Increase in the price of a product or service is a natural occurrence at some point in its life cycle.
Very few businesses are able to provide constant prices, since stagnation in the price of commodity often directly indicates stagnation in business, which would almost certainly have fatal consequences as far as the organization, is concerned.
Given such a scenario, it becomes important to communicate properly when informed customers of a price increase.
Because price increases are so commonplace, a percentage of customers generally understand. However, this is true only if the customer knows beforehand the reasons that lead to the eventual hike in prices.
There are telemarketing software solutions available that can be implemented to predict circumstances in the larger market that would lead to an upscale of prices.
Using the help of the software, it is possible to feed in enough data, to compute at which points an inflation can occur in the future, based on the real time events.
This is why, it is essential to let your customers know well in advance about a jump in prices. Nobody wants to fall into a position where they suddenly have to pay more than they used to for the same service without prior notice.
Mark Cox of Toronto Sales Consulting says in the March 2016 issue of Canadian Business Magazine, “If you’re business-to-business, every one of your clients has built their company by running a smart commercial entity, and they don’t give away products for free. If you have a fact-based conversation to explain the rationale for a price increase, they will get it.”
The difficulty in communicating price increase to customers lies in sales representatives taking an unnecessarily apologetic tone and trying to soften the blow with roundabout ways of stating the inevitable.
If a call center agent talking directly to a consumer can get rid of the impulse to apologize in case of a price increase for the commodity in question, the process becomes much smoother.
In fact, it can be looked upon as a valuable opportunity to remind the client why your company is the right choice and the sort of value it can provide.
Price increases are inevitable, and communicating such a price increase becomes an important part of the operations of the call center hired to provide telemarketing services for that company.
It is important to have proper strategies in place to communicate price increases effectively and without the possibility of spooking the client.
Keeping that in mind, here are a few tips to handle that conversation with the customer in the best of ways.
1. Transparency is the key to any dealing involving money. Pricing transparency dictates that you let the customer know clearly of the price increase before it actually occurs.
Trying to slip it in, in a manner that you hope the client will not immediately notice, is a terrible strategy and always leads to loss in sales.
2. Prioritize your clients and let your most important customers know of the price increase first, directly. It creates a negative impression if these customers find out about it after word has spread in the market, or through a general announcement.
3. Be honest in announcing your reason for increasing the prices. Substantiate your requirements with facts to convince customers that the move was indeed necessary. Customers understand that price increases are bound to occur, but they do not want to be fed an obvious lie as a reason for the same.
4. Avoid frequent price increases aimed solely at profitability. For a business to flourish, profit is important. However, no customer wants to be paying more for no reason other than to see the company grow. Even a suggestion that the price increase is meant to help increase profits can negatively affect your business.
5. Focus on the positives during such an announcement. Instead of explaining only the reasons for the increase in price, stress on what the customer can now get in exchange for the extra money.
6. In all cases, avoid making your announcement sound like an apology, because that would make it seem like this increase in price came about because your profits and losses are not under your control. This would send out a very wrong message, and would lead to customers losing faith in your business.
7. Build a lasting impression with your customers so that events like a price increase cannot hamper the trust they have placed in your company. Thank customers for their continued support of your organization, and for their continued businesses. This brings out a positive tone and helps generate more business.
8. Provide ample time to the customer to deal with the price increase. Announcements should be made well in advance, so that no customer is encountered with an element of surprise. You need in place a proper timeline for announcements, and a proper timeline for implementing the increase.
9. With a timeline in place, use the time between the announcement and implementation of price increase to listen to the queries of customers and address them so that they retain their business with you after the increase.
Drive demand with this timeline by making your reasons and your plans transparent. Address the worries of the customers and remind them of the extended services that you will now provide.
10. Add new features to the existing services that you offer in order to justify the hike in the mind of a customer. These services do not have to be time-consuming processes, but it is a good practice to offer something more once you are taking in extra money.
11. Focus on the logic behind a price increase. Remind your customers that it allows you to continue offering a service that has greater value than your competitors.
Sustainability is essential for the survival of a business, and for the sake of sustainability different fluctuating market factors have to be taken into account, Price increases are a reaction to these factors.
