Globalization has enabled unprecedented hyper-competition, and all types of dynamic comparative pricing models. Yet pricing within many segments of our economy appear like something from the The Stone Age.

If you go into a white tablecloth restaurant and order the sea bass on a Wednesday, you might pay $30.  If you return to the same restaurant on a Saturday the price would be the same, even though demand in the restaurant is likely to be very different.  Eateries price on the cost plus model built in the industrial age; the price is based on some multiple of raw materials (or labor).

Our economy doesn’t work this way anymore.  Consider the market for sports tickets. Sports franchises (the Lakers for example) set the initial price for a ticket. But the market resets the price in real time based on supply and demand. If it is a Tuesday night game against the Raptors, a seat may command a few dollars more than the face value.  A Sunday game against the Celtics could command double that within a market being energized by the likes of Stubhub and other online exchanges.

Variable pricing based on nuanced supply and demand is the future, and it is the present.  Marriott has historically been the most profitable hospitality company, as its revenue per available room (the industry benchmark) often exceeds that of rivals. In the case of hotel rooms (or airfares), business-to-consumer pricing models can shift daily based on numerous variables such as weather, events, or the calendar.  Like it or not, exchanges that provide comparative prices are proliferating, in both B2C and B2B.

I am not advocating the companies participate in such portals: they the fastest way to commoditize an industry. What I am saying is that the acceptance of such tools points out a broader problem (or opportunity), that markets re-price based on real demand, not arbitrary prices set by the seller.

Businesses, including those that market products and services business-to-business will need to be more analytical about which products and services could and should command higher prices and which will command less.  To set up a fixed pricing schedule seems overly convenient in a world where buyers have far more sensitivity over some purchases than others.  A software developer may need to sell a project at a low cost to win the business, but could charge far more (on an hourly basis) for change orders that are not foreseen by the client.

Most small and mid-market companies have not done enough research to understand the relationships between the products and services they sell.  If an accounting practice sells tax work and audit services, how should they price one against the other and what is the likelihood that clients will gravitate to them as a result of their pricing model or other variables? I think few really know.

Companies should test various pricing strategies to see what works best, and be more purposeful about tweaking pricing to reflect current demand.

There are many ingredients required to develop and execute a successful strategy; none more important than discipline. Disruptive innovations that reshape an industry are rare. Most innovation is incremental, and successful execution is a function of hard work, time and patience.

Jeff Bezos’s insight about selling books online (which resulted in the formation of Amazon) was conceived while he worked as an analyst at an investment bank. His conversion of strategy into tactics will go down in history, as Amazon took on all the best in retailing, seemingly overnight.

Bezos remains hungry and focused. Amazon’s top 5 managers meet every Tuesday for four hours to review and rebake strategy. Not once a year, not once a quarter – every Tuesday. Twice a year his team has a two day off-site to think about “big ideas” that may require 2-3 years to implement.

Alan Kay once said, “Perspective is worth 80 IQ points.”  Where the rubber meets the road in strategy is maintaining the right perspective – the intersection of strategic thinking and tactical execution.  Business owners can easily lose perspective when they spend too much time muddled in solving day to day operational problems.

To maintain strategic discipline:

Create a strategy committee, task force or executive management team (EMT).

Each member should have a role in strategy formation and implementation and be accountable for key initiatives of the company. Meet with the EMT monthly to review progress versus goals.

Engage mid-management in strategy formation and execution

Mid-managers are often insightful in identifying latent needs as they are often closer to the customer than their senior counterparts.  Many entrepreneurial companies lack management depth. They are well served to include mid-managers in executing strategy.  Provide learning opportunities for junior managers by delegating tasks for them to complete.

Hold your teams accountable

Results oriented organizations are built from the ground up to support execution, rigorously using scorecards that drill down to individual performance. Best-in-class organizations orchestrate goal setting for individuals that align with the broader goals of the organizations.

Include outside variables in your dashboard

While most successful companies measure internal activities, few score external variables. Seek out external metrics that may be predictive of future demand. Leverage the data to plan capacity, labor, facility expansion, procurement of equipment, etc.

