Pricing for Digital: Establishing Consistency Across Message and Media

Will Morgan
Dec 7, 2018

As digital delivery proliferates within the customer communications market, service providers with a legacy in print have been challenged to devise pricing models that position their operations for long-term sustainability. As part of its recently published research study entitled, Pricing for Digital: Exploring New Models for Transactional Communications Delivery, Keypoint Intelligence-InfoTrends conducted over a dozen in-depth interviews with print service providers in North America to gain a deeper understanding of the greatest pricing obstacles they face in today’s changing market.

The first segment of this three-part examination of our findings examined the ramifications of procurement’s growing power over transactional customer communications strategy at the expense of business leadership. The second considered some of the difficulties print providers face when working to demonstrate value through services. This final installment explores the challenges that providers face in developing and marketing pricing plans that encompass composition and delivery of transactional and marketing messages to various print and electronic channels.

Establishing Consistency Across Message and Media

For years, many enterprises segregated their customer communications by purpose and channel, often resulting in inconsistent messaging that frustrated customers and wasted opportunities to cross-sell and upsell. Today’s consumers are more empowered than ever, and they are conditioned to expect instantaneous access to information, goods, and services. As they struggle to reach and engage with these increasingly informed consumers, businesses have been forced to reconsider their strategies. End customers are demanding more relevant communications, and enterprise clients are increasingly interested in coordinating their correspondence. The quest for a cohesive approach that makes the most of every customer touchpoint across every channel has naturally given marketers and technology specialists greater influence over outbound communications than ever before.

Some marketers are now leveraging their transactional documents to include promotional messaging. Such a practice goes beyond the old notion of “TransPromo” communication by elevating the quality of the transactional document to a higher and more consistent brand standard further enhancing customer experience. The delineation between different types of communications continues to fade, so clients are relying on providers to better optimize each channel and ensure that their messaging is seamless across all channels and media types. A truly omni-channel approach involves using multiple platforms to deliver a cohesive and consistent message as part of the overall communication strategy.

Although many enterprises ultimately want to move toward this kind of synergy, they often fear losing control of their messaging. As a result, a number of RFPs remain delivery-driven and channel specific. According to InfoTrends’ Pricing for Digital study, only 8% of contracts currently incorporate a global composition fee. Meanwhile, nearly 50% are based on per-piece or per-image click charges that are added to other service and material costs.

Simple Pricing for a Cohesive Plan

Although some of the providers we interviewed believe that demonstrating broad value in a partnership is the key to pushing toward a platform-based pricing model, this is not always an easy goal to achieve. In transactional communications, for example, notifications lend themselves better to platform pricing than bills and statements, but these notifications have a lower perceived value than channels that facilitate consumer payments. Enterprises understand that they can only convince a portion of their customers to come to their website to pay, so they place a premium on channels that will meet consumers where they are.

Beyond developing a workable model that can incorporate pricing for a variety of messages, today’s providers are also finding it difficult to devise a strategy that can harmonize print and digital channels under a single pricing plan. Interviewees to InfoTrends’ survey explained that print is particularly hard to fold into a platform model because of its unique factors and the added postage expense. On the other hand, pricing for digital communications isn’t always easy either; specialized knowledge is generally required. It can be challenging to determine the true value of these services and to also price them at a rate that is comparable to what other vendors in the market are offering. When performing digital delivery rather than printing and mailing, providers must ensure that they are compensated for composition and data processing. It is also difficult to explain the intricacies of digital pricing to clients and prospects—especially when many have become conditioned to think of digital delivery as a value-added service because of former vendors that offered digital storage and presentment as a “bonus” to a print and mail arrangement.

In an affiliated survey of mid-tier print service providers, one-third of respondents believed that their clients would be unlikely to accept a digital pricing model that differed significantly from the one they used for print. The broader Pricing for Digital study found that while enterprises are generally not very willing to change their pricing models, innovations in communication technology might encourage them to do so. Today’s providers may be able to successfully introduce fresh pricing structures by adding new value to their contracts beyond communication delivery. For instance, InfoTrends’ survey data confirms that the majority of enterprises (64%) are willing to consider adopting new pricing models for voice-based communications. This is because a new pricing model could strengthen the vendor’s value proposition with new levels of delivery automation and a removal of costs from the value chain that ultimately offer consumers faster and easier access to their transactional information.

Also, our 2017 analysis of over 60 in-depth interviews with market stakeholders (Enterprise Customer Communications—Trends & Strategies from Around the Globe) uncovered a general trend favoring providers that offer a wide range of services. This same trend was also visible in our Pricing for Digital study. Although many enterprises still have siloed operations, there is reason to believe that providers’ position will become more tenable in the near future. Survey results do demonstrate movement in the market toward the integration of print and digital channels into comprehensive contracts, particularly among mid-sized businesses. Over 60% of enterprise respondents reported that their company is more likely to use a single vendor for print and e-mail. Meanwhile, nearly half agreed that if they were to issue an RFP today, it would be for all channels.

InfoTrends’ Opinion

When it comes to attracting business across a wide range of channels and services, providers must demonstrate clear and discernable value. Today’s clients are seeking a partner with the skills, technology, and multi-channel know-how to future-proof their communication strategies. Service providers must find a way to elevate their purpose beyond helping clients save money on commodities and delivery—modern clients want to a partner who can empower them to generate fresh revenue through communication innovations and an improved customer experience. Providers that can meet these demands will be the ones that are best positioned for success in today’s multi-channel market.

If you’d like more information about the pricing challenges that today’s print service providers are facing and the strategies they are implementing for future success, our comprehensive Pricing for Digital research study provides a wealth of knowledge. To learn more, please contact Deanna Flanick at deanna.flanick@keypointintelligence.com.

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