The absolute BEST thing about our loyal customers is that they don’t even think about which one to buy. They always choose our product. Awesome. No extra marketing effort. No extra sales effort. Just keep shipping quality product and life is good.
Until you increase prices.
Don’t get me wrong. I love price increases … when we can get away with them. But much of the time we can’t. The single biggest problem with a price increase is our loyal customers suddenly feel they need to re-think their decision. That’s the last thing we want.
When a loyal customer rethinks their decision we stand to lose because our competitors may have improved their products or prices, we may have new competitors in the market, or our customers’ tastes may have changed. Considering the lifetime value of a loyal customer, losing can be painful.
What are your options? Your best option is to increase prices only on new customers if possible. Your existing customers never see the price increase. Alternatively, you can create loyalty programs so your truly loyal customers are rewarded and don’t really experience the higher prices.
If you think you have to raise prices on everyone, then try to make it as painless as possible. One option is to attempt to time it simultaneous with price hikes from your competitors. Regardless, you must justify it with increased costs.
Some industries are lucky in that their customers expect annual price increases. In those cases meet the customer expectations, but don’t be too greedy. The goal is to make as much money as possible but still keep them from revisiting their purchase decision.
No two businesses are alike, but there is one almost universal trait among customers: they hate price increases. Be sure to take extra special care of your loyal customers during price increases. They are your most valuable and most vulnerable customers.
Mark Stiving, Ph.D. – Pricing Expert, Speaker, Author
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Photo by Dave Fayram