It’s safe to say that we’re all feeling the pinch. Like much of the world, Australia is grappling with a cost of living crisis, high inflation and possible recession. What’s more, the situation is likely to get worse before it gets better. Many businesses of all shapes and sizes have started to see rising costs impinge on their profit margins, leading to increasingly bleak cash flow statements.
Your vendors are raising their prices to cover their own rising costs, the utility crisis has seen your energy bills and operational costs soar, and your employees require a fair wage to help them navigate their own cost of living crisis. Yet, despite all this, you are loath to increase your prices. You strive to deliver outstanding value for money to your customer base and understand that they’re feeling the pinch in all the same ways as you.
Deep down you know that it’s only a matter of time until you have to increase your prices. Understandably, this can be a real source of anxiety. What if your customers decide that they won’t pay your new prices and take their business to one of your competitors? What if the price rise is insufficient to cover your rising costs and you need to increase your prices again shortly after raising them the first time? What if raising your prices compromises your brand or alienates your core customer base?
As in all things, communication is key. Here, we look at how to communicate a price rise to your customers in a way that doesn’t compromise their relationship with your brand. So you can meet the rising cost of doing business while maintaining the loyalty of your customers.
How to approach communicating your pricing increase
The absolutely last thing you should do is bury your head in the sand and increase your prices without communicating your price increase to customers.
The key to approaching a price increase is similar to any other communications with your customers. It needs to be done with the customer’s feelings, needs and anxieties in mind. Just as your marketing and brand-building communications are based around their needs rather than your competencies, a sympathetic and empathetic approach is required here.
Here are some tips for communicating your message effectively and tactfully.
Make it personal
A personal touch is always better for situations like these. If you need to break bad news to customers, it’s much better to approach them directly where possible. Address existing customers directly over email. This goes for everyone, from subscribers that use your service to unconverted prospects who have subscribed to your newsletters or special offers via email. Where possible, address recipients by name and tailor your messaging to the products or services that they use.
The same goes for your team. Ensure that every member of your team is aware of price increases, the reasons behind them and when they come into effect. Inconsistencies can be an embarrassment for frontline employees and give your brand a negative image.
Explain your reasons
Let’s be honest. When companies announce a price rise, some consumers may assume that they are doing so in order to elevate their profits rather than to maintain harmonious operations and uphold quality.
As such, you need to be open and transparent about your reasons for increasing your prices. Explain how your vendors have been forced to raise their prices, how rising energy costs mean that your operations are more expensive, how supply chain issues are making materials more scarce and how you want to ensure that you avoid losing staff or providing them with pay cuts as inflation soars.
Show them that a slight price increase is due to the cost of running your business ethically and effectively.
In these uncertain times, your customers are looking for assurance. They need to know that they’ll still be getting the same level of quality that they have come to expect. They deserve to know that you have the staffing to maintain the level of service that keeps them coming back.
Explain that maintaining your current pricing structures would inevitably come at the expense of compromising the quality that they have come to associate with your brand.
Nobody likes to be confronted with unexpected bad news. But the longer we have to prepare, the better able we are to adjust to it. So, it’s prudent to provide as much notice as possible – at least one month. This gives customers the luxury of being able to reflect on their household budgets, compare prices and make an informed decision as to whether or not they want to stay with you.
Ways to communicate your pricing increase
The better informed your customers are, the better prepared they are to react to your price increase. Therefore, it’s important to reach out to them on their own terms, using platforms that are best suited to them and you.
Email is an effective channel for communicating price increases to customers. It is immediate and accessible, and automation enables you to personalise email copy without investing hours of your team’s time.
However, emails may get lost in spam boxes, accidentally deleted or simply forgotten within a bustling inbox. It’s always a good idea to combine email messaging with other channels.
Social platforms can provide a more intimate and immediate setting in which you can communicate with customers individually, while also giving you an open forum to communicate your price increase to new customers and prospects.
It also provides a space in which customers can ask you questions about the price increases and you can publicly address their concerns. This can actually help you to promote trust in your brand and demonstrate your commitment to your customers.
It’s all too easy for consumers to see companies as impersonal, profit-driven machines. But the truth is that companies are run by people just like them. People with many of the same concerns and anxieties as their customers. Try to keep this in mind when considering your wording.
Your communication with customers should be conversational in tone, with a vocabulary that feels more like a chat between equals rather than a corporate statement. This helps them to better empathise with your reasons for raising prices and see the human cost to those within your organisation if your prices were to remain the same.
How we can help
At Square, we provide a suite of tools to help you to improve financial transparency, add value to your business and improve operational efficiency. So you can ensure that price increases are as minimal as possible, and maintain the same quality that you offer customers in the face of rising costs. From POS systems with accurate real-time reporting to Team Management solutions that help you to get the most out of your workforce, and Loyalty programs that help customers to feel valued despite price rises.
High inflation and rising costs are concerns that could affect any business. Being prepared is key, and our tips, alongside our suite of software and hardware solutions are designed to help you weather these turbulent times and steer your business towards a harmonious future.