In Dynamic Pricing we trust!
With the growth of the digital landscape, not only in users but what seems to be endless possibilities, came the growth of the digital tools to scrape data from the web. Many technologies out there appear to have the ability to subtract and make use of literally any data about anyone they wish for - without the user knowing.
It is only understandable that this thought raised many concerns and feelings of uncertainty about privacy and unfair market uses.
Ask yourself this question before you continue reading: Do you really know how your online data is processed, or do you have customers who have raised concerns about this?
Thankfully, the European Union came with an action plan that aimed to make online users feel more comfortable and secure about the use of their data. The resulting regulation protects users and gives more control over what data will be accessed at what times. On the other side, it also allowed the free movement of personal data within and outside the EU - delivering insights and enabling data-based optimisation and customisation!
Of course, there are many facets to the General Data Protection Regulation, also commonly known as GDPR, including the right to be forgotten or anonymised. In a nutshell, it restricts data scraping to the minimum, based on the user's consent, while still allowing certain degrees of customisation.
But what does that mean? Which data is used now? What means consenting to the right data use? Is this an advantage or a disadvantage for users?
These, and many comparable questions and pressing concerns, are still out there among online users and potential customers. Data usage, especially regarding pricing, still appears to be a BlackBox that nobody seems to fully grasp or decode.
We have been working with data for quite some time now, and we see that the communication on which data is used to develop adverts or prices is often not transparent enough, and raises questions regarding their integrity and honesty.
We are here to demystify the theory of data misuse within Dynamic Pricing by delivering the requested and needed transparency you and your users, or customers, deserve.
On this note, if you wonder how others work with dynamic pricing, you might also be interested in our Success Stories!
It's not you; it's the circumstances! This is the data used in Dynamic Pricing
To explain to you the data used within dynamic pricing, it is crucial to, shortly, make you understand the distinction between personalised pricing and dynamic pricing.
In personalised pricing, which falls under price discrimination in the EU (and is therefore illegal), a company would technically be allowed to track and use any data of a user (name, gender, race, you name it!), and use it to target them in the most profitable way. Thus, personalised pricing is limitless to data scraping - it can use whatever it gets from you without specific consent: an endless world of possibilities.
Dynamic pricing, however, is more contextual. It means that two users, in the same conditions, are ensured to receive a price for a particular service or product.
This pricing model, run by an algorithm, uses circumstantial data: it may include the weather, the season if it is a weekend or weekday, the availability (demand and supply), but also competitive prices, public events, traffic jams, and much much more data into account. Based on these factors, it can decide on different prices and continuously update them.
If a certain user, however, has been in touch with a brand for consecutive points in time, dynamic pricing does have the ability to detect this and develop prices based on factors ruled as loyalty programs or student status. These exceptions have to be reasoned and specified, and under any circumstances, still, refrain from using untouchable data that is considered private and be protected at all times; including name, race, gender, financial information, but also IP addresses, log-on IDs, biometric identifiers, geo-location, and all other data that makes you, you.
This means dynamic pricing does not use personally identifiable information that will define you as an individual.
Let's look at an example!
Meet Bettina; she is interested in a season ticket for a zoo nearby. She is now looking at a few offers from different locations.
And now? What data is used to get her to buy a ticket to a venue?
Bettina is being targeted for a limited offer that included her name, gender, and location before inserting it, and differs in price compared to the offer her boyfriend sees when he searches with his phone.
She is presented with generalised offers that might differ in price from day to day (or even by hour), but not compared to her boyfriends if compared at the same time.
What happened in these situations?
In the first scenario, the price is offered personally to Bettina; therefore, her boyfriend is unlikely to receive the same offer.
In the second scenario, she is offered a price that is based on environmental factors such as a sudden high demand or low request in the number of tickets. Since her boyfriend will be within the same conditions, he will be presented with the same offer.
The only difference between Bettina's and her boyfriend's offer could be if Bettina has already been in touch with the venue before (e.g., through a registration or a purchase), and therefore, belongs to a loyalty program.
You probably already guessed right; the second scenario is called dynamic pricing!
Deciding prices on contextual factors that allow individual privacy while adapting the prices to the market situation and conditions.
Dynamic pricing is a powerful tool that is not only profitable for your venue by achieving goals such as equalising the number of ticket sales within the week as compared to the weekend; it also allows your customers, users, or visitors, to not give up their personal information they hold so dear, and still have the opportunity to receive trustworthy offers to their advantage!
Now that you know which data is used in Dynamic pricing, please feel free - no, we actually encourage you to share this knowledge among online users and buyers to reduce possible uncertainty or misinformation and replace it with understanding. See for yourself: approval will come your way!
If you have any questions about the topic or wish to get started with dynamic pricing, get in touch with our team.
We are here to help you reach your venue's full potential.