Convincing existing customers that a higher price is worth paying
One of the most difficult tasks faced by marketers and copywriters is that of telling loyal customers about an impending price rise. There’s no easy way to do this. Just ask the current UK government who now face the people with the biggest price increase in history.
But the key that every marketer and communications specialist must remember is that price is the sacrifice made to achieve a reward greater in value than its cost. Yet many businesses fail to understand this.
We’ve all seen it: magazine/newspaper prices going up; energy costs rising; insurance premiums increasing. The notes which accompany these changes vary from the irrelevant (our costs have risen so we’re passing them on to you – yeah, great…), to the cynical (an invoice with no explanation, relying on inertia to drive revenues).
In the end, existing customers couldn’t care less about your cost base – or anything to do with you. What they care about is what they need to go about their lives. When they are in a relationship with your company, the only thing that concerns them is what they will lose if they stop doing business with you. And that is at the heart of the discussion.
A problem with many in-house copywriting and marketing teams is that they often have lost touch with what their products do. I know, I have said this before, but that’s because it is largely correct. Instead of words which show that the company understands the customer, we get the same tired old phrases: “modern”, “up-to-date”, “comprehensive”.
These words will not serve you in retaining customers in the event of a price rise. Instead, the argument needs to be restated about why the product is so valuable.
How do you find this out? First rule: don’t rely on received wisdom of in-house staff! Second rule: talk to your customers. Strong relationships with your customers will help you to understand what they get out of using your products. Sometimes you might be surprised by what customers tell you. But it is crucial to recognise that you cannot simply invent benefits and advantages of features. The customers will tell you why they bought your products and what they use them for.
You may find as part of your customer dialogue that there are ways of using your products which you hadn’t thought of before. You may find that they have particular needs which are answered by a distinct way in which your product performs over competitors. You may indeed find that competitor products offer exactly the same deliverables but are more expensive or don’t have your customer service.
The key is to find out not what you think your product delivers but what your customers will lose if they don’t get it. It’s possible that the two are the same. But don’t rely on that. Find out. By regular surveys. By dialogue. By talking with your sales team. By going on site visits with your sales people.
In the end, when you create your “increased price message” to your existing customers, it’s down to credibility. Show them that you understand them, that you understand how their business ticks and that you understand how crucial your product is in enabling them to deliver for their clients.
Treat a price increase, however, as a mere fact of life and you might find another fact of life comes back in your face. The customer who goes elsewhere. The UK election will be an interesting test of customer retention strategy.