How to raise prices without losing customers?
Raising prices of products and services is a big decision for any company. Several internal and external factors work behind a price rise and every firm at a certain point or another, hikes costs.For any enterprise going for a price hike, an essential consideration is not to lose customers because of the move.
However, a meticulous and planned approach ensures that firms are able to make a smooth transition. Keeping these things in mind would help companies hike costs without compromising on their customer base.
Inform about the hike beforehand
A sudden hike can take customers by surprise and leave them with a bitter experience. Therefore, it’s imperative for firms to inform about the upcoming hike in advance so that customers are better prepared. Today, most enterprises maintain a database of customers with their names, address, mobile phone numbers and emailIDs.
Enterprises can send personalized emails and messages to each customer informing them about the price hike. The message must clearly outline the date from which the increased prices will be levied. The announcement can also be made through advertisements in newspapers or on TV. As most companies these days maintain a distinct presence on social media, the information can be spread via these platforms, too.
Explain the reason for hike
Customers prefer honest companies who are transparent with their operations. Since price hike is a crucial move that impacts bottom line revenues, it’s imperative for organizations to explain the reason for the hike. Increase in prices of raw materials, changes in taxation norms and increased wages of workers are some of the common reasons for companies to raise prices.
Clear communication with customers explaining to them the reason for the hike goes a long way in building trust and respect, essential to retain customers.
Customers are more likely to accept a hike in prices if they are offered something extra. It’s consumer psychology to want a little more for an increased price. If given, they don’t mind the hike.
For instance, if a firm is into manufacturing biscuits or snacks, an extra 10 or 15% in the current package is likely to be better received by customers. However, it’s essential to ensure that the extra doesn’t cost the company much as this can nullify the effects of a hike on revenues.
An effective way to soften the blow of increased price on customers is to enhance the quality of products and services. For instance, in the above example, the company into manufacturing biscuits and snacks can use better ingredients in its products to improve its quality.
Note that customers don’t mindpaying a little extra for quality products. Instead, they appreciate companies offering quality products, albeit at a higher price.
A survey on the likelihood of customers ready to accept a hike within the desired time frame helps firms time their move right without the fear of losing out on buyers.