If the past few years have taught us anything it is that nothing stays the same forever.

The Covid pandemic has shaken most businesses to the core. It has been followed by global political and economic stresses, and regulatory and policy settings domestically that have significantly affected input costs. In that context, “something’s got to give”.

For business owners the past several months have created what some are referring to as the “perfect storm” – rising input costs, significant labour and raw materials shortages, and a sense that the coming 18-24 months might not get much better.

Now is NOT the time to pretend you can bury your head in the sand. As with all challenging times, there will  be opportunities for those who are prepared.

You’ll probably have to increase prices.

How you communicate the news is just as important as the increase itself. Provide clients with detailed information, address questions and concerns, and reinforce your value as their chosen provider.

1. Contact customers directly

No one wants to find out about a price increase by surprise.  Imagine arriving home and your local council has left a letter telling you – out of the blue – that your rates are up by 20%.  How would you feel? The chances are you will get pretty annoyed and look to use your vote come the next municipal elections!

In the same way, when you need to tell your customers about a price increase, do it directly. Ideally, personalise your communications with an email or letter, or even better a phone call. Go through your database, identify what the effect will be for each one and then tell them – and wherever possible have a conversation. Don’t hide behind email. . .

2. Communicate early

Always use a policy of no surprises. When things are changing, the best way to get ahead of an issue is to react quickly. It’s absolutely true that you need to think before you act, but in today’s world speed is your ally.

Honour your clients by giving them plenty of time to come to terms with the price increase. They might need to redo their budget or look at other options, so keep them in the loop as soon as you can. If the increase is not immediate, encourage them to make one or more product or service orders before it starts. With time to prepare, you’ll be better placed to retain customers because they will be better able to accept and adapt.

Keep communication short and simple. The last thing you want is for your customers to get annoyed with you. Loyalty and trust are two things that are hard to earn but easily lost. There is no need to over-explain, or to apologise. Be clear, be concise, be available to answer questions.

3. Focus on quality and value

Focusing on price is a fool’s game. To succeed in business, always focus on the value you create. That way both you and your customers can see the return on investment you are getting. It removes the pain of paying more and replaces it with the understanding that you are still getting a good deal. There’s a simple equation to keep in mind:

Gain = Value – Cost

When you increase prices, make sure the value is clear. Sometimes, the need for a price increase can be confusing for customers. It’s vital you stress the importance of product and service quality. People don’t mind paying, typically, if they can see the value they’re getting. Tell your customers you’re committed to the same or even better service and products, which is the reason for increasing prices.

Even better, explain your roadmap to the future. A good example is United Airlines: “To provide a more productive and relaxing experience, we’re investing more than $100 million in renovating existing locations and building new spaces with expanded seating areas, more power outlets and upgraded wifi. We’re also investing in a brand-new complimentary food menu that you can now find at most of our hub locations across the US and will be available soon at the rest of our locations.”

This is part one of a two-part article. See the October issue for part two.