How Adjustable Pricing Boosted the Skiing Industry–It’s Snow Joke!
May 13, 2019
• Some pricing factors can be foreseen. Having a good grip of historical data can unveil cyclical factors that can often form a predictable path. But what can you do when you have one of those phenomena that even leaves the experts baffled?
• Dynamic pricing was the answer to put to an end to the one-size-fits-all approach where companiesthey lose money here and there, and let customers slip through their fingers.
Some pricing factors can be foreseen. Having a good grip of historical data can unveil cyclical factors that can often form a predictable path. But what can you do when you have one of those phenomena that even leaves the experts baffled? The phenomena? Yes, you’ve guessed it, the weather. So, put that umbrella down, you are about to meet the ultimate in adjustable pricing!
Ticket to Ski
TicketCorner is a Swiss subsidiary of Eventim. The parent company sells more than 100 million tickets a year in 25 countries, mostly in Europe. Ticketcorner is the first mover in online ski ticketing with a market share of around 10% for online ski tickets. They also have a Ski-Ticketing app and offer different promotions with partners so that they receive discounts when booking with them.
One of their major challenges is the traditional and very conservative nature of the industry. They don’t know their customers or much about online marketing, customer journey or retention. They use old-style advertising, such as posters, to promote their offerings, sell tickets the traditional way, and that’s that. “Thank you for your custom–see you next year, I hope!?”
This is where Ticketcorner helps these resorts to modernize by focusing on the price to increase revenue and to get them out of their dilemma. Dynamic pricing is the answer to help them put to an end the one-size-fits-all approach where they lose revenue opportunities and let customers slip through their fingers
Weather to Ski or Not
One of the main parts of their plan was to drive down costs by increasing their online purchase percentage significantly, cut costs at the physical cash desks and decrease the weather risk. If on a good week, they make $300,000 a day, and when the weather is bad, they make only $50,000 a day. Weather is a huge issue, not only in terms of snow conditions but also if the sun is shining, because people might decide they’re doing something else for the day.
Channeling Dynamic Pricing
For Ticketcorner, it was all about digitalization because dynamic pricing occurs mainly on digital channels. When people go to a ski resort, they buy for the same day and avid skiers buy for a whole season. It was also crucial to have price parity among all channels. If there are different prices at the cash desk to online, customers will just switch to the cheapest channel, which they wanted to prevent.
Time to Call In the Experts
Dynamic pricing is complex and expensive, and as they were not capable of doing it themselves, they brought in Pricefx to do all the technology and analysis. Plus, the Ticketcorner platform brings with the added value of its experience in online marketing and how to approach the customer.
Introducing the Pilot Project
As a pilot project, they chose SkiArena Andermatt-Sedrun. This ski resort is 1,400 meters up in the mountains and owned by an Egyptian billionaire who made his money with online travel.
Time to Get Focused
They decreased the price of ski tickets if customers book early with an early bird discount than if they booked more than five days in advance. And they included weather data for up to five days into the booking system. No matter whether people were going there during a weekday in November, which is off-season, or at New Year’s Eve or in February, where it’s the holiday season, they paid the same price. Just 60 Swiss Francs every day.
Focus two, they also created special seasons which they then imported into Pricefx., For example, if there are freeride festivals or concerts in the ski resort, then they called it a special season.
Focus three, they imported a weather feed into the system with five days’ forecast and can change the price automatically depending on the weather. They also had a manual ad hoc top up if there were perfect conditions, which they call the winter trim, and then they increase the price significantly.
Focus four, they added the Pricefx pricing engine on top of the system architecture where they had their different sales channels. This they did with PriceBuilder and PriceAnalyzer . And using the API, they could place a huge focus on data exchange real time. Plus, digital signage is important at the cash deck so that they have the correct prices. Before they implemented this, all prices had come from SKIDATA. The future stage of the project will include automated integration at the cash desk.
Fear of Bad Press
It is necessary firstly to introduce dynamic pricing as an acceptable topic for customers and alsoand the media because ski resorts are scared that the media will report any price increases negatively. As Enrico Karg, Head of Customer Journey Driving Project, says, it was necessary to explain to resorts, “Okay, you will not increase the price in theory because… around 50% of your prices will be below the average price from last year, which was $60, and 50% of the available tickets will be above this.” But in the real world, more tickets were sold above the median price from last year because many people go just to the cash desk or spontaneously decide to buy the ticket online a day or two before they go.
Time to Experiment
By starting small, Ticketcorner could start to onboard customers to this new way of thinking. Building on this, the next year, they will differentiate the prices more to play with the willingness to pay as it was much higher than they and the ski resort had expected. And to make the prices more transparent, they created a low fare calendar with the promise to their customers that the price will not be lower than this, making the dynamic pricing topic more visible for customers.
The Results Are In
And the results? SkiArena Andermatt-Sedrun is now at the top of the list of all their ski resorts. They have 10 times more online bookings than the year before and now they know both their customers and their buying behavior–they know when they book and which prices they are willing to pay. They also saw a higher growth for this dynamic pricing ski resort with the Revenue Generation Index 36% higher than for static ski resorts. Plus, there was an increase in the face value of custom booked tickets on their platform.
That Was Then
Before starting dynamic pricing, their customers booked less than one day before they really went to the ski resort. And now, it’s 12.5 days in advance and customers are happy to take on the weather risk. Plus, early bookers are buying more multi-day tickets. So more than 50% of all multi-day tickets were bought more than 21 days in advance. Can’t wait to see what the future brings to this impressive upturn of events, can you? Why not get a demo of Pricefx and see how dynamic pricing can boost your profitability?
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