Why Managing Price Perception Is Crucial to Customer Satisfaction
In today’s fiercely competitive retail environment, effectively managing price perception is crucial to customer satisfaction. In an era where consumers are more informed and more selective than ever, understanding the psychology behind purchasing decisions is no longer a luxury—it’s a necessity.
Released this past October, HappyOrNot’s report "Retail’s Biggest CX Trends in 2024" uncovers a troublesome finding: Pricing has emerged as the top customer concern, surpassing key factors like product availability, checkout processes (including slow waits to pay), and customer service. Importantly, customers’ perception of pricing steadily worsens throughout the day, with complaints peaking sharply at 4 p.m.
Worse still, complaints about pricing are highest on Saturdays, the busiest shopping day of the week. Without intervention, unchecked pricing-related dissatisfaction can erode customer trust, damage loyalty, and lead to significant revenue loss.
Proactively tackling pricing perception concerns can unlock opportunities for brands to differentiate themselves in a crowded marketplace, improve customer retention, and build lasting loyalty. By adopting data-driven strategies to manage price perception, retailers can turn this common concern into a competitive advantage, fostering trust and satisfaction in an increasingly demanding consumer landscape. Improving price perception can drive sales growth by 2 to 5 percent and margins by 5 to 10 percent, along with higher levels of customer satisfaction.
Why Do Customers' Price Perceptions Fluctuate?
Customer groups have varying perceptions of price depending on when they shop. Early morning customers are typically routine visitors, who know what they need. They head to the store with a clear goal, often to purchase a specific item, before tackling their daily tasks. As a result, they are often more aware of current promotions and sales. Their familiarity with the store’s pricing is reinforced by quieter, less crowded environments. The calmness of the store also means there is less waiting, resulting in minimized frustration levels and more patience when it comes to pricing. This sense of familiarity and ease aligns with the “clean slate” mentality, where shoppers are less price-sensitive when starting their day, having not yet incurred other expenses. By contrast, afternoon customers—who are more likely browsing, visiting sporadically, or popping in after a long workday—face busier conditions, cognitive fatigue, or a lack of familiarity with the store, which can exacerbate pricing perceptions. These factors amplify price sensitivity, culminating in a notable spike of pricing dissatisfaction at 4 p.m. This gap in price awareness can quickly lead to dissatisfaction and, if neglected, can escalate into a negative overall customer experience.
The cost of unchecked pricing satisfaction can be detrimental beyond customer dissatisfaction—it can impact a retailer’s revenue and customer loyalty profoundly. Managing pricing perception is key to building long-term trust with customers. When customers feel they are being treated fairly with transparent pricing, they are more likely to return, recommend the store, and spend more. Retailers who fail to address this growing frustration risk alienating their customers, many of whom will simply leave the store without making a purchase and, worse, choose not to return in the future. In fact, a recent study suggests that 66 percent of customers switching brands or stores are doing so for pricing concerns.
These patterns, based on real-time, tangible data, present retailers an opportunity to mitigate price dissatisfaction by adopting proactive strategies:
Clear communication and price transparency. Clear communication and price transparency are crucial to building customer trust. Customers want to understand what they are paying for and why, and feeling misled can quickly damage that trust. Visible price tags, clear signage, and transparent communication about discounts or promotions help prevent confusion, particularly on the weekends, when expectations are higher. At these times, shoppers have more time to browse, compare prices and look for deals, increasing their price concerns. It’s essential for retailers to invest in comprehensive staff training to ensure their team can effectively explain prices and promotions, helping to reassure customers and build their trust. Most importantly, this transparent pricing must occur throughout the entire shopping journey, with no surprises at the checkout.
Dynamic pricing strategy. Retailers can utilize price-matching policies or dynamic pricing strategy tools that automatically adjust prices based on competitors, demand, or traffic patterns, to ensure customers feel they are receiving the best deal. These tools can alleviate price concerns, particularly during peak shopping periods, or on weekends, when customers anticipate discounts, as shoppers have more time to scrutinize prices and actively look for deals.
Targeted discounts. Introducing targeted discounts or “happy hour” pricing during peak dissatisfaction periods, such as 4 p.m. and weekends, can transform shopper frustration into satisfaction. By aligning promotions with high-frustration periods, retailers can improve customer perceptions of value and create a more positive shopping experience.
Loyalty programs. Loyalty programs improve price perception by increasing perceived value through exclusive discounts or special offers. Loyal customers are less sensitive to pricing inconsistencies and a well-crafted loyalty program strengthens long-term relationships whilst offsetting high price perceptions.
Real-time feedback. Real-time feedback plays a pivotal role in addressing customer concerns and improving their shopping experience. By actively collecting and responding to customer feedback during the shopping process, retail managers can quickly identify and resolve issues related to price perception, promotions and overall satisfaction. This proactive approach not only helps alleviate frustrations in the moment but also fosters a sense of trust and loyalty. By acting on real-time insights, retailers can adjust their pricing strategies, refine communication efforts and ultimately create a more positive experience that encourages repeat business and strengthens customer relationships.
Addressing price dissatisfaction isn’t just about short-term fixes; it’s about harbouring long-term customer trust. Customers who feel they’re being treated fairly are more likely to return, spend more, and recommend to others. Proactively addressing pricing perception safeguards revenue, enhances customer relations, and strengthens brand reputation. With the appropriate strategies, they can eliminate the 4 p.m. price dissatisfaction surge, leading to happier customers and healthier revenue streams.
For more information, or to download the full report, visit https://www.happy-or-not.com/en/insights/resources/retails-biggest-cx-trends-2024-report/
Tim Waterton is the chief revenue officer at HappyOrNot, the company globally recognised for their smiley-faced feedback terminals, used by more than 4,000 brands in more than 135 countries. With over 20 years of experience leading and building revenue teams at global technology companies, Waterton has a wealth of expertise in driving operational efficiency in service-based businesses and using data to understand the impact of the customer experience.