Articles

Companies have struggled with the economics of making sustainable products both affordable and profitable, but that’s because they aren’t asking the right questions. Rethinking what customers are paying for, who is paying, and how and when the payment occurs can increase access to not only green products, but also health care and education. The authors suggest ways businesses can adjust the price mechanism to meet their commitments to improving sustainability and reducing inequity.

More and more companies are relying on pricing algorithms to maximize profits. The use of artificial intelligence and machine learning enables real-time price adjustments based on supply and demand, competitors’ activities, delivery schedules, and so forth. But constant price shifts have a downside: They may trigger unfavorable perceptions of a firm’s offerings and its brand. It’s vital, therefore, to understand and manage the signals being sent by the algorithms. The authors offer real-world examples of companies that have succeeded in this endeavor and others that have not. And they recommend four steps to avoid harm: Determine an appropriate use case for algorithmic pricing and explain its benefits to customers; designate an owner to supervise and be accountable for the system; set and monitor guardrails, both to protect against wild surges and to learn how price changes affect all aspects of the organization; and override the algorithms when necessary.

The new CMO of an extreme-race company is on the hook to come up with a way to further monetize the underexploited brand while also fixing customer pain points related to the registration process. She and the COO propose a premium membership that allows die-hard fans to buy early access to race registration, but tests on social media reveal strong animosity toward the program among some racers. Should the company pull the plug or move forward, potentially upsetting the company’s most loyal customers? This fictional case study features expert commentary by Michael Bolingbroke and Huib van Bockel.

Customers ultimately want to pay for meaningful outcomes, not the products and services that presumably deliver them. Today, companies can be increasingly accountable for those outcomes with three kinds of technologically-enhanced revenue models. Adopt one to better align your company’s success with your customers’ satisfaction.