If Prices Increase, so Should Your Confidence
How to initiate price increase conversations with your customer base
Companies around the globe are being heavily impacted by the high prices of raw materials, increased labor and energy expenses, and supply-chain bottlenecks. In combination, these events are causing a significant impact on the bottom line, as well as eroding customer trust, threatening customer retention, and damaging employee morale.
While the C-Suite is feeling the strategic pressure, frontline salespeople feel the pressure of having to deal with the fallout firsthand. They are charged with managing the expectations and emotions of customers who are frustrated at their company’s inability to fulfil orders, and at the same time, being told by their leadership team to go to those very companies and increase prices in response to inflationary costs. In addition, salespeople are being asked to have new sales conversations with their customers and grow their accounts as demand begins to surge in many industries due to the reopening of economies.
The question is, how do salespeople implement price increases with customers who are already reeling from supply chain issues while maintaining their trust and still earning the right to have sales conversations with them when appropriate?
Bain & Company’s recent survey of more than 400 industrial companies worldwide found that companies under $5 billion in revenue were less confident than larger ones in their ability to handle inflation through price increases, to respond dynamically to market conditions, or to equip their front line with the right tools to make good pricing decisions.
In many situations, salespeople enter price increase conversations with their customer base with a sense of dread – feeling highly uncomfortable and often guilty, and commonly coming out of those conversations without fully achieving their goals. Other times, the conversation takes a turn for the worse, and they now have extremely unhappy customers looking elsewhere for an alternate supplier. Lastly, some salespeople are putting their heads in the sand and are simply not having the conversation, choosing instead to avoid the reality and make excuses for why it hasn’t happened yet. None of these scenarios are productive for either party yet are happening on an all too regular basis.
Download Imparta’s ‘Managing Challenging Pricing Conversations’ program guide to learn more.
INSTEAD, COMPANIES NEED TO PROACTIVELY EQUIP THEIR SALESPEOPLE WITH THE KNOWLEDGE, SKILLS AND TOOLS TO:
Understand the bigger picture about what is going on with the global supply chain and rising inflation, putting their company’s situation in wider context and appreciating that this is a global occurrence, not a unique one.
Control their own mindset and outlook, demonstrating resilience, rigor and responsibility as they begin their conversations.
Handle challenging conversations, lowering tension with the customer as quickly as possible, demonstrating empathy, listening intently, and maintaining trust through openness and customer-centricity.
Communicate pricing and supply chain messages simply and concisely.
Have a clear understanding of their own BATNA (Best Alternative To a Negotiated Agreement) and that of the customer (which is likely weaker than they think it is).
Identify if there are variables within their remit to trade (and the cost and attractiveness of those trades to both their company and that of the customer), in order for the customer to understand that the price increase is inevitable but that the company is trying to reciprocate and add value in other ways.
Practice, rehearse, and receive coaching for these conversations in advance.