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It’s a truth universally acknowledged that customers price check items. In fact, dissatisfaction with price is one of the top reasons for cart abandonment. As the cost of living rises and price sensitive consumers seek out deals, a smarter pricing strategy is essential for retailers looking to avoid a ‘race to the bottom’. Enter price matching.
In this article we explain what price matching is, why it’s so effective and why it’s a fantastic strategy for retailers in challenging economic times.
What is price matching?
Price matching is a price competition service that, in the case of tools like Similar Inc’s Price Match Guarantee, automates the process of finding the best price for products on a retailer's website. It does this by analyzing prices across the web and matching your competitors’ prices in real time.
Why is price matching effective?
1. It increases site conversions by keeping customers on site and encouraging in-moment purchases.
With a pricing matching service, customers can feel confident they’re getting a fair price. It’s a proactive strategy that encourages them to stay on your site and buy from you instead of browsing your competitors’ stores.
In 2022, the average rate of cart abandonment is a whopping 68%. While this figure can be attributed to a number of factors beyond price such as a complicated checkout process or a slow site, it’s clear retailers need to provide compelling incentives for customers to ‘buy now’.
Price matching is a powerful strategy to convert customers who are ‘just browsing’ and those who would usually price check. By creating a sense of urgency and making shopping journeys more convenient, customers are encouraged to buy on the spot, thereby smoothing the path to conversion.
2. It drives customer loyalty, builds trust and improves customer retention.
Winning a customer’s loyalty requires more than an attractive deal. To gain consumers' confidence, retailers need to combine great offers with an excellent shopping experience.
Price matching not only gives customers peace of mind that they’re receiving the best price, it also increases their trust in your business. By accommodating consumers’ shopping needs you increase customer satisfaction, which in turn increases retention rates (i.e., number of people who continue buying from you), the lifetime value (LTV) for each customer, and ultimately revenue.
Why price matching is a powerful strategy for retailers in a downturn
You might be wondering, why can’t I just drop prices? Well, as BCG notes, retailing in a downturn is a little like operating under “wartime”, and price matching should be in your arsenal of strategic weapons.
Although it is possible to maintain profit margins with lower prices, you risk kickstarting a price war with competitors - a “war of attrition in which everyone loses”. Furthermore, dropping prices does nothing to stop Amazon scraping your site, or customers abandoning their carts to price check.
If we look to past economic crises, we see that price matching has been used by retailers to win customers in tough times. During the 2008 GFC when the economy was in free fall and in the years following, Nordstrom responded to the downturn by offering a price match guarantee: “if you find the same item for less somewhere else, we'll match it — even if we're not currently selling it”.
Though consumers are particularly price sensitive during downturns, slashing prices to the point of margin erosion is an ill-advised race to the bottom. In comparison, price matching allows retailers to compete on price without sacrificing margins, and prompts immediate buying action from customers while building goodwill and trust.
To win in a downturn, retailers must focus on driving bottom-line profitability, and price matching can achieve this. It’s a simple and effective strategy to stay competitive, build trust with shoppers, and boost conversions.