Sure, there’s plenty of cover right now: supply chain issues, tight labor and a pandemic. But your customers are not going to forget being gouged.
Weary consumers who are already overwhelmed and angered by the rising prices of everything are starting to realize that it’s no longer a matter of supply chain congestion, excessive “free” money from the Fed, the rising wages of “essential” employees, or the unseen but oppressive hand of inflation that’s making their lives more painful and their pocketbooks lighter. As much as Elizabeth Warren berates the greedy corporate leaders and, while President Biden sics the antitrust lawyers on them and the media dutifully chimes in, the root causes of rising prices are far more local in nature and far simpler to explain.
It’s not the Fed or Ford Motor or Dr. Fauci jacking up prices at the grocery store and making a meager meal at the corner diner cost as much as the fine fare at a fancy French restaurant. It’s Fran, your friendly pharmacist, and Harry at the hardware store, and even the guy at the bagel shop down the street who is making sure that your bucks don’t buy as much anymore. Every business in town is taking a joy ride on the margin expansion merry-go-round and no one wants the music to end.
While the media’s begging you to shop local, and Amex is stoking Small Business Saturdays, the truth is that it’s not the Saudis or some other nasty boogeyman but your neighborhood merchants who are so hooked on the COVID inflation gravy train that they can’t seem to quit gouging everybody and their brother every chance they get. The “new normal” sadly seems to be “grab as much as you can get” while the gettin’s good and before the golden goose flies away. Price hikes, scarcity allocations, surcharges for pickups and deliveries and all sorts of other things are everywhere you look, and many are buried where you can’t even see them. More importantly, whether the business is large or small, each one of them thinks that there’s no reason in the world to take a step backwards and reduce prices.
But consumers have longer memories, far more alternatives, and considerably less patience these days than these clueless mercenaries imagine. I expect – just like the much-abused tenants of the world who will soon enough extract their pounds of flesh from landlords who basically did little or nothing for them through the two years of the pandemic – that once the dust settles, what little care, concern or loyalty anyone had for the little business down the block will be long gone. We’re going to be seeing Amazon and Walmart vans up and down the block all day long, every day, for a long, long time.
If you’d like for your business to be on the right side of this particular nasty storm – morality aside – now’s the time to take a careful look at your own pricing and your going-forward strategy and to do two important things: (a) make sure the numbers still make sense for your business and your customers; and (b) make sure you communicate and carefully explain the reasons for price increases to your customers before you get lumped into the pile with all the other penny-wise and pound-foolish pigs who are hoping that their regulars never catch on. Most of the justifications and rationales that worked during the early, intense phases of the pandemic just won’t cut it much longer and businesses are running out of excuses and people to blame. If you want to do better, make sure your explanations make sense. You don’t want to be the guy who blames the band because he’s a lousy dancer.
Here are the three most critical parts of the conversation
A transaction is a promise of solid value for a fair price. No conditions, no add-ons, no expectations, and no strings. Nothing is expected in return – there’s no quid pro quo – no exchange of data, personal information, lengthy commitments. If the price doesn’t make economic and business sense for both parties, it’s not going to build a real connection and a continuing relationship based on actual mutual advantage, and therefore it’s not worth doing. Sure, you’re in business to make a profit, but only if you hold up your end of the bargain and deliver the goods. And, even today, you still get what you pay for and if the seller isn’t getting paid enough – given his or her real costs and expenses – to provide a high quality, professional product or service, then ultimately everyone loses. This is not something to hide or evade; it’s something you need to explain.
Second, a transaction is not a one-time offer, a short-term deal, or some big favor.
While everyone’s in a hurry to get back to business as usual (as much of a fantasy as that may be), there’s no long-term upside to trying to quickly build back your business with gimmicks, fire sales, discounts, “extra” bucks or points because: (a) a sales gimmick sends the wrong message about longevity and continuity; (b) consumers readily see through insincere attempts to reduce COVID-inflated prices simply by returning them to pre-pandemic levels as if that’s some kind of substantial benefit to them; and (c) it’s never smart to try to build volume and traffic simply through discounts because that trains your customers to buy on price rather than brand or value.
Third, you’ve only got one good name, reputation, and brand to bet on
At the end of the day, your brand and your reputation aren’t transitory and fluid. They’re promises of the values you’re committed to honoring all the time. Honor never grows old – it’s always about protecting the worthy and important things that need and deserve to be defended whatever the cost. If you’re not willing to extend yourself for your clients and customers in the tough times when all these things are being tested, then they’re not essential parts of your mission and purpose, they’re nice-to-have hobbies to brag about in the good times. We’re all ultimately selling trust – even as that gets to be harder and harder to do every day – and people need to see that we can be depended on and relied upon to act honorably and appropriately in good times and in bad because it’s the right thing to do. Customer trust is hard to win and easy to lose.
And, just to be clear, your decisions and your behaviors are also observed and evaluated every day by your own employees – they’re customers and consumers too. The very last thing that your business can afford is for them to lose faith in you and what you’re all trying to accomplish. The best employees today want to do good work, want to actually help others, and want to be proud of the way they do their work and the results. Your customers will never be happier than your most unhappy employee.
The post Raise Prices at Your Own Risk appeared first on Inc.
Original source: Inc.