Using Retention To Increase Check Size: Lessons From Amazon

Using Retention To Increase Check Size: Lessons From Amazon
  • Dynamic pricing strategies can use incentivizing tactics like offering discounts on high-retention items to boost customer willingness to return.
  • Amazon employs a similar strategy, adjusting prices frequently while creating the perception of offering the best prices. This includes lowering prices on common items and increasing prices on rare ones.
  • The psychological aspect of pricing is important, as customers may pay more for certain items on Amazon but still feel they got the best overall price for their entire purchase.

Using Retention to Increase Check Size: Lessons from Amazon

We discovered that dynamic pricing strategies allow for various tactics. For example, you can incentivize customers to order specific items or offer discounts on high-retention items. It's possible that only 15% of your menu items fall into the high-retention category, but they can encourage customers to order more overall.

This approach is similar to Amazon's pricing strategy. Despite the perception that Amazon always has the lowest prices online, the reality is different. Amazon adjusts prices millions of times each day. They lower the prices of commonly available items while increasing the prices of items that may be harder to find elsewhere. As a result, you might end up paying more on Amazon for something that is cheaper elsewhere, but still feel like you obtained everything at the best possible price.

Therefore, there is a psychological aspect to pricing.

Learn More About Sauce

With Sauce you can easily manage pricing to boost profits seamlessly.