What was clear in many of the previous survey answers is that (a) businesses are desperate to return to higher prices; and (b) most businesses are reasonably aware of how big a challenge this is. Therefore, the fact that 62% confidently believe they will be able to engineer the introduction of premium price products and services is a welcome demonstration of intent. However, in the current climate if 62% are able to achieve this goal, they will have done very well indeed.
New ways of contracting with customers – such as payment for performance and on-demand delivery – take firms out of their comfort zone on several levels. Leaders must have confidence that their firms can deliver against performance targets. They must also be able to effectively evaluate outputs to prove the desired impact has been achieved and the agreed KPIs have been met.
Performance-based contracts also introduce new levels of risk. Given that the only certainty in the business environment is change, the base economic and commercial assumptions underpinning an agreement are liable to shift at a moment’s notice. When entering payment-for-success arrangements, both parties must have sufficient trust to agree new parameters within the framework of the contract.
Almost half of firms (48%) do not expect to be able to implement pay-as-you-go pricing. This has to be a concern in a climate of austerity, where businesses and consumers will demand more flexible arrangements and shy away from long-term commitments. In tight times, customers will only want to pay for what they consume, not the luxury of unlimited use. The need to understand the value and needs of the customer base is vital.