say an amateur pursuit. I prefer the perspective of Theodore Levitt “The purpose of a business is to create and keep a customer”. With that sort of focus, revenue follows.
However, the article then turns focusses on dynamic pricing as the answer to the secondary market and hence an advertisement for QCue.