Zermatt Bergbahnen AG has renewed their two year-long collaboration with Smart Pricer. In our interview, Sandra Zenhäusern, Director of Marketing and Sales at the Zermatt Bergbahnen AG, explains the effects dynamic prices have had on the successful Swiss ski lift provider and gives some advice to ski resorts that are considering to improve their pricing.
Mrs. Zenhäusern, what challenges were Zermatt Bergbahnen AG facing that led you to pursuing a new pricing strategy?
For years, ski resorts have been faced with stagnating skier days. Regulars, who book one or even two weeks of ski holidays, have become the exception instead of the norm. Additionally, holiday planning has become more of a short-term thing, and therefore, weather dependent. That is the general situation in our industry. Demand can be controlled on the one hand by distribution or distribution channels, or on the other hand by pricing. Thus, we thought about how we could positively influence the aforementioned factors with a new pricing strategy. From the beginning it was clear that for Zermatt Bergbahnen AG the future of ticket sales is online as well as with market-related and demand-driven prices.
What was your pricing strategy prior to the implementation of dynamic pricing? What did you pay attention to when choosing your new strategy?
Zermatt Bergbahnen AG has always pursued a premium price-strategy. In Zermatt, we never introduced so called “price-dumping”, as other competitors with a lot of media coverage did. We invested early on, more precisely in 2013, in online distribution by building a web shop specifically for the Zermatt Bergbahnen AG. Already in the early stages of online ticketing we dealt with limited reduced online prices, offer-bundling as well as up- and cross-selling. In the winter of 2018/19, the Zermatt Bergbahnen AG then introduced systematically dynamic prices. It is important to mention here, that Zermatt Bergbahnen AG deliberately chose an “Online Best Pricing Guarantee” approach. This way prices increase the closer the desired ski-day approaches, or the more the demand increases for a specific date. Thus, guests that book earlier and online will always get the best price.
Why did you decide to go with Smart Pricer and the dynamic pricing software?
Smart Pricer has great know-how on the topic of dynamic pricing from other industries which impressed us. That’s why two years ago we involved Smart Pricer in our advisory mandate. However, the automatic dynamic pricing software will be used for the first time in the winter of 2019/20.
What doubts did you have concerning the implementation of dynamic pricing?
In other sectors, such as the aviation industry, accommodation as well as in theaters or cinemas, dynamic prices have been known for a long time. However, this was something completely new in the cable railway industry. Thus, we were very curious to see how open our guests would accept these.
How were these concerns eliminated?
In practice we found that our concerns were misguided. We received a lot of positive feedback from our guests. By purchasing the tickets online our guests can on the one hand save money (Early Booker Discount) and on the other hand save time. No more waiting in line at the ticket counter. This allowed us to increase our online share of total sales from 7% to 30%.
Were you able to observe further effects through dynamic pricing?
Due to the increased online sales we were also able to report an increase in revenue in the “additional offers” sector (cross-selling).
What final tip do you want to give other cable railways, that are thinking about improving their pricing?
There’s no “pricing-patent-recipe”. Not every pricing strategy fits to every cable railway. What’s important is that you know your clients and their buying behavior, and that you align your pricing accordingly. What one can say with certainty though, is that “price-dumping-strategies” are neither sustainable nor expedient for our industry.
In our case study of the Zermatt Bergbahnen we explain the inception of dynamic pricing step by step. From the integration with SKIDATA, to the analysis of the price-influencing factors, over to the execution of the new pricing strategy. Download the case study here.