Background and challenge
An email and digital marketing solutions provider engaged L.E.K. Consulting to develop a new pricing and packaging strategy for its platform.
The client requested that L.E.K. benchmark competitors, analyze historical performance data, and conduct an extensive assessment of customer needs and willingness to pay based on a sophisticated conjoint analysis. This analysis was notable for its complexity due to the need to optimize packaging at the feature level across dozens of individual features. We also examined the option of introducing a new freemium on-ramp, and alternative pricing structures such as ‘pay-as-you-go’.
L.E.K. performed a range of analytical tasks to support the client’s goals:
Fielded a customer survey to conduct a thorough evaluation of customer purchasing dynamics, including adoption drivers, most valuable digital marketing features and likelihood of switching
Conducted extensive research on the competitive landscape, including competitor pricing, packaging, and tiering structures, to better understand the industry standards and the client’s relative positioning
Analyzed customer preferences and price sensitivity by utilizing an adaptive choice-based conjoint survey and Gabor-Granger analysis to determine the optimal feature configuration and assess the price elasticity of the client’s solutions
Assessed ideal sales models for the client’s various offerings, including direct sales vs. self-service models, by considering the scale/size of customer needs (e.g., number of contacts) and evaluating effective sales strategies to maximize adoption
Evaluated the revenue uplift from both current and new customer adoption of the proposed pricing, packaging, and tiering structure, and developed an implementation roadmap outlining the key features to develop and proposed prioritization
L.E.K.’s work helped the client achieve a deep understanding of customer needs and pricing dynamics to optimize pricing and packaging strategy to drive adoption and profitability
Our recommendations are estimated to drive a 25%-45% of annual revenue uplift, which represents a >100x return on project fees