Bezos said, “We are willing to plant seeds and wait a long time for them to turn into trees. Every new business we’ve ever engaged in has initially been seen as a distraction by people externally and sometimes even internally.”

Great strategies convert into initiatives that become the unifying vision of the strategically successful organization. Ideas that lack resources, energy and concentration are just a distraction.

One of the bi-products of our caffeine crazed, media blitzed economy is that we have virtually no attention span. It is as if we have a collective form of ADD. Over time, customers get bored with their vendors, alliance partners and trade associations. Client relationships have a natural tail.

The ability to continuously delight customers is a skill mastered by few. Clients need some type of stimuli that reinforces the value we provide them and it needs to come in different forms at different times. Variety is not just the spice of life; it is the remedy for overcoming the dreaded- inevitable customer fatigue.

Entertainers understand the element of surprise all too well. We all have a lot to learn from that ingenious management mind; Jerry Garcia. In the 60’s, the Grateful Dead had a Board of Directors and a call center. Whenever “the Dead” where touring, “Deadheads” who had gladly forked over their phone numbers would receive outreach about upcoming performances. The Deadheads would do something extraordinary; they would follow the band from city to city. As every show was an ad lib (jam), no two were alike, and no one knew what the Dead were going to play. Most businesses would kill to have the raving fans of the Dead.

The problem of customer fatigue is exacerbated by the fact that challengers are incented to barrage prospects with new offers and discounts in a way that an incumbent is not. In relative terms, the incumbent can easily become complacent and offer clients much of the same. As the old adage goes, “if it isn’t broke…”.

I heard of a guy who gave a business review presentation to a client on an iPad. At the end of the presentation, he said to his client “thank you so much for your business” and handed him the iPad. Giving such generous gifts may not be as accepted as it once was, but imagine the shock value of the meeting. It is one the client will never forget! We need to find ways to maintain our clients’ attention span.

Customer fatigue only magnifies themes we have often shared in this space. The number one rule of customer relationship management is to take better care of the customers you already have than new ones you might attract. Offering our best discounts to new customers flies in the face of this principle. Organizations often position their best people as hunters, and then delegate customer service to others (who may not be empowered to make customer retention decisions). An organization can easily lose sight of its most precious possession, its most profitable customers.

Customers should be treated differently based on their lifetime value, and perhaps even receive different benefits based on their tenure.  One of my clients recently calculated their average client retention cycle (and at what time they lose the average client) and is now taking steps to change their approach over the span of the customer relationship.

Find a way to shake things up and keep customers coming back for more.

One of the bi-products of our caffeine crazed, media blitzed economy is that we have virtually no attention span. It is as if we have a collective form of ADD.

Over time, customers get bored with their vendors, alliance partners and trade associations. Client relationships have a natural tail.

The ability to continuously delight customers is a skill mastered by few. Clients need some type of stimuli that reinforces the value we provide them and it needs to come in different forms at different times. Variety is not just the spice of life; it is the remedy to overcoming the dreaded inevitable customer fatigue.

The problem is exacerbated by the fact that challengers are incented to barrage prospects with new offers and discounts. In relative terms, the incumbent can easily become complacent and offer clients much of the same. As the old adage goes, “if it isn’t broke…”.

Customer fatigue only magnifies themes we have often shared in this space. The number one rule of customer relationship management is to take better care of the customers you already have than new ones you might attract. Offering special discounts to new customers flies in the face of this principle.  Organizations often position their best people as hunters, and lowly customer service agents as the face of the company with current clients. An organization can easily lose sight of its most precious possession, its most profitable customers.

Vendors should track the average length of their relationships and take actions to prolong them. The element of surprise is understood by entertainers and magicians. Similar tactics can be applied from our business gifts, customer reviews, plant tours and the like. Customers should be treated differently based on their lifetime value, and perhaps even receive different benefits based on their tenure. Find a way to shake things up and keep customers coming back for more.