Canada may no longer issue pennies, but when you tell your friends and family a recent purchase was “worth every penny,” they all know what you mean.
Everything we buy has to be justified. With personal items like clothing or books, we have to convince ourselves that it’s not going to put us behind with our regular expenses. Within a company, investing in a product or service can often require an extensive business case, where seeing a return is critical.
Most of what we buy now costs a lot more than a couple of pennies, thanks to higher than usual inflation. Those same economic pressures may force you as a business to increase what your customers pay for your products and services.
This is never an easy message to communicate, largely because it risks seeing some customers walk away for good.
While the increased cost of materials or a rise in operating expenses may make a price increase unavoidable, many customers are making tough financial decisions. Some may have already been re-evaluating where they spend, and a price increase could push them in the wrong direction.
Communicating a price increase should not necessarily be seen as bad news, however. Within any industry, it’s a natural part of the long-term journey that makes up any viable customer experience.
In the beginning of your relationship with a customer, for example, winning them over meant they came to see the value of their experience as greater than the price they would pay.
Over time, the experience you’re delivering should continue to evolve so that the value continues to grow. This could involve deepening the personalization you offer every time a customer engages with your business using platforms like Customer 360, offering customer service via mobile apps or additional features you introduce into a product.
When the customer experience becomes richer, customers may become loyal to that experience and in turn, willing to pay more.
Part of the challenge is that price increases tend to happen across the board, which require a message that gets communicated to your entire customer base. Bear in mind that yours may not be the only message of this kind that lands in their inbox. You’ll not only need to strike the right note, but ensure you don’t seem to be simply one more company asking for more money.
As you review the message you’re sending, make sure you can answer the following questions:
Are customers being given sufficient notice?
Retailers who welcome customers into their physical stores or online don’t often need to spell out a price increase because shoppers may only visit and spend occasionally. For many other businesses, however, customers are investing via subscription services or contracts that have to be periodically renewed.
The earlier these customers can be notified, the more time they have to process the news and, if necessary, to reallocate their budgets. It also provides you more time as a business to respond to any questions or concerns, and to persuade them that sticking with you is the best course of action.
Is the price increase clearly defined?
The effort to soften what can seem like a blow can lead companies to overload their messages with extraneous information, or to try and couch the price increase in a way that makes it seem less than it really is.
Be transparent and get to the point in the first paragraph of your message. Don’t make them scroll down to find out the details. Instead of disguising the price increase by describing it as a percentage, get as specific as possible so they understand the actual difference in dollar value.
Does the rationale provide enough context?
In an ideal world your price increase could be part of a good news story, where you’re responding to customer feedback by launching more functionality to a product or complementary elements to an existing service. Even when that’s not the case, you need to make your reason for a price increase resonate.
Remind customers of the full experience you’re delivering. Help them see that a price increase will allow your business the ability to continue providing that experience consistently and with the same high level of quality. Connect the dots to larger forces, such as the economy, that are common across the market and that are out of any single person or organization’s control.
The overriding theme of your message should be that you’ve looked at this price increase from your customer’s point of view, and that it still makes sense to everyone involved.
Has the message been positioned as part of an ongoing conversation?
There may be some people within your customer base who will proactively complain immediately following your message. Make it easy for them to make themselves heard, whether it’s providing a number for your contact centre, an e-mail address, or a link to a chatbot on your website. This is just part of providing truly customer-centric service.
Other customers may not reach out – but they would benefit from additional information. Embed links to FAQ content about your pricing and its benefits. Consider how you can use content like video to bring these details to life in a more compelling way.
Don’t be afraid of using surveys or other mechanisms to solicit more actionable feedback about how to improve your customer experience amid a price increase. There could be relatively inexpensive or smart ideas that come in, such as a request for more self-service tools, or changes in how information about your product and service information is presented across digital channels.
Your price increase is ultimately posing a question to your customers: is the experience they’re having with your brand going to be worth a few more pennies? Being direct, open and responsive to their reaction is the best way to retain their loyalty and ensure the long-term growth of your business.
