Fortunately, the economy is improving, and Karl’s company is seeing the benefits through increases in sales as high as 10% in seven of the last eight quarters. As a result, Karl’s company is now in a position to implement price increases for the first time in seven years.
Karl doesn’t know what to do.
Like many Sales Professionals in the volatile economic conditions of the 21st century, Karl has never had to communicate price increases to his clients. Lacking experience in positioning a price increase, he is afraid of weakening the strong relationships that he has developed, or worse, losing clients by delivering this difficult message. However, for Karl, as for many Sales Professionals, economic growth is making price increases inevitable.
Fortunately, it is possible to maintain strong client relationships in this situation by following five techniques borrowed from Sales 101 for leading a consultative conversation about price increases:
1) Know the reason for the price increase. There are a number of reasons for increasing prices. For example:
- Your costs (materials, labour, facilities, etc.) have increased.
- The original pricing that you established with the client no longer reflects current conditions, and your margins are too low.
- The market has shifted upward since you last quoted a price for the client.
- Be honest with your client about your company’s reason(s) for the increase, which will help create transparency and build trust.
2) Anticipate client resistance. Think through the implications of the price increase for your client, and be prepared to acknowledge these implications. Anticipate in advance how the client will react to the increase so that you are best prepared to address his/her objections and concerns.
3) Neutrally position the price increase. As briefly as possible, layout for the client why you are implementing a price increase, how much the increase will be, and when it takes effect. Do not belabor the point with excessive rationale. Remain neutral and confident. Avoid using phrases like, I know this increase is hard on you … or, I know this increase seems high … which could create a perception that you don’t support your company’s decision.
4) Remain silent after positioning the increase. Anything you say after that point will open up room for negotiation in the client’s mind. Do not ask a checking question. If the client raises objections or concerns, use the Objection Resolution Model to address them, but avoid creating the impression that the increase is negotiable.
5) Strengthen the relationship. End on a positive note. Thank the client for understanding and for his/her continued business. Express your enthusiasm for continuing to work together.
What sales techniques have you used to position price increases? Share them with us in the comments below!