6 Ways to Handle Price Increases Like a Sales ProArticle by Colleen Francis, June 20, 2022
Discover six ways to handle price increases like a sales pro!
Price increases are a big part of life now, but most sellers can’t be like the local gas station or grocery store, where today’s price jump is a non-negotiable, take-it-or-leave-it matter.
Selling is deeply personal. And pricing is emotional. We lead with our feelings in both areas. That’s why today, you must use your well-honed people skills to properly manage those price increases hitting your inventories and being passed down to your customers.
WHAT’S IN YOUR CONTROL IS WHAT COUNTS
There’s no getting away from the fact price increases keep happening. But what’s within your control is how you choose to approach this tough task of breaking the news to those you do business with.
One choice is to say nothing: just raise your prices and hope for the best. That’s both a huge missed opportunity and a risky move that will alienate your customers because, as I pointed out, you’re probably not a gas station or a grocer. You’ve personal relationships to manage…and competitors who’ll gladly do that job if you refuse to.
Your better choice is a harm-reduction strategy. Yes, your bottom mine means you must do something that your customer isn’t going to be happy about. But they don’t have to also be unhappy with you in the process!
Here are six ideas that can turn unpleasant price increases into an opportunity for positive growth in your business…and in your customer’s business, too.
6 Effective Ways to Handle Price Increases
1. Talk Globally, Manage Locally
Last year, many clients reported to me that when they first implemented price increases, customers often reacted as though this was something being done to them personally. In the absence of thoughtful preparation, this is entirely unsurprising in the emotional business of pricing. You must reframe this. Put your increase in a global context so your customers can see this is in response to market conditions and entirely separate from the great relationship you’ve fostered together. When you do this, people become much more receptive…and even sympathetic.
2. Help Them Find More Ways to Be Profitable
Selling is about serving. And these days, your customers have an insatiable appetite for finding new ways to cut costs and be more efficient to close the widening gap between old prices and new ones. Find ways to optimize products so your customers don’t have to buy as often (it beats losing those customers altogether). A client of mine did this with the petroleum product they sold. They used to sell only oil drums to a specific customer, which had a fixed percentage of product waste. Now, thanks to a new tank system they’ve promoted, that waste is cut substantially—a savings for their customer that is far greater than any price increase.
3. Simplify and Consolidate
Be simpler and more predictable with your prices. Some of my clients are putting customers on longer-term contracts to lock-in price guarantees and ensure predictable budgets. Others are drafting up agreements with graduated price increases over a defined period of time. Also, look at the range of products or services you’re selling to your customer. Is there a way you can consolidate them into a small number of solutions? Offer them a bundle option instead of expecting them to make individual purchases each time. Each of these gestures helps your customer reduce cash burn while improving cash flow. They will remember you for this.
4. Sell More to More
This is the classic solution to every sales problem: sell more to your existing customers. You’re a known quantity to your customers and that means less risk for them. But the benefits don’t end there. You must take time to study and define the problems they’re dealing with in their business. Next, you must define the value you bring to the table each time they buy from you. And don’t just focus on the department where your customer lives. Look at adjacent ones and find meaningful solutions there. Let’s say you have a product that helps cut administrative costs by 40%. Find the data and develop the tools so people in other departments can see how these savings apply to them, too. Do this well and you can double your customers seemingly overnight.
5. Don’t Hide
Stop treating a price increase like it’s the elephant in the room. That kind of avoidance behaviour will only get you into trouble. Instead, treat it as a matter of fact. Ask your customers directly: “What kinds of price jumps are you seeing in your own business?” “How are your customers responding?” “What are you learning from managing your own price increases?” Have these conversations either face-to-face or via video call. When a price increase is coming, don’t let your customer hear that news from someone else. Put them first and make it personal. They’ll appreciate it.
6. Talk About All the Costs
It’s easy to look at a price increase and measure it solely in terms of the cost staying on as a customer. But while price is what your customer pays for something, it’s not the underlying reason why they choose to do business with you. That’s why you must show them the costs of leaving and the benefits of staying. A client of mine tallies up for each customer all the free services and add-on benefits they enjoy—right down to the free donuts and coffee—just from having this successful ongoing business relationship. Customers will only know this if you tell them.
A FACT OF LIFE, BUT UP TO YOU HOW YOU MANAGE IT
Do like the sales pros: be more harm-reduction focused with your approach to managing price increases. Recognize that while some customers might be tempted to jump ship for a cheaper competitor, most won’t if you work hard at managing your relationships and define the value you bring to each sale. Price increases are a fact of life…and a fact of a free marketplace. Work with your customers to absorb these changes and watch how your relationships with them deepen.