Why Did Your Pricing Go Up? The Missing Ingredient to a Well-Crafted Answer
When a customer asks why your price has increased on a particular item or category, what do you say?
In a recent Dish Network Commercial, a gentleman walks up to two young girls at a lemonade stand and one of the girls says, “Would you like some lemonade?” He says; “I’d love some lemonade!” The two adorable little girls say, “That will be five dollars, please.”
The gentleman reacts to the price and says, “Five…what?!”
One after another the girls volley back and forth sharing their reasons for the increase.
- Supply chain issues.
- There’s a lemon shortage.
- Have you seen the price of cups these days?
This commercial truly captures the typical response to, “Why the increase?”
The responses sound flippant with no value to the customer for why the price is increasing.
(To Dish Network’s credit, this is the point and they are addressing customers who have ‘had enough with inflation’.)
If we rework the lemonade stand example and instead of just sharing the reason why the price went up, let’s also tell the customer what’s in it for them.
The reason for the price increase:
“Actually, yes, our pricing did go up. We have been able to absorb our increases up until now but do have to pass on some of the increases in costs we’ve had due to the lemon shortage and increased price of cups.”
What’s in it for the Customer:
“We have also improved the recipe to the lemonade for a better taste and removed all artificial sweeteners to create an all-natural product.”
Now, let’s take a closer look at the two ingredients that make this response so much more effective and how you can put this into action the next time you or your team have to address a price increase.
#1. The reason for the price must be explained clearly, confidently, and concisely.
Telling loyal customers you are raising your prices is not exactly at the top of anyone’s to-do list. But it’s one of those conversations that you must have.
The girls in the lemonade stand were on the right track but the delivery missed empathy and what is in it for the customer. One extra sentence makes all the difference sharing what I am getting out of the increase.
#2. The reason for the price increase should be customer-centric.
The most effective price increase communications are customer-centric. They provide a value narrative — a vivid and compelling story for why the price is being increased that focuses on customer value.
A value narrative can be effective even when the price increase is predominantly due to an increase in input costs. In such cases, telling customers that the only way you can continue to provide the current level of benefits is if you raise the price, and you are choosing to do so rather than degrade the product or service’s quality. That’s a powerful argument.
Most Sales Professionals are giving the WHY (#1) but we often miss the mark in making sure the customer walks away with what they get out of having an increase (What’s in it for THEM?).
For example, the what’s in it for them might sound something like: Increased availability of product, better service, innovation that will improve how we serve you in the future, increased wages/staffing to better serve, etc.
When you frame potentially negative news with what’s in it for the customer, you can nip complaints or pushback in the bud, make the message positive, and you may even get more sales and loyalty based on how you handle the situation.
Tips for Sales Leaders & Teams
Nail down the Reason and What’s In it For Them. Work together as a team to craft a customer-focused explanation of why the price increase is happening and what they will get from it.
Put yourself in your customers shoes. As you prepare what you’ll say, channel your best customers. Why do they already love your products and services? How can we frame our price increase message to include more of what keeps them coming back as repeat customers.
Create Muscle Memory Through Practice. When you’re under pressure to respond or perform, it’s much easier, and will come more naturally, if you practice handling the concerns or questions you may get when announcing a price increase.
Communicating a price increase is not the news we want to talk to our customers about but when you clearly, confidently, and concisely explain the reason why while making it all about the customer, you’ll more effectively communicate the change and your customers will appreciate your ability to do so.
P.S. If you haven’t seen the commercial, check it out on YouTube by typing in “Dish Network Lemonade Commercial.”