12. Bear in mind there is no reason to be nervous about a relatively small price hike. Customers who are not willing to pay 5% extra for a better service are customers who are not loyal to your brand. This means you need to pay more attention to your sales tactics first, before you can progress to selling a more expensive product.
13. Another common strategy is to give customers a choice of opting for a lower-priced service as well as a premium service. If the customer is willing to compromise on the sort of services he requires, he should have the choice of not paying extra for a host of unnecessary services.
14. The feeling of being given a choice is important to generate sales out of a consumer. If the customer feels that he can get more or better services, he is more likely to pay extra than he would if he were not told of the extra services.
15. In your timeline for announcement and implementation of the price increase, you must make the change easy to adopt for your customers. Making any sort of change can be difficult and customers could be hesitant to implement it unless you provide clear guidelines.
16. It is helpful to provide customers with specific details of the increased prices rather than just stating an overview, so that communication is more effectively established. This helps them communicate with their company in an easier manner as well.
17. When changes are framed in such a manner that they are easy to implement, customers are not frustrated with the proceedings during the changes being made. This prevents the customers from making emotional decisions and helps retain their trust above all else.
18. Ensure that all sales personnel are well-versed with the changes so that any queries by customers can be effectively answered. Customers want to be reassured that they have all the facts at hand in order to take their decision.
19. You might want to implement a system where you lag the increase for current customers as compared to new customers. This again goes a long way in communicating to the client that you value the faith they have placed in you.
20. Remind your customer above everything that switching vendors at a time of market fluctuations will definitely cost them even more. They are far better off sticking with your new and advanced services because you value them as a loyal customer.
The Case Study
The tips provided above, if implemented properly, can help to cement your relationship with your customers and boost your business without affecting sales even during a price hike.
It is important that companies invest in the best telemarketing software that are available in order to know exactly when a price increase would be necessary.
To determine exactly how price increase can be used as an opportunity to further business, let us take a case study of an actual firm.
We will be calling the company Bessit in order to maintain their anonymity. Bessit, for this example, is a call center company providing telemarketing solutions for a recognized company.
In this case study, we will take a look at the situation that the company was in, the challenges it faced and the solutions that its top leaders managed to incorporate to eradicate those challenges.
We will also devote some time in understanding the effects of the changes that were brought about and how the results showed a positive change.
The Problem Scenario
The company that hires Bessit will be increasing prices of its services in the next quarter, and the call center agents have to communicate this to their customers so that all the business can be retained.
Bessit realized that they had to systematically go about this exercise in order to ensure the clients, that they were getting what they deserved for the money they paid. They would have to convince customers to stick with their business even after an increase in price.
In such a dynamic time, there were many challenges that the company encountered, however, for this example let us take a look at the challenges they faced in communicating the price increase to the customers.
1. Sales representatives were adopting an apologetic tone when explaining the reason for the increase in prices. This did not go down well with the customers because they interpreted it as a sign of uneasiness from the business.
2. Customer queries were not being sufficiently answered because call center agents were not equipped to deal with the reasons for the hike very transparently. This left the customers feeling like the company was not willing to discuss their plans with them.
3. The company was unable to foresee fluctuations, so their announcements came very late. This left the customers with very little time to implement the changes and thus translated the loss in sales.
The managers came up with the following solutions to counter the problems they faced.
1. They decided to invest in and implement call center software to predict such fluctuations with ample time to spare. This would help immensely since it would provide them with a structured timeline for announcing and implementing changes.
2. Call center agents were trained in the nitty-gritty of the increase so that they could provide satisfactory answer to the customer queries.
3. Agents were told to focus on the positives of the enhanced services rather than provide apologies for the increase, since price increase are a natural, inevitable thing in business.
Implementation of these strategies meant that the company did not lose business in the next quarter when the increase in prices was implemented.
In fact, delving in the positives helped them gain new customers, and they saw a 10% rise in revenue in the next year.
Thus we see that communicating a price increase effectively is the key to sustaining and even growing business. Price increases do not have to lead to uncertainty if you can properly explain your reasons.
The most important thing is to ensure that you remain honest and transparent with your customers, and keep providing them with value that your competitors cannot provide.