Every organization, irrespective of the industry they operate in have been coerced to adopt advanced analytics and integrate it with their existing capabilities. With the help of advanced analytics, the companies in the financial services industry have directed their efforts towards improving customer experience, driving digitalization, increasing growth, and adhering to regulatory compliance frameworks but have failed at innovating their pricing strategies. By adopting a relationship-based pricing approach coupled with big data and pricing analytics tools, the financial service companies can move away from a traditional, obsolete product-based approach. As a concept, the relationship-based pricing approach allows organizations in the financial services industry to address the business challenges and build customer relationships.
Business Challenges in the Financial Services Industry
The last two decades have been challenging for the companies in the financial sector with the growing competition and changing consumer demands. However, due to the stagnant growth rate, the financial service companies are desperately making attempts at improving their customer retention rate by improving customer experience. The financial services industry as a whole has realized the importance and the related cost differences between customer retention and new customer acquisition, the latter being more expensive and tiresome. The financial sector is constantly plagued with addressing issues and develop effective pricing strategies that drive revenue growth, improve profitability, retain customers, and stay ahead of their competition.
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Success factors for a Relationship-Based Pricing Approach
When an organization in the financial services industry is moving away from a product-centric approach, they have to discontinue the silo-based approach and take a more enterprise-wide holistic approach to various operations. Additionally, the financial services industry must adopt an effective customer segmentation framework to gain customer insights and identify their preferences, behavior, and needs in order to drive profitability. Pricing analytics helps financial service companies to bundle their product and services as a package and offer them to their customers. As a result, financial companies can reduce cost, optimize cross-selling opportunities, streamline the delivery process, and maximize profitability.