Thursday, August 15, 2013

Agent Tips #2

I happened to be cc'd on an email correspondence between one of our Bookers and their Agent. The Booker had requested a price quote from an Agent via email, even though the Agent had rates available in PricePoint (more on that practice below). The email quote was higher than the PricePoint quote. When the Booker questioned this, the Agent explained: 

"In the future, if you’re using PricePoint, please don’t ask for separate rates or most likely you’ll get higher prices than PricePoint."

This comment highlights a departure from traditional pricing methodology which is central to the international moving industry. PricePoint is designed to help evolve the industry towards this mutually beneficial better practice, as demonstrated by the above agent's mentality.

First let's address the common practice in which traditional "published" tariffs are typically priced higher than a "spot quote" from the same agent via email. Why is this?  I can think of a few reasons:

1) Price Privacy

The industry is very sensitive about not disclosing pricing to competitors. Since traditional tariffs can easily find their way into the hands of a competitor, the rates are published at somewhat inflated levels.

2) Price Fluctuation / Tariff Distribution

The industry is of course highly cyclical in terms of peak vs off-peak seasons. Meanwhile traditional tariff creation and distribution is rather tedious, and therefore only done once per year, or even less often. Hence it is sensible to set tariff prices at the "high water mark", because an agent would not want to be held to lower published rates in the busy season.

3) Booker-Price Variations

It is common for agents to agree to different price levels for different bookers, so again the agent would not want to publicly distribute pricing which is lower than any of those agreements.

All that said, PricePoint resolves all of these concerns. A number of features (addressed in other blog posts - see Privacy label) provide much greater price privacy security than any traditional pricing methods (published tariffs, emails, etc.). These security measures includes the ease of discreetly offering different price levels to different Bookers. Regarding fluctuation/distribution, Agents are free to easily update their tariffs whenever they choose, which effectively provides truly instant "distribution" of the new rates to our Client Booker group, without having to deal with tedious email distributions.

In sum, having neutralized the traditional reasons for inflated tariff pricing, it is sensible to offer truly competitive pricing upfront via PricePoint. Why? First, PricePoint serves as a no-cost member of staff who flawlessly quotes OA/DA rates on your behalf. If you have to pay a staff member to manually respond to quotes via email, vs PricePoint quoting those rates for you automatically, clearly the latter scenario creates admin savings which can be shared with Bookers/customers.

Taking that thought process further, the traditional approach is to offer a high price via tariff, then discount upon request. That tactic is in some respects irrational because you are reducing your price for a more costly sales process. Hence the agent comment above is essentially saying "please don't waste my time with email quotes since I am giving you a better rate via PricePoint."

Lastly, there's also a strong correlation that time-sensitive quote opportunities are also more cost-sensitive. Considering global time zones, PricePoint enables the Booker to provide much faster same-day quotes to their sales leads, rather than waiting overnight (or longer) for the agent's time/cost-consuming email quote reply. Again a more efficient process and higher closing ratio helps to justify lower tariff rates for these cost-sensitive sales opportunities.

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