Steven doesn’t agree with the haters. He thinks there are innovative things happening in the industry. The haters say there aren’t…and that there won’t be any more innovations coming.
Steven is bullish. Haters are bearish.
Let’s look at Steven’s case by checking the evidence in his company. Steven created an award show, he formed local partnerships to open up new markets, he completely rethought his internal compensation system and saw a big jump in productivity.
Now he’s creating unique prices for each shopper. That may not sound like an innovation if you think back to how sellers and buyers acted in ancient Middle Eastern markets. Each seller negotiated a price directly with each buyer. To do it at a massive scale online – many interactions between sellers and buyers every second of every day – requires access to broad data and deep expertise with handling it. Steven is working with an innovative partner that has both advantages in his industry.
How are they doing it? Steven’s sites see millions of visitors. He knows each visitor is as different as his or her fingerprints. This visitor is rich…that one is poor. This one visits in the middle of the night…that one in the middle of the day. There are many, many other differences, too. Each difference sends a signal of how much that person wants to pay.
Steven’s partner’s system shows each visitor different prices for his monthly memberships. They range from about 85% of his normal price up to 115%. The job of the system is to give each visitor the right price. The more visitors and signals, the better the team can train the system to learn and improve. And by giving the best price to each visitor, he’s been able to increase the amount each visitor spends by 8%. Where he used to make $100,000 he now makes $108,000. That’s a big deal considering that his costs are basically fixed.
This innovation isn’t unique to Steven’s company. Everyone in the industry can use it. Maybe Steven’s right that the industry does have more innovation to offer after all?