Last week I received this question from one of my e-class
participants:
“I have a customer that I’m selling a specific product to with a
very low price. How can I increase the price without an objection?
Also, if I happen to increase the price on the invoice, should I
tell him or stay silent until he finds out? By the way, this
product has been increased by the manufacturer.”
The following is my answer to this question -the best way to
handle a price increase:
When you deliver bad news (a price increase) with the reasoning
behind it (higher gas prices, labor costs, etc.) your customers
are more likely to accept the increase as inevitable and
reasonable. The absence of reasoning will annoy the customer and
he or she will assume you’re just trying to squeeze more money out
of your relationship.
Advance Notice
Don’t pull a price increase out of thin air. Give your customers
an advanced warning that changes are coming. Include the timeline
of when changes will happen.
1. Give at least one month’s notice.
Reason: The customer will appreciate the advance notification and
will be more tolerant of the price increase if s/he has received
prior notice. Suddenly increasing prices
without any advance notice could destroy any trust you have built.
Some customers may be annoyed to the point that they will take
their business elsewhere.
2. Don’t use email, fax or a letter. Instead: Call and tell the
customer about the price increase.
Reason: Written notification of an increase in price is impersonal
and may create the impression that the customer’s business is not
important enough for you to take the time to make a phone call.
The personal touch of a telephone call leaves a better impression.
3. Give customers a good a reason when explaining the increase
(for instance: your price from the manufacturer was increased.)
Reason: Customers will be more understanding if you give them a
reasonable explanation for the price increase.
4. Give the customer options, like a quantity discount or an
annual agreement, where they would agree to buy a certain quantity
of the product during the next year for a
specific discount.
If there is enough profit built into the current price the
customer is paying, you can offer to lock in the price for a year
when the customer purchases an annual agreement. In fact, this is
the perfect time to offer an annual agreement. You can copy and
paste an Annual Supplies Agreement letter from this page:
www.telephonesales.com/ASA.htm
Caution
When you call to tell your customer about a price increase – if
you offer to ship the products today at the current price - make
sure your customers know it is really YOU calling. This is a
favorite tactic used by “Toner Pirates” - fraudulent
telemarketers.
Keeping Loyal Customers
Good communication between you and your customers is essential to
maintaining customer loyalty. This becomes crucial when you notify
a customer about an increase in price. The way this is handled can
either strengthen or damage customer relationships.
Ann Barr is a consultant and sales coach who has written eight
books on sales and marketing. Email Ann at
Ann@SellingSupplies.com Get a free E-book when you sign up
for her free Weekly Sales Tips e-mailed newsletter at
www.annbarrblog.com
