Interview with Pricenow and Beno Sutter
Pricenow: Mr. Suter, Pricenow has been supporting the Engadin St. Moritz Mountain Pool since last winter season in the implementation and implementation of Dynamic pricing and Data Analytics Services. Pricenow advises each mountain railway on the implementation of the pricing model based on their individual starting position and strategic goals. Which points were particularly important for you?
Beno Suter: For us, it was important that our company and pricing model were viewed individually and not tried to sell a one-size-fits-all model. Understanding the mountain railway industry and our individual pricing requirements is a key point for us: Working with Pricenow, you quickly recognize that they have a comprehensive market understanding of the industry and that the pricing model has been developed for the mountain railway industry. Pricenow responds individually to customer needs and the exchange is open, direct and uncomplicated. We enjoyed the implementation with Pricenow and the results we are now seeing reflect the knowledge and skills of the Pricenow team
“Through a dynamic pricing strategy, we can address different customer groups with different willingness to pay.”
Pricenow: The previous data analysis is particularly important when creating the dynamic pricing model. By analyzing historical data, we identify the relevant influencing factors for ski guests' purchase and use decisions. In Upper Engadin, we also traveled directly to the ski area to carry out data-based market research. Why was this important to you and what key conclusions could you draw from it?
Beno Suter: We already started implementing dynamic pricing with another partner in the 2018/19 winter season. Back then, only our historical data was analysed and we had not done any market research. The dynamic pricing model in Upper Engadin has also attracted a lot of media attention, partly because of the day pass price that we have set. Together with a professional partner, we wanted to find out comprehensively and statistically how the new pricing structure is received by guests and where there is potential for optimization. With the market research Could we direct feedback from our guests generate.
The results of market research reveal two different customer segments: multi-day pass and day pass guests. We can ideally implement this differentiation based on different pricing models for these ticket types in the Pricenow model. Through dynamic pricing, we are therefore creating exciting price differentiation and can therefore address different customer groups with different willingness to pay. Some people have a high willingness to pay, while others are more likely to have a low willingness to pay. Some, especially families, appreciate early bird benefits and actively make use of them. Others want to maintain the freedom to book spontaneously and are prepared to pay a higher price in return. Our customers are very heterogeneous and static pricing cannot finally do justice to this.
Pricenow: A major milestone in the joint implementation phase was the development of a fully automated interface for importing prices into the Axess cash register system. Together with you and Axess, we spent several months working on a solution that is completely new in the industry. That was a bold step for you too, which certainly entailed some challenges?
Beno Suter: When we made the strategic decision, it was clear to us that we wanted an automated solution. In the first year, this was not yet fully possible, but with Pricenow, we were able to implement this technically for the previous, second season. We needed courage, perseverance and persuasion to create an automated interface. Pricenow was the first company to develop an interface that transfers prices to Axess cash register systems. This was an innovation that did not exist yet — and therefore took a lot of time. However, we are convinced that this is a win-win-win situation for all partners, which offers enormous added value!
“The positive expectations were exceeded: 15% of day passes and as much as 70% of multi-day tickets have already been booked in advance.”
Pricenow: The winter season, which started so optimistically, unfortunately had to come to an abrupt end this year due to the COVID-19 situation. How did you experience the course of the season up to mid-March and did your earnings expectations meet in collaboration with Pricenow? What conclusion can you now draw with the current Corona situation?
Beno Suter: The advance sale of ski tickets was very good. Many of our guests take advantage of the early booking benefits and secure their ski pass well in advance. The positive expectations were even exceeded. 15% of day passes and as much as 70% of multi-day tickets have already been booked in advance. This gives the guest a good feeling that they have bought the ticket early and at an attractive price and gives us improved planning security regardless of the weather situation on the ski day itself.
