Moving Prices; Retaining Customers
Happy New Year 2021, and like every new year before, this is prime planning time for your business. But unlike every year before, 2020 has given producers marketing challenges tagged by terms such as “pivoting,” “resilience,” and even “survival.” We are going into a new year but with the old year’s problems, “How much should I produce, and are people going to keep buying my products at their current rate? How well does my e-commerce platform work for my customers? Do I need a new inventory system to track different sales channels? Should I retain the online ticketing program for my pick-your-own or agritourism operation?”
The most challenging question is tied directly to your profitability. “Should I change my prices and, if I do, will I lose customers?” There’s no doubt that many producers have absorbed increased costs to keep their business running. Not adjusting prices could mean you will not be able to sustain the volume or quality of your products that attracted those customers in the first place. Price adjustment can be intimidating but, there are ways to build on your relationship marketing model to build empathy and trust between you and your customers.
Here are some steps to follow when determining if you need a price increase., If needed, how do you inform your customers about these changes:
1) Begin the process by using your financial records to determine if you need to
- leave your prices where they are,
- increase prices only on particular items or,
- apply some percentage of increase across all your products. Having good sales numbers and set profit margins to review will help make better decisions than just “going with your gut.”
If you determine a needed price increase on some of your products, you will need to tailor a different message to your customers by informing them of the price change and when.
2) Using an email announcement
- Email those customers that will be affected.
- If your CSA share price is not changing, no need to contact those shareholders.
- But, make sure you communicate changes to your regular customer base and especially those who regularly purchase products that will have a price increase.
3) In your announcement
- Make sure you explain to your customers why the price is increasing. Was it due to additional packaging costs, increased labor, delivery costs, or online store expenses? These are all valid reasons for a price increase.
- Be transparent in your explanation and use this opportunity to build empathy and trust with your customers.
4) At the end of your announcement
- Make sure you thank your customer for their previous support.
- Ensure them the same quality of products and service they have experienced in the past.
Increasing prices always presents some risks of losing customers. But, if handled correctly, it can provide an opportunity for improved customer relations. It’s important to remember that having a sustainable price is your customers’ best assurance that you will be able to continue offering the high-quality products and services you provide.
Mastering Marketing is produced by Ginger S. Myers and is published periodically containing important seasonal marketing information.