We’ve written on the subject of packaging before but we wanted to bring the issue of pricing and packaging to the forefront for companies.  The tendency to think of packaging as a way of offering discounts without cutting your prices reflects the narrow thinking we find in many companies.

Packaging has power far beyond discounting.

One of the things that pricing experts will tell you is that the first goal of pricing and packaging is to shift the customers perception from a cost mindset to a value mindset.

So what’s the trick?

We’ve successfully used a combination of segment targeting and packaging to create a higher pricing opportunity.

The game here is to get as close as possible to the centre of a prospects value “nexus” … the needs or pain areas which they are most focused on and are willing to spend the most money to fix.

In a training context, often a single course or program will only represent a partial solution to an overall challenge faced by a prospect.

The right approach: multi course packages targeted to specific market segments and their specific “pain” areas.

The question is how should you segment and how should you package.  We’ll touch on the packaging part here and get into segmenting in another future article soon.   Here are few steps that will help in your packaging process:

1. Start with your segments (industries, job roles, other)
2. Identify their critical pain areas
3. Create packages of courses which will more completely address those pain areas
4. Price with value to customer in mind rather than cost + or a discounting mindset

The central power of this approach to packaging is that it shifts your packaging mindset towards solving prospects problems rather than giving them unnecessary or excessive discounts.  I always notice clients are surprised to be told of this approach to packaging and they quickly find that it empowers them to overcome the initial defensive position on price that prospects try to put you in.

But generating business growth requires reaching beyond product features or service elements to what affects customers in their daily lives (work or personal). Framing the benefits in that mindset is what we (AftertheNet) do for clients on a daily basis and  companies can greatly benefit from that approach.

Using a pain based selling approach, you can engage potential prospects who are not connecting your offerings to their critical problems.  Key goals are met by this approach:

• Gaining access to new segments which you have not previously had strong presence with
• Connecting the most emotional / critical pain areas of your prospects
• Increasing the value perception of your products

Here’s an example:

A technical training program for IT managers is offering courses about building Custom Content Management Systems.  In the past, the training organization has marketed to companies which currently use or are planning to use  CMS’s.

The focus has been around increasing the effectiveness or extending the capabilities of the CMS.  There’s a big missed opportunity here: direct marketing to the IT managers.  IT managers are always under pressure from the threat of new technology, the implementation of hosted technology (which don’t require internal IT) or outsourcing of the IT function.

This disempowerment creates both a morale and negotiation problem for IT managers.  An advance Customized CMS course can be marketed to IT Managers as a way to influence the direction of their company’s technology that is good for the company but also favours them in building their importance in the organization.

Once a custom CMS is implemented, the dependency level of the company on the IT manager with expertise and direct knowledge of the custom system will have increased exponentially.  This value to an IT manager can be tens of thousands of dollars of increased pay annually.  Hence greater inquiries to your company from IT managers for their own self interest.

These types of quantifiable association to salary negotiation power is an important marketing angle for training companies to reach companies whose management doesn’t see value in a particular program.

Direct access to a potential student’s personal career goals can play a big role in increasing the value perception and interest level in a particular program.

So how do you grow your average customer value?

Remember, your customers are not ultimately looking for products or services, they are looking for solutions to their problems. Most companies we talk to focus their packaging efforts on offering volume or multi-product discounts.
In part, this is the result of poor competitive positioning, but also reflects a lack of understanding of the power of packaging.

Taken individually, your offerings may only represent a part of the solution to a prospect’s challenges. But packaged together, several of your offerings can represent a complete solution to a defined problem of a prospect.

Lets look at an example

• A company decides to send an employee for Adobe training to a local training organization
• An internal challenge with creating campaign landing pages as add-ons to their website was affecting the effectiveness of outbound marketing
• Several weak spots were identified ranging from visual design to creating interactive functionality on landing pages

The company had translated this problem into a photoshop and dreamweaver skills deficit.

One of our clients told us that in this situation, they would sell a combined Dreamweaver and Photoshop training package with a 20% volume discount.  We asked the question back: why not create a premium course package: which includes Photoshop, Dreamweaver and a Javascript course into a new mini program:

• with a package name like Landing Page Design Essentials
• selling points focused on the pain areas associated with creating strong landing pages

Suddenly a higher price can be charged for the packaged set of courses
A much lower package discount is required because the prospect company sees a closer fit to their specific needs.
We’ve helped clients to build packages like these into their existing marketing efforts.   Leveraging industry or busiiness situation based packaging empowers the company to create a clearer value perception among prospects and (by extension) higher pricing and a raised average customer value.