Any business owner wants to make more profits and increasing prices is a way to do that. But the biggest reason businesses don’t raise their prices is the fear that if they do, their customers will go elsewhere. It makes sense; you spend a lot of time building up a customer base and attracting people to your list and you don’t want them leaving in droves.
But they won’t leave you!
Cool facts to keep in mind to dispel your fear:
FACT #1: Less than 10% of customers actually leave following a price increase.
This is a very small percentage! In many businesses no customers leave. (Geoff Vautier http://www.howtoincreaseprices.com)
FACT #2: Only one in seven customers buy on price alone. (Dale Furtwengler, “Pricing for Profit” http://pricingforprofitbook.com )
FACT #3: This means 6 out of 7 prefer value over price and are willing to pay more for the value they are looking for. (Dale Furtwengler)
FACT #4: In corporates, only 20% of the purchasing decision is based on cost, the other 80% is based on value, relationships, bonuses offered, reputation. (Dan Kennedy, “No B.S. Price Strategy” http://dankennedy.com/ )
The two main reasons customers don’t leave:
1. They know that they get value from you.
“People will find a way to afford what they want.” – Dale Furtwengler
They’re existing customers, right? So they’ve bought from you before and been satisfied with what they got. They know you, your company and your product or service. They’ve invested time, effort and money in the relationships which might have taken months to develop. Who really wants to give these up?
2. It ‘costs’ them to leave
“Even under adverse economic pressure, the majority of buyers respond to motivating factors other than price.” – Dan Kennedy
Have you ever tried to change an internet provider? Did you try and then give up? In the end did you stay with your supplier because you couldn’t be bothered?
How about an airline ticket? Yes, we know there are security implications so questions have to be asked but does that justify the hoops you have to go through, the different departments you have to speak to, the extra costs you have to pay? Who’s the customer here?!
When you change suppliers, it might not cost you dollars (though it can!), but it will certainly cost you time. And the same is true for your customers.
How to increase prices and keep your customers:
How can you make an advantage of these two reasons?
Top Ten Tips
1. Emphasize the importance of your relationship
2. Mention how long they’ve been a valued customer
3. Remind them how satisfied they’ve been with your product or service in the past
4. Reassure them they’ll still get great service from you and better value
5. Give them a simple, straightforward, no questions asked, money back guarantee (and be prepared to honor it)
6. Offer them an incentive to stay
7. Point out that there is no-one else offering what you offer
8. Acknowledge how much you appreciate their loyalty
9. Show them how much you understand their business or situation
10. Remember that if they do go somewhere else after you’ve made a justifiable increase in your prices, then they may not be the right kind of customer for your business
These are simple steps to give your business a raise, and those revenues will go straight to your bottom line because the acquisition cost was paid for long ago. If you lose a couple of customers, the 10% increase will be more than enough to compensate.
Plus, all newly acquired customers will be at the 10% higher rate giving your business even more revenue.
If you decide to raise your prices, tell your callers about it when you place them on hold. A short line in your on hold messages about a price increase will alert callers, so it may not come as such a shock.
Of course, there are exceptions to every rule. Here at AAA Phone On Hold we’re proud that we have NOT raised prices in over 15 years! WHY NOT, you ask? Because, we value service to our customers above everything else. We’re here to fill a need for our clients, not give ourselves a raise every time we feel like it. Of course, when our costs get too high to maintain a fair profit, we make adjustments as needed. However, those adjustments don’t always have to mean higher prices for our clients.