Organisational transformation Singapore

My clients are allergic to price increase!

My clients are allergic to price increase!

Been having a hard time of late? I’m sure some of you have probably got your sales targets or business goals for the year. And while there is little compassion from management to take a breather, it seems that customers too are unrelenting with their demands.

A client recently remarked that they were finding customers impossible to deal with. With the dizzying increase in oil prices, their latest round of ‘price increase’ letters sent to customers certainly didn’t go down well with many of them, who were not the least bit understanding or compassionate. That letter resulted in constant re-negotiation and explanation. Why couldn’t the customers accept it when the whole world knows about it? Why couldn’t they understand?

Switching perspectives, clients who were recipients of such letters saw it differently. Faced with constant pressure to deliver more for less for their end customers, they felt that these vendors were unable to explain why the need for such increase and beyond the percentage changes. As a reaction, they used the price increase as an opportunity to open the door for competitors with better value proposition to woo them over. But interestingly, more than 90% accepted the price increase after several rounds of negotiations and then it was business as usual. Why? Because they needed the vendors’ support and their familiarity with the company made it tedious for them to move to another supplier.

So if you’re preparing that letter the next time round, it’s a good reality check to justify the value that you provide to your customers apart from price. Help customers understand how indispensable your service is. Show them how you can help them achieve their goals. Talk about their goals ahead and show them how you provide business improvements and more importantly, value.

Customers buy because they see the need, even in price increase situations. So do they really need you?