Now, if there is anything worse than
telling a client about a price increase, I just don't know what it is.
If you're a key account manager, then,
you know, it is not as simple as just saying, you know, "Hey, guess what, our
prices are going up, OK?" If only it was that easy.
No, what lies ahead is just a bunch
of long, drawn-out conversations, delicate negotiations,
internal battles and tight deadlines to get it across the line.
So sit tight.
I'm going to hold your hand the whole way through.
I'm going to share with you exactly what you need to do to make the process
of communicating a price rise as smooth as possible.
So sit tight. I'll be right back.
Hello and welcome back, Heroes, it's Warwick here from account manager
tips, and it is my mission to help busy key account managers get results.
So let's talk about how to get that price increase across the line.
Okay.
You know, we're in this together, you know, you and me.
Now, first things first.
Conversation
first and correspondence second, there's nothing worse than an impersonal
email arriving in your inbox to notify you of a price hike.
Now, for a big price rise, you really must talk to your customers first.
I mean, they're just going to pick up
the phone and ask you what the hell it's all about anyway.
So you might as well make the first move.
Now, briefly share the details and let them know that a formal communication will
follow and then they can reach out afterwards if they have any questions.
This is - it's going to put pressure on your client's costs.
It's going to create extra work for your
key contact to implement and manage the change.
So please be sensitive and sympathetic.
Now give as much notice as you can.
You know, the bigger the increase, the greater the notice required.
Why? Well, there's going to be things that your
client may want to consider in response to the price increase.
You know, they may need to let internal stakeholders know.
They may need to update their procedures or their back-office systems and they may
even need to explore alternative suppliers.
So be prepared for that.
Next up, let your clients know what's changed.
Raising prices is often linked to additional or improved services.
And as a business, you constantly invest in your products, your solutions and your
people, and you know, that don't come cheap.
A price increase is perfectly justified and the best way to communicate it is
by sharing with your clients the drivers that have led up to the rise
and how they've benefited and how they will continue to benefit.
And while you're at it, let them know,
you know, your vision for the future and that there is a lot more to come.
Don't apologize.
You can be sympathetic.
You can be sensitive to the impact of the price increase.
But you have nothing to apologize for.
Operating a business costs money,
not to mention the market forces over which you have no control.
Deliver the message of a price rise to your client, with confidence.
Believe that you have a great solution worth every penny and then some.
If you're apologetic,
you're going to send the wrong message that even you don't believe in the price
rise and you will end up in a long, drawn-out conversation about why.
Alright, now a word of warning: don't over-explain.
Your client does not need to know how the sausage gets made.
The detail of inputs that lead to the outputs should be confidential.
You know, just give them the briefest
explanation you can get away with about what has led to the price rise.
Too much information, and you may confuse your client.
Or you may invite conversations that are,
quite frankly, none of your client's business or distract you from your
objective, which was to communicate the price rise in the first place.
Keep it simple, if your price rise also
includes a change in the pricing structure.
Make sure it's simple.
I had these menu-based pricing that,
you know, you need a mathematics degree to put together.
Or bundled pricing with optional extras that make absolutely no sense.
I had situations where a client could buy a bronze package with a couple of add ons
and then end up with a platinum package at half the price.
So put pricing through its paces and look for loopholes.
Your clients sure will. And if you can't
explain it easily, well, how do you expect your client to understand?
Consider alternatives. Now, if you've got clients that, you know,
will be enraged by a price increase (you know, it happens) evaluate alternatives
that may yield a similar result to the bottom line.
So, for example, you might move them to or from fixed fees.
You might give longer contract periods or
link it to volume or a changing configuration.
I had some clients that were on ancient
contracts and they had a dedicated account manager they were paying two and a half
thousand a year for and the going rate was like ten grand.
So I had to say, you know,
either you keep the account manager you have and you start to pay more or you move
to like an inbound telephone-based solution, and you can pay less.
Some loved their account manager and,
you know, paid the ten grand while others chose to reduce the level of account
management so they could continue to pay less.
Will you negotiate?
When you tell your client about the price increase, you are initiating a power play.
Will they accept? Will you negotiate?
Or will you back down?
If your client challenges you and you immediately revoke the increase and
pretend you never had the conversation, you're going to forever be a doormat.
Before you present that price increase.
Know what you will concede and have your walk-away position in mind.
Always ensure that any concessions you make are an exchange, not a gift.
