There is nothing more intimidating for digital marketing teams than having to initiate an across-the-board price increase. It's a touchy subject and one fraught with potential pitfalls. However, there are some simple strategies you can adopt that can both increase profit margins and guard against customer attrition.
The Importance of Strategic Price Increases
Initiating a pricing increase can't be haphazard. It can't involve guesswork, assumptions or be based on a gut feeling that the market is ready, willing or able to accept an increase. Instead, the full adoption of your price increase comes down to the strength of your marketing data and your marketing team's strategic approach to market. Here's how to go up on prices without customers getting down on you.
Sometimes it's less about how you implement an increase and more about when. Customers are often more willing to accept increases during strong economic times. However, you don't have to wait for the next economic recovery. You can implement your next price increase to coincide with a seasonality increase in demand within your own market.
Every market has some quarters that are busier than others. Your marketing data should pinpoint those lulls and increases in demand throughout the year so that you're better able to strategically implement that next increase. If planned properly, your customers may not care enough to notice.
Cross-Promotion with Up-Selling and Cross-Selling
Every company has a "me-too" product offering, one that is universal within the market and one that all customers want. Treat these giveaways as loss leaders. These are your complimentary products. These are the ones you use to offset a given increase. Offer discounts and rebates on these common products.
Create specific landing pages for your best sellers while cross-promoting these me-too products. Soften the blow. Use up-selling and cross-selling at the same time. Customers are typically more willing to accept an increase on one product if they're given a break on another.
Focus on Core Customer Segments
The right marketing database software will help you identify specific customer segments that represent higher price points. These customer segments may be completely ignored by your competition. In fact, it's common for companies to overprice a given customer that they feel doesn't meet their ideal requirements.
Isolate those customers within your market that are all but ignored, ones who are willing to pay your premium. You may just find that your higher price is still lower than your competition's. Having a database marketing strategy that helps you keep abreast of competitor price points is critical to making this specific strategy successful.
Appeal to Different Buyer Personas
Different buyer personas appreciate different things. Engineers, field-service technicians and project managers are more likely to appreciate a product or service's higher price if, and only if, it's justified by that product's performance. This is especially the case if you're offering a highly-engineered product.
Unfortunately, some buyers are more likely to shop for the best offer and that invariably means the lowest price. For these prospects, use special offers and inventory liquidations. Finally, business owners and C-level executives are more inclined to look at the big picture. They need to see the value in your offer. Selling each of these different buyer personas requires a different strategy and a customized value proposition.
Price Mapping With Marketing Data
Use your marketing data to pinpoint customer segments, industry channels and geographical locations where higher prices are more prevalent. Your marketing data is a fantastic tool for segmentation. Don't just segment your customers. Take it a step further and segment different customers within different geographical locations and segments. It sounds involved but the rewards are substantial.
Don't throw something out there and hope it works. Take a systematic approach and isolate your own criteria for success. Your marketing data will point the way to implementing a price increase with pinpoint accuracy.
ReachForce helps marketers increase revenue contribution by solving some of their toughest data management problems. We understand the challenges of results-driven marketers and provide solutions to make initiatives like marketing automation, personalization and predictive marketing better. Whether you have an acute pain to solve today or prefer to grow your capabilities over time, ReachForce can unify, clean and enrich prospect and customer lifecycle data in your business, and do it at your own pace.