Every company wants loyal customers, but it's not always easy to retain them, especially when making necessary yet major changes to your brand. For instance, when you've decided that to make a profit you need to raise your prices, you probably know your buyers won't be pleased. You might face backlash from consumers, but you can work to prevent this while still doing what you need to survive as a business. Here's how.
If you have long-term customers who've been loyal from the start, you should make exceptions for them. For instance, if you offer a service costing $35 a month and want to increase it to $45 a month, you should not apply this price jump to existing customers. Allow those who have been consistently paying the lower amount to continue doing so, unless the change is desperately needed. This is called "grandfathering."
"This lets you grow future revenue without worrying about losing existing customers," said Dave Lane, CEO of Inventiv. "It also gives you an opportunity to show your existing customers how much you value them. As part of the pricing change, inform your existing customers that they'll continue enjoying your product or service at the same great price they've always had."
However, if this strategy doesn't seem sustainable for your business, you can instead offer them a twilight period with advanced notice, Lane said. [Stay in touch with your customers with a customer relationship management (CRM) solution. Check out our best picks for CRM software.]
"Informing them of a change coming up in six months to a year will help set expectations without surprising them at the last minute," he said. "Warning them in advance will give you opportunities to upsell as well: Offer discounts on long-term commitments or higher-tier service plans. Annual or multiyear plans for your long-term customers can help them maintain a price point they're comfortable with while increasing the predictability of future revenue. Discounting higher-tier plans for existing customers also demonstrates you value their business by giving them exclusive offers that are not available to new customers."
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If you're raising prices, odds are you're either struggling with finances or improving your products or services somehow. Regardless of the underlying reason, Mary Zakheim, marketing manager at OpenSponsorship, advised against raising prices without adding some sort of value.
"If you're losing sales and that's your motive to raise prices, it's time to rethink why you're losing sales and invest in fixing that, rather than push your shortcomings onto the consumer," she said. "The consumer is smarter than you think and will be able to sniff out a meaningless price raise from a mile away."
Listen to reviews, customer complaints, and feedback and use them to better your business. If you're receiving the same criticism over and over, you should take action and bridge the gap, no matter how expensive that may be. Customers will be more willing to accept a price change for good reason.
No matter the reason, be transparent with your customers. Consumers appreciate clarity in today's invasive, sales-driven digital world, and giving that to them will soften the blow.
Zakheim suggested highlighting the value you are adding to your offerings and being honest about your rising prices. Reach out to both existing and new customers by sending emails and posting on social media.
"With new customers who may not know about your previous pricing model, continue your efforts in communicating the value that you've added to your product or service," she said. "Are you using better materials? Let your potential customers know. If it's a service, are you adding value that makes you better than your competitors? Shout that from the rooftops. Don't be shy in letting your target audience know that your product is still the best value for its cost."