Your client should always offer something in return.
In "Exactly What to Say: The Magic Words for Influence
and Impact," Phil M. Jones suggests a simple question: If I can, will you?
For example, if I can keep the price
the same, will you sign a three-year contract?
I love that structure.
Now, remember, loyalty does not equal discounts.
If your price increase coincides
with a renewal, be prepared for a conversation about discounts.
Can you imagine your client saying
something like, "Oh, so, you know, I've been with you five years and that's
how you repay me with a price increase?" It happens and it's completely irrational.
The cost of your business operations has
nothing to do with how long your clients have stuck around.
But you know, we're so used to frequent flyer schemes and customer loyalty cards
that, you know, people think it works in business as well.
So know what you'll say if and when your client challenges you about price
increases and say they were expecting a discount.
Implement annual price reviews, you know,
if you find yourself constantly going back to the table year after year negotiating
price increases, then set expectations by establishing how
and when you review commercial terms within the contract.
For example, include conditions that raise
prices every year in line with inflation (calendar year though, not contract year).
Or provisions that formally return you
to the negotiating table every year for a pricing review.
Through enhanced terms and conditions, you can automate some of these price
increases and certainly make initiating pricing conversations much easier.
Now, be ready when they say,
"Let me speak to your Manager." So you've done everything you know how to get your
client to accept this price increase and they are still pushing back.
What is the escalation path for a formal
complaint or dispute about the price increase?
Who do they contact? And how? It is so much better to know
in advance than to scramble around for somebody, you know, when it hits the fan.
On a related note, if you've got a client,
you know, is not going to take this price increase lying down and you're concerned
about your ability to lead the conversation, let your manager know.
They can help coach you.
They can rehearse the conversation with you.
Or they can even join you when you deliver the message.
Make sure everyone is on the same page when it comes to whether or not you are
prepared to let a client go or to back down.
There is nothing worse than when you,
as an account manager, dig your heels in and then your Manager
overrides you just because they couldn't deal with the confrontation.
And you know, it happens.
Now, please deliver a consistent message.
You know, you want to just make sure
that your entire organization is aware of the price increase, why it's happening,
when it's happening, and what the approved message is.
There are so many contact points: customer
service delivery, back-office et cetera, and your communication strategy can become
undermined if your team is unaware of upcoming changes, know what to say when
asked questions or who to direct callers to that want more information?
And last but certainly not least, manage your feelings.
I want you to know that it is OK to be anxious, overwhelmed or even scared
of a conversation with your client about a price increase.
It's completely normal to feel like you might be opening Pandora's box.
So acknowledge your feelings and talk about them with someone you trust.
Preparation and working through
the previous steps will definitely help you too.
But also know that as a key account manager, you are the messenger.
And there will be times, you know, you must support a position by your
employer that you might not be on board with.
Share your constructive feedback and move on.
Holding a grudge will only make delivering the message so much more difficult and may
also impact how people perceive you in the organization, especially leaders.
Don't kill your career over a disagreement
on how, when or if your company should raise its prices.
Alright, let's recap real quick.
Conversation first, correspondence second.
Give your class as much notice as you can
. Let clients know what's changed and frame the price increase around value.
Don't apologize. Don't over-explain.
Keep it simple. Consider alternatives.
Know whether or not you're prepared to negotiate and by how much?
Remember, loyalty doesn't equal discounts and be prepared for that conversation.
Implement annual price reviews if you can.
Define escalation paths.
Deliver a consistent message and manage your feelings.
Follow these steps and I'm absolutely confident it's going to be a lot easier
next time you need to communicate a price increase to your clients.
Now, if you're a member of The KAM Club,
check out the replay and show notes from The KAM Project - the one about
increasing your prices - where we dig into this topic a lot deeper. And look,
if you're not a member of The KAM Club, well what are you waiting for?
The KAM club is a private learning
community helping busy account managers get results.
Inside, you'll find tutorials, guides, templates, training and of course,
a connected community of account managers all there to help you succeed.
Find out more at www.thekamclub.com. So, anything I missed?
What works for you when it comes
to breaking the news to your clients about a price hike?
I'd love to hear from you, so please comment below.
And don't forget to like, subscribe, share and follow #amtips for more videos.
And of course, if you want to stay in touch and you can
find me @warwickabrown on the social media platform of your choice.
So until next time, Heroe's, bye for now.