The Key to Raising Prices Without Sacrificing Customers

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It’s a challenge every business faces at some point in its lifecycle—the need to raise prices in order to maintain operations and secure revenue to finance future growth. But the marketplace is littered with companies that attempted to achieve this goal but lost much of their valued customer base. One wrong step along the price-increase process and customers can feel mistreated, alienated and turned off enough to no longer purchase the company’s goods or services, even if they’ve been rewarded in the past with quality care and products.

The key to raising prices is designing the right strategy, coupled with a sense of timing and an all-out communications effort to persuade a loyal customer base that the price hike is both appropriate and promising of better things to come. Here are tactics to consider when you’re ready to raise prices:

Leave no ambiguity about the services you provide. Hopefully, you’ve laid the groundwork to clearly differentiate between what your business provides and how it stacks up compared to what’s offered by the competition. But it never hurts to further expand upon how your specific solutions effectively address problems that your customers can’t find elsewhere.

A good time for a price hike is when you can upgrade your product’s differentiating factor into an even more streamlined solution for the problems your customers face.

Incorporate price hikes in your strategic plans. Some companies mistakenly wait for what seems to customers an arbitrary time to suddenly announce a price increase in their goods and services. Instead, consider incorporating a comprehensive pricing strategy as part of your long-range business objectives, thus anticipating the influence of market forces, competitive gains in the marketplace, and other factors.

Being in a position where you can anticipate the next scheduled price hike enables you to prepare your customer base for that eventuality.

Investigate tiered pricing opportunities. Different customers may be willing to pay different prices for your business offerings. Multiple price points often make sense for retail and service businesses but can be applied to any business that offers a tiered pricing system with varying levels of service (or product upgrades) at different prices. This approach also gets customers more comfortable with price increases, making it possible to introduce across-the-board price hikes at a later date.

Communicate intentions in a positive light. Any increase in costs to customers will incur some level of push-back. For this reason, it’s critically important to communicate ahead of time your intention to take this step. Moreover, framing your message in a positive light—rather than blaming inflation or your own manufacturing/distribution expenses—can smooth the path toward eventual acceptance.

Emphasise your ongoing commitment to the highest product quality and most efficient customer service, as well as any investments your business has made in expanding personnel or acquiring state-of-the-art technology. Price increases go down better if the customer feels your business is spending money to improve its quality for them.

Test a price increase. It’s natural to expect objections from customers, but that’s not always the case with a rise in prices. “Your best customers might even wonder why you haven’t done it sooner,” notes Small Business BC, which adds that if you do have concerns about your existing client basis, “you could always introduce the changed pricing on new clients only.” This helps you gauge the effect of higher prices for your products in the marketplace.

Finally, help cushion the impact of a proposed rise in prices by offering one-time consultation services or other form of specialised assistance to your customers. This demonstrates how important they are to you, as well as your willingness to go above and beyond on their behalf.

Want to learn more about strategic planning and price increases? Find out if a TAB Board is right for you!

 

 

Management – A Task Worth Reflecting On! By Corrinne Zuchetti, Master HR Solutions

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As we head towards the end of the year, often employees reflect and consider what they want to achieve in the new year in terms of jobs and careers. For some, this can lead to job hunting and your valued employee moving on to a new future career without you.

Employees leave companies for different reasons but one we commonly hear is that “people leave managers, not companies.” According to a recent Gallup poll – of all the reasons people leave companies, having a bad manager/leader tops the list, with 50% of employees listing their manager as the reason for leaving.

Don’t despair, it’s not all doom and gloom because on the flip side employees who are empowered, engaged, valued and motivated by their leader are often inclined to stay. Now is a perfect time to reflect on your own style and consider some tips that can see you go from good to great in the eyes of your valued employees.

There is a wealth of information available on management and leadership, the following are just some practical tips our consultants have seen across some of our clients who have a great company culture and whose star employees are not considering their next move.

Motivate and inspire your team -  by sharing the company vision and help employees set team and individual goals that contribute to this vision so they are part of the journey

Provide Inspiration – Share your passion for the business but also listen to your team and allow them to contribute to help form the vision, mission and values.

Empower People. Encourage openness, transparency and involvement of team members in decision-making.  As confidence and commitment grows let team members take ownership for decisions or find solutions to problems.

Live your values – ensure your company values, policies and procedures are followed and walk the talk. Behave ethically and ensure that you are meeting all of your employment legislation requirements and treat your employees how you would like them to behave.  Also hold people responsible for bad behaviours to ensure that it does not become part of your culture and to ensure there is value in your policies and procedures.

Make other people feel important and appreciated.Invest time and energy in your team, it is a bit like a relationship and everybody needs to be appreciated. Showing a commitment to your team and recognising their worth shows they are valued and the work they do really does matter. When people feel that value they become committed.

Continual Improvement  – Be open to ideas of new methods to improve methods of work, provide learning and development opportunities for your staff. Give them an opportunity to stretch themselves in a supported way.

Show care and compassion – Sometimes tough decisions have to be made but the communications can be handled with consideration and care. Show care and compassion for people and their situations.

Importantly and particularly with end of year celebrations creeping up, celebrate successes and arrange fun activities as a team. Acknowledging success doesn’t always have to be a costly venture – don’t underestimate the value of saying thank you and recognising a job well done. Have fun with it, you can set traditions and acknowledge success, or you may find if you fail to take the time and acknowledge a job well done, after a while your team will see no point in giving you their all and might start considering their next position.

As mentioned these are some of the take away points we have gained experienced over many years working with clients of varying industries and business size.  We can provide you with practical assistance with all of your people related activities including compliance, culture, employee recognition and management strategies.

We can help you go from good to great.

By Corrinne Zuchetti, CEO Master HR Solutions, and TAB member. Get in touch with Corrinne at http://masterhr.com.au/contact-us/

 

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