How to Raise Prices without Losing Customers
For any business which sells a product or service the time will inevitably arrive when the price the customer pays must be increased. This situation causes a potential headache both for business owners and for their salespeople. It's an accepted fact that delighting the customer by providing outstanding service is fundamental to retaining their loyalty to you. How can you break the news to your customers that your prices are going up yet still prevent them from turning to a less expensive competitor?
Part of the solution to this problem is to manage the customers' expectations. This subject is explored in detail in 'Managing Customer Relationships', an online training course offered by Maguire Training. For the convenience of busy salespeople this invaluable course can be accessed at any time via Maguire Training's innovative E-learning platform from any internet-connected device. Aimed at sales managers and salespeople, the course explains the importance of customer loyalty and demonstrates how to build strong business relationships, delight the customer by managing their expectations and how to turn customer complaints into positive advantages.
So, as a business, just how can you raise prices without losing customers? Here, Maguire Training suggests five useful steps that can be taken to soften the blow of price increases and make them more acceptable to loyal customers.
Step 1: Inform customers well in advance of a price rise
No-one likes to receive an unexpectedly high invoice without prior warning so aim to give your customers a minimum of six to eight weeks? notice that your prices are increasing. Whilst this gives them the opportunity to check out your competitors? prices, hopefully you will have undertaken prior research to ensure that your new prices are still fair and in line with market expectations. Your customers will also appreciate the courtesy of being informed well in advance.
Step 2: Be honest about the reasons behind a price increase
If you want to avoid unfounded suspicion and awkward customer conversations let your customers know upfront why your prices are going up. This might be because of an increase in raw materials or production costs, a change in supplier or increased difficulty in sourcing the product. As long as the reason you give is valid and honest most customers should understand and accept the new price.
Step 3: Ensure that sales managers and salespeople are properly briefed
Work out a form of words or answers to likely customer FAQs about your price increase and ensure that salespeople and anyone else who is in contact with customers knows the facts about the price increase so that every customer receives the same information regardless of who is delivering it.
Step 4: Accompany the price rise with 'sweeteners' to appease customers
For those customers who may be resistant to a price increase you might offer a favourable payment plan, a discount on a future purchase, an extended warranty or service period, an upgrade or something else which benefits them and helps to 'offset' the new price.
Step 5: Don't waste time and money chasing obviously lost customers
It's a fact of business life that some customers simply won't tolerate an increase in prices and will seek an alternative and cheaper supplier. No business is immune to this, so rather than chase obvious losses in the hope of winning them back focus your efforts instead on winning new customers to replace them.
Customers will remain loyal to a business that treats them with honesty, courtesy and respect and building upon these foundations businesses can form strong customer relationships which help them to maximise sales opportunities. Sales training experts Maguire Training offer a wide range of practical courses which can help sales managers and their teams enhance master skills encompassing everything from consultative selling to winning telephone sales.