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QUESTIONS TO ANSWER
Does the customer put a standard percentage increase on the price to the consumer?
We can point out to the customer that he will make more money by taking a standard percentage on a higher amount.
QUESTIONS TO ANSWER
1. What percentage of the customers business is our business?
If it’s small, then the amount for the price increase forms only a small percentage of their total business.
If it is big, then we need to emphasize that the increase is necessary to maintain the level of product quality needed for them to serve their customers.
QUESTIONS TO ANSWER1. Has the customer faced increases from other
competitor suppliers?
Try to identify what percentage these increases might have been.
If ours is on the lower side then point out to the customer that our increase is much lower that that of many others.
If its on the higher side then we need to say to the customer that they shouldn’t be surprised if the others come back to take another round of increases.
QUESTIONS TO ANSWER1. How does the customer view us and the
products we sell?
If we have a quality reputation and record then we can emphasize that the increase has been carefully thought through and is only been taken to ensure continued quality.
If we have a poor reputation and record, then we must emphasize that the increase will help us in improving the quality of the product and service in totality. (Make sure all comments are backed up and followed through)
QUESTIONS TO ANSWER
1. Know your customer. Will he raise an issue with the price increase?
Be prepared, have documentation of how costs have escalated and how other co. are experiencing the same problems. (Eg: rising fuel costs, the weakening Rand, exorbitant costs of raw materials, etc.)
Show the customer what steps the co. has taken to absorb some of these costs & the price increase is the only way to maintain the quality of the product.
Show empathy to the customer, but be firm to avoid a concession in pricing.
Having inflation figures on hand can also be useful.
QUESTIONS TO ANSWER1. Why does the customer do business with us
anyway?
Knowing this will help reinforce the point when discussing the price increase.
Identify at least 2 needs of the customer, that our product satisfies.
Ensure all strategic data regarding the customer is up to date before tackling the price increase.
QUESTIONS TO ANSWER1. How much of business from the customer is
at risk?
Know the 20% of our customer base that makes up 80% of our business.
Be well prepared when tackling these customers
Some customers might reject our increase and refuse to do business with us, but are they really significant. Taking a firm stance with these type of customers is key, they usually have no choice in the end but to accept our increase.
KEY FACTORS
BRIEFING OF ROLE PLAYERS UNDERSTANDING THE LOGISTICS PRICING INTEGRITY BELIEVING IN THE PRICE INCREASE LEAD TIME SYNCRONISATION OF ADMIN CHANNELS FOR COMMUNICATION POST INCREASE ANALYSIS
BRIEFING OF ROLE PLAYERS
All staff, sales reps, customer services, agents etc, must be informed
Information given must be accurate and consistent
Each individual should have a blue print for the price increase
UNDERSTANDING THE LOGISTICS(know your market)
Every role player must understand the rationale behind the increase
Know your market (competitor activity)
BELIEVE IN THE PRICE INCREASE
Product knowledge is key You get what you are worth Quality products demand a premium price Modestly convince the customer
LEAD TIME
Increase to be communicated timeously Allow customer to place one more order
before increase Builds healthy relationships and gives
customer time to amend his systems
SYNCRONISATION OF ADMIN
New pricing must only appear on invoice once confirmation is received that all customers have been informed
CHANNELS FOR COMMUNICATION
Management at all levels must be willing to accept a phone call
Let the customer be aware of this
POST INCREASE ANALYSIS
Monitor ROS before & after increase This feedback to top management is
essential Helps counteract negative impact of
increase Margins can be adjusted if necessary