One of the trickiest situations in b2b sales is having to tell a client about a price increase. Even the most seasoned sales rep would need a few cups of tea to calm the nerves that come with this situation.
Scenario: Top level management releases a memo about a price increase–and because you know your product’s market position and its value, you understand the increase makes sense.
Now, you’re faced with the task of making your clients believe the same.
See, talking about prices–even conversations unrelated to increases–is already a tough act.
Considering the deal sizes in the b2b setting, price increases are rarely small adjustments. A small per-user increase in monthly subscription cost can easily mean increases in the tens of thousands for enterprise-level companies.
So, now you’re here, having to communicate the increase to the clients you have in your stable. Here are some tips:
Remind your clients that they’re businesspeople too
For this one, subtlety is key.
It’s true–your clients are most likely to have been in the same position as you and your company are now.
Price increases made business sense for them–and they had to communicate it to their clients just the same.
For businesses, raising prices is one of the most powerful ways to drive and create revenue, and so long as they’re creating value for their clients, it fits.
Get on your client’s empathetic side by continuously referencing their role as a business leader and not only as your client.
Here’s a unique situation that you can leverage: Does your customer resell your service as part of their business?
If this is the case, you can talk to them about helping them put together a plan to communicate the price increase totheir customers. Now they’re on your side and not the seemingly you versus them situation you could easily put yourself in. Note that the increased revenue will help their business as well.
Know how much your clients rely on your product to run their business.
If you’re a minor supplier, underscore this. They have the rest of their business running smoothly and you will continue to deliver the best value possible to help them run their business better. Now, if you’re a major supplier, get them to think long-term by saying that the price increase is necessary to maintain the level of quality and performance they deliver to their customers.
Let value be your banner
Many b2b buyers and decision-makers are price sensitive–and truth be told, we can see why. More money going to suppliers mean less money for them. While this is the case, rarely do b2b buyers buy based on price. These are smart business people who know that the value of your product is what makes it useful and not your price point.
That said, take every opportunity you have to remind your clients the value they get from your product or service. Be specific and state the previous benchmarks your product has set with them.
This is the best time to go back to your value prop and compound that with real, statistical growth your product has contributed to their business. Talk about the problems you’ve solved together.
Another dimension to this approach is that it might be tough to sell your clients on the fact that they will be paying a higher price for the same service so make sure to frame your messaging and direct your conversation toward continuous growth they’ll experience with the help of your product. If a bonus is possible, throw that in there. It doesn’t have to a total upgrade (next tier, expanded service), the bonus could be an increase in dedicated support hours or services.
Don’t be sorry
Right out of the gate, you must know that apologizing for a price increase is a huge mistake. Are you sorry? No. Don’t say sorry.
What’s critical in opening up a conversation about price increase is giving a solid reason for it. Your company isn’t increasing prices just to spite customers–there has to be a reason that you could clearly communicate to the client.
Of course, price increases are unpleasant and there’s always the temptation of not mentioning it or putting off the conversation around it as much as you can.
However, presenting price increases just when they’re up for implementation or at the very end of your call is unfair and disrespectful to the customer. You have to be confident when you present the price increase. In the first place, you have to understand and believe that the price increase is necessary. If you dive in a call regarding raising prices with a weak tone or unconfident body language, your client might pick up on it and force the issue. They might ask to be excluded. Now that’s a losing situation and an awkward one you wouldn’t want to be in.
You’ll get on the better side of your client if you’re confident and upfront about the price increase, presenting a solid reason.
Communicating the reason can be tricky so a lot of this rests on upper management in crystallizing the information and reasoning in a digestible form. There could be a meeting on the internal messaging, but there has to be top-level support when it comes to how to present the new pricing to clients.
It’s important to lay down the reasons honestly but be wary of saying too much. Lisa Singer of SiriusDecisions said it well in a post, “While there’s no need to divulge a great deal of sensitive financial information, state the reason(s) for increasing the price. Have costs gone up because demand for the product has decreased? Has there been an increase in raw material pricing? Have manufacturing costs increased due to an environmental event? Whatever the reason, state it. Candor counts – and so does credibility.”
Don’t pin the increase on something external
Prices of raw material gone up? Is that why the company decided to increase prices? Even if this is true, there’s no place for this reason in a client call. Grant Cardone said, “Don’t blame inflation,” he said. “Instead, increase the value of your offer.”
What comes up will come down. If it does, will you be decreasing your prices? No. But your clients will be banging the phones for a price reduction.
B2B price increase conversation tips and tactics
Give clients lead time. For most client contracts, some lead time is required for a price increase. Review contracts to ensure you’re taking steps within the agreement. Outside the contract, it’s always wise to give clients lead time as a courtesy and a way to show they that you’re not pulling the rug from below them, that you’re not raising prices just because you can charge them more.
Do it in a meeting. While formal pricing announcements could work, the nature of contracts in B2B is reason enough to go for a more personal “announcement”. Contracts are often in the tens of thousands–at least–and highly custom. In this situation, you really need to communicate with them directly. Don’t let it come to the point where they find out about the price increase on an invoice.
Study the price increase. Believe it. You need to understand that price increases work because they’re best for your company and your clients. Use this opportunity to connect with clients and convey your value. Most price increases allow existing users and clients to buy right before the price increase. Doing this increases the chances of extending contracts with the existing clientele.
Make sure the messaging is consistent for all reps handling the client account. If there is an inconsistency in communication, especially on pricing, across the client-facing workforce of your company, you’ll lose the respect of your clients and they will feel like they’re being manipulated. To avoid ill business and confusion, everyone in sales and customer service must be aware of the price increase and why it needs to be enforced. All must be on the same page regarding how to roll out the increase–if it involves the opportunity to buy right before the increase, if there are clients who will be grandfathered in, and so on. Consistency and accuracy must be maintained.
Don’t hesitate to escalate. Since b2b contracts are not tiny, a price increase can really impact the business of your clients. As such, it is a significant change for them, one that might require further explanation. Sales leaders need to ensure that the sales force has access to setting up calls with higher management so they can answer clients’ probing questions if and when they arise.
Track sales data related to the price increase. A price increase is a complex business decision. This move will definitely cause some ripples in your performance numbers. Now, the sales force has access to data that can be directly attributed to the price increase. Did it work? Is it a good business decision? How did it impact contract size, new deals, and retention? Of course, it is also useful in gauging the competence of salespeople in navigating tough situations. Who are the salespeople with better retention rates? Were there clients who elect to terminate their contracts?
It’s all business
There are very few people who take comfort and pleasure in talking about pricing. It’s just natural to feel a bit of anxiety when telling clients about price increases. What’s worse, of course, is to attach too much emotions in it and be unable to prepare for the conversation.
Remember that it’s all business–no need for apologies or playing biases. Trust your company’s decision and take conscious steps to deepen your understanding of the increase. From there, pick up the phone with confidence and go in with these tips in mind.
FREE WHITE PAPER: The Impact and Opportunities of Account Based Marketing for B2B Sales Teams
Read on about how you can take a more calculated approach to sales and exceed your goals.
Latest posts by Aki Merced (see all)
- Key Traits of Effective Customer Experience Leaders - August 10, 2018
- 8 Strategies for Effective Contact Center Management - July 12, 2018
- How Context Drives Great Customer Experience - June 29, 2018