For those of us who have our own businesses or work in corporate America, the idea of a price increase isn't new. In fact, annual price increases are one of the fastest ways for you to earn a few extra dollars to improve margins and cover growing costs.
As marketing professionals trying to sell around price increase, we more often find that traditional campaigns become less effective. All it takes is one heavily weighted variable to have a negative impact on campaign performance. This is especially true when we hear objections from our customers and are unable to fully justify the increase. With few changes to a given product the prospect of creating value is limited.
A key concern among marketing professionals is that customers will quickly move to a competitors product as soon as they hear the words price increase. This is especially true in markets where your competitor has a similarly priced product. There is always someone else that your customer can buy from. The good news however is that few customers migrate because of price increases.
There are a number of factors that explain why this is the case. Also, one must consider the cost to the customer to start from scratch. This has both and emotional as well as financial component.
Consumers have been conditioned to ask for a discount or find the sales rack. When introducing a price increase to your customers they are going to want to avoid it at all costs. This is just human nature. But this also explains why they will continue to ask for discounts long after their customers even though they wont leave you.
Here are some ways to overcome objections related to price increases:
Articulate value that is greater than or equal to that of your actual price increase. No one wants to pay more money for the same old thing. It is very difficult to justify given the current state of the economy and the growth of a competitive landscape.
Evaluate the cost for your customer to switch. This consideration has always been popular among phone companies. They not only want to sell more to existing customers, but they also want to attract new ones. You must be able to explain to your customer what costs he will incur if he changes providers. These costs may be both financial as well as emotional. How much time, energy, and resources will it take to truly switch?
Not all customers are equal. I know that saying so is not going to be popular but its the truth. Your customers are different shapes and sizes and mean different things to your company and organization. Price increases should reflect the individuality of your customer base and be designed for maximum impact.
The final bit of advice I can give around price increases is that you should really understand your competition and what types of alternatives are available to your customer.
For companies that can provide good products at a fair price, switching is not a major concern. However if you are over priced or your product is not equivalent to something a competitor offers, then your job becomes more difficult. Marketing professionals may need to encourage their business to invest dollars in product enhancement in order to justify the price increase. Regardless, focus your messaging on value which can help lesson the blow of higher prices.
As marketing professionals trying to sell around price increase, we more often find that traditional campaigns become less effective. All it takes is one heavily weighted variable to have a negative impact on campaign performance. This is especially true when we hear objections from our customers and are unable to fully justify the increase. With few changes to a given product the prospect of creating value is limited.
A key concern among marketing professionals is that customers will quickly move to a competitors product as soon as they hear the words price increase. This is especially true in markets where your competitor has a similarly priced product. There is always someone else that your customer can buy from. The good news however is that few customers migrate because of price increases.
There are a number of factors that explain why this is the case. Also, one must consider the cost to the customer to start from scratch. This has both and emotional as well as financial component.
Consumers have been conditioned to ask for a discount or find the sales rack. When introducing a price increase to your customers they are going to want to avoid it at all costs. This is just human nature. But this also explains why they will continue to ask for discounts long after their customers even though they wont leave you.
Here are some ways to overcome objections related to price increases:
Articulate value that is greater than or equal to that of your actual price increase. No one wants to pay more money for the same old thing. It is very difficult to justify given the current state of the economy and the growth of a competitive landscape.
Evaluate the cost for your customer to switch. This consideration has always been popular among phone companies. They not only want to sell more to existing customers, but they also want to attract new ones. You must be able to explain to your customer what costs he will incur if he changes providers. These costs may be both financial as well as emotional. How much time, energy, and resources will it take to truly switch?
Not all customers are equal. I know that saying so is not going to be popular but its the truth. Your customers are different shapes and sizes and mean different things to your company and organization. Price increases should reflect the individuality of your customer base and be designed for maximum impact.
The final bit of advice I can give around price increases is that you should really understand your competition and what types of alternatives are available to your customer.
For companies that can provide good products at a fair price, switching is not a major concern. However if you are over priced or your product is not equivalent to something a competitor offers, then your job becomes more difficult. Marketing professionals may need to encourage their business to invest dollars in product enhancement in order to justify the price increase. Regardless, focus your messaging on value which can help lesson the blow of higher prices.
About the Author:
Michael Fleischner is an Internet Marketing Expert with more than 13 years of marketing experience. He is an author and founder of The Marketing Blog. Read his search engine optimization guide, SEO Made Simple, to enhance your internet business.
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