Last month we spoke about some of the challenges facing business owners in a post-pandemic New Zealand.

The “perfect storm” of rising prices, staff and materials shortages and a sense that the next year might not be a whole lot better have all left people feeling jaded. For those business owners ready to do the hard yards, however, there are opportunities to be had.

Speaking to several entrepreneurs during the past few months, I’ve noted a constant theme about how they have tackled raising prices. Overall, there are seven critical aspects to raising prices, including contacting customers directly, communicating early and focusing on quality and value. We covered those three last month, so go to otakitoday.com if you missed it.

Following on and rounding out the seven areas, remember that a vivid and compelling story for why the price is being increased that focuses on WIIFT – What’s In It for Them – should always be at the core of your thinking. Ask yourself these questions as you prepare:

• What has changed about your services that provide additional value?

• Have you done extra training, developed new skills or hired specialists?

• Have you expanded your service offering?

• Does your company offer benefits that currently aren’t documented in your quoting or estimating process (such as technical support, extra resources, increased availability or shorter turnaround)?

Call an increase an increase

Your customers are smart.  Don’t obfuscate or use euphemisms in communicating an increase. It’s common to try to hide price increases as “updates” or “adjustments” because people are scared customers might react badly. It might seem like a small thing, but research shows that attempts to obfuscate bad news rarely pay off for brands. People appreciate helpful, transparent, and informative communication.

Authenticity and honesty matter. Euphemisms don’t fool customers, they only make them suspicious, often because they perceive it as being talked down to. Call a spade a spade and let your yes be yes and no be no.

Be clear on the reasons and details

To emphasise that you’re raising the prices to maintain the quality of your products and services, explain what caused the price increase. After the size of the price increase, the perceived fairness of the motive for it is the second-biggest driver of how customers react. Right now, materials shortages, a tight labour market and overall price inflation are well recognised. Customers might not be happy to get a price-increase letter, but explaining things openly will prove your willingness to be transparent.

Telling your customers that you can continue to provide the current level of benefits only if you raise the price – and you choose to do so rather than degrade your products and services – is a powerful argument. It reinforces your values to the customer. Think of a couple renewing their wedding vows – it reminds them of why they started the relationship in the first place.

Details matter. Clarity is power. Consider including the following information in your communications:

• When the price increase takes effect.

• The exact price that will be reflected on their next bill.

• What happens for jobs that are in progress?

• What happens for customers that are on a promotion or being offered a special price?

Don’t be afraid to share data. Know and share the increased cost of materials, the cost of labour or the expense of complying with new regulations. If it’s been a long time since your last price increase, share that with your customers, too.

Align internally first

Consider all the stakeholders in your business when communicating price increases – employees, customers and suppliers. Inform each department to help minimise impacts on their day-to-day operations. Make sure you avoid creating confusion for your customers, for example by your sourcing and purchasing departments and your marketing department not being “on the same page”!

Your team serves your customers. They are the frontline troops and you are the general directing operations. To be effective, all your people need to know and understand and be able to articulate the reasons for the price increase. Having a consistent message is critical, because winning teams are ones that have a unified sense of purpose. In this case, that purpose is to keep on delivering consistent, high-value service.

It would be embarrassing for a frontline worker to accidentally charge a customer the wrong price, or to not know that things have changed when they arrive on site. All of your team should be on the same page in terms of the cost difference, the reasoning, and the logistics for the future.

Depending on the size and complexity of your business, prepare an internal Frequently Asked Questions document that addresses questions or concerns you expect will come up. Invest the time now and the clarity you gain will pay itself back in spades. Provide your team with the FAQs document ahead of time so everyone is able to provide a great customer experience by responding to questions quickly and consistently.

Reward loyal customers

Similar to focusing on value and quality, building loyalty with customers is always vital and never more so than right now. It doesn’t have to be complex or expensive. Communicate a sense of gratitude and appreciation and be thankful for their understanding. These have been tough times for everyone, so be authentic and ready to tell your customers why you genuinely value them.