The external factors were also appropriate last year: We had snow early and the weather was beautiful on the most important days. The corona situation has hit us hard as a company. We would have had perhaps the best time on the slopes in the best weather conditions ahead of us. In the end, however, we got away with a “black eye” due to the timing compared to other destinations that have their main business in spring. The season until mid-March was very satisfactory and there could have been an excellent winter season if the season was normal. In addition to good external conditions, we can also attribute the promising figures to our pricing strategy. Through dynamic pricing, we were able to motivate guests to book early, increase the average ski pass duration and achieve or even exceed economic goals in some areas.
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Pricenow: In addition to the positive sales increases, were there any other goals that you pursued by introducing the new dynamic pricing model and how were they achieved?
Beno Suter: One of our strategic goals is to increase the number of skiers across the destination. This season, we could see that ski days have risen faster than overnight stays in the valley. This could be an indicator that the share of ski guests is being positively influenced by the pricing strategy. By Upselling-Pricing incentives, for example, mean that guests One day longer skiing with us than in previous years — the results confirm this success. Increasing the online share of ticket purchases was also another goal we had set ourselves. We were able to achieve this through early bookings. The increase in advance sales was therefore also successfully achieved.
“Only every third 6-day pass is purchased locally at the cash desk.”
Pricenow: As a result of the second winter season with dynamic prices, your guests have significantly changed their buying behavior for ski tickets: Customers now book their tickets up to 300 days in advance. Which changes do you notice particularly strongly in this context and what effect does this have for you?
Beno Suter: The attractive early booking conditions are a strong incentive for customers to buy their ski tickets online early on. By purchasing tickets in advance and online, we have improved planning security and can optimally plan our personnel resources. This also makes the Less crowds at the ticket offices and shorter waiting times — which ultimately benefits our guests. For example, only every third 6-day pass is purchased at the cash desk. In addition, tickets purchased in advance at discounted rates are independent of the weather — one of the biggest risks in a destination where, in addition to skiing, many alternative activities are offered.
Pricenow: As a result of increased early booking behavior, it is all the more important that realized customer demand is included in the price calculation on a daily basis. Every day, the Pricenow Pricing Engine automatically includes demand in its price calculation across all sales channels. However, it is also possible for mountain railways to override the prices themselves in our “Pricing Dashboard” in order to react in the best possible way to local market conditions. How do you use this option and which functions in the Pricing Dashboard are particularly relevant to you?
Beno Suter: In the early stages of a dynamic pricing model, it is extremely important to build understanding and trust. As a rule, an automatic algorithm makes better decisions than a human. With the Pricenow “Pricing Dashboard”, clearly shows which mechanisms in the background influence prices. In this way, responsible employees and management can easily understand how prices are changing and trust in the system increases significantly.
If humans want to intervene “against” the algorithm in exceptional cases, we can Also manually overwrite prices if necessary. This is especially true when we have the feeling that local conditions are changing unexpectedly. It is important for us to be able to make adjustments even during the season if necessary and that we are able to react at any time. However, we want to learn as much as possible with the “Pricing Dashboard” and intervene as little as possible, as this is an automated process.
Pricenow: Speaking of tools, you also use our data evaluation tool, the Business Intelligence Tool. On a daily basis, this tool provides important key figures and comprehensive insights into price and revenue development. What decisions can you make based on data analysis?
Beno Suter: With the BI tool, we can View the figures in real time and on a daily basis and see how prices change. This allows us to analyze whether the jointly defined pricing strategy has proven effective. For us, it serves as a controlling tool for our defined measures and so we can further adjust the pricing strategy if necessary.
Based on comprehensive data analyses, the pricing model will also be continuously optimized for the coming winter season. What goals do you want to set yourself for next winter and what insights would you like to explore further?
This season, we have already achieved a great many of the goals we set. We will certainly improve the pricing model based on the data generated. We want to maintain the positive developments that we have generated this season by continuously developing our products.
We expect that the market will continue to develop again next season, also due to the corona situation. We will monitor developments and incorporate them for the benefit of our guests and our company. With our collaboration with Pricenow, we have the right partner and the tools to do so.
Thank you Beno Suter for the detailed discussion!
Pictures: © Engadin Mountains
