It’s the last thing customers want to hear.
“Unfortunately, we have to increase the price of our product.”
It’s true that price doesn’t have the power it used to. It’s only one factor customers consider when making product decisions – and it’s lower on the list than you think. Still, a price increase is always going to sting.
There’s also no way around it. Price fluctuations are just a part of doing business. They’re how you can keep making a profit even with pressure from inflation, supply chain disruptions and changes in market demand.
That puts everyone in a tough spot. No one wants to raise their prices. And customers sure as hell don’t want to pay even more for the products they need.
In fact, a few weeks ago I asked my readers to tell me about their biggest challenges. One of them was dealing with out-of-control pricing.
The pandemic brought more price increases. It also brought more uncertainty to your customers. It’s more important than ever today to help bring more certainty to your customers by doing a better job of communicating as much as you can about your pricing.
Building materials companies have been doing such a poor job of communicating price increases that it’s not hard to be better than your competition.
If you take the right approach to communicating them to your customers, you can keep their loyalty even as their budgets start feeling tighter.
Here’s how you can do it.
1. Avoid Sticker Shock
The prices of everyday items go up all the time, but you probably don’t notice most of those changes. That’s because it happens slowly and gradually.
If the jar of peanut butter you buy every other week suddenly went up by seven cents, it would barely move the needle on your grocery bill. If you noticed the increase at all, you would just shrug it off.
But if the price doubled, it would stop you in your tracks. You would start comparing the prices of other brands and might even give up on PB&J sandwiches for a while.
The same thing happens with your products. Customers can easily handle small increases in the price of their building materials. They can tweak their budgets and adjust their expectations.
Sudden, large increases are different. They hit your customers hard. Instead of accepting the extra expense, they’re more likely to look for ways to avoid it – like buying from your competitors.
If you can, parcel out price increases over time. Increasing your price by 1% each quarter is better than slamming your customers with a 4% increase at the start of the next year. It’s the same increase either way, but doing it gradually means you can avoid giving them sticker shock.
2. Keep Your Employees in the Loop
When your price goes up, your customers are going to have questions. They’ll want to know why it changed, if there are ways to keep their costs manageable and if more increases are expected in the near future.
The last thing you want is for them to ask those questions to someone who is completely in the dark. That’s almost as frustrating as the price increase itself.
Before rolling out the price increase, make sure your employees are briefed about it. Sales reps, customer service staff, the people who run your social media – anyone who might interact with a customer should be able to explain the ins and outs of the change.
3. Contact Your Customers Directly
Your customers shouldn’t find out about the price increase when they’re filling out an order form. They should know about it well ahead of time.
In fact, the sooner the better. Knowing the price is going up weeks or months before they actually have to purchase from you again will make the blow a lot softer.
It’s even better if you let them know personally. Getting an email from a rep they’re never heard from before is too impersonal. That might work for promotions and run of the mill announcements, but the bearer of bad news should be someone they already know and have interacted with.
It’s also a good idea to personalize the communication instead of sending a generic email or form letter, especially if you’re sending it to a long-running customer.
4. Justify the Increase
Think back to the peanut butter example above. If your jar of peanut butter doubles in price, you’d expect some kind of explanation.
A massive peanut shortage. Another ship getting trapped in the Suez Canal. A trucker strike holding up stock at the border. It doesn’t matter what it is, as long as it makes sense of the price increase. Otherwise, you’re going to feel like you’re being ripped off.
That’s the last thing you want your customers to think. So when you announce that the price of your product is climbing, you also need to let them know why it’s happening.
Explain why you had to switch to more expensive materials. Let them know that it’s your only option for dealing with rising inflation. Give them a quick primer on the supply issues that forced your hand.
And tell them up front. Don’t wait for them to ask for an explanation because some of them won’t. Instead, they’ll draw their own conclusions – and those conclusions probably won’t make you look good.
5. Answer Questions Promptly
Your customers are going to have questions. Your job is to make sure they’re not left hanging.
Customers who feel heard are more likely to stay loyal. That’s especially true when things go wrong, like when a shipment is late, the product they need is out of stock, or the price goes up.
You should anticipate an increase in communication after an announcement like this. Make sure you’re ready to handle it. Get all hands on deck so every customer email gets a quick response. Have someone handling social media throughout the day – even after hours.
Don’t underestimate the importance of a prompt reply. It’s what keeps your disappointed customers from becoming frustrated ones.
6. Offer Deals
If you can afford it, offering your customers a deal can take the sting out of the price increase. For example, you could give them reduced shipping on their next order or offer discounts for high-volume orders.
It won’t completely make up for the extra costs, but it’s a show of good will that they’ll appreciate.
7. Update Your Marketing Materials
This is a very basic mistake, but you’d be surprised at how often it happens.
A company changes the price of its product and forgets to update it everywhere. A pre-scheduled email goes out with the wrong price. The old numbers are still one or two pages of the website. They don’t print new posters and flyers to replace outdated ones.
The result is another wave of customers who have to be disappointed. They expected one price and then were hit with a higher one.
Before announcing the increase, go through your marketing materials with a fine-toothed comb. Identify every single piece that needs to be updated and fix it before you break the news.
Loyalty Is Always Cheaper
The building materials industry has changed a lot in recent years, but one thing hasn’t. Keeping a customer is still cheaper than getting a new one.
That’s one of the reasons customer loyalty is so critical to your success. Constantly churning purchasers might keep you afloat, but it’s more expensive than having a steady base of loyal customers.
You can’t prevent price increases, but you can soften the blow. So be strategic with your communication – it’s the best way to keep your customers coming back.