Increase Prices While Keeping Loyal Customers

August 03, 2023

Can you increase prices while keeping loyal customers?

It’s an age-old question that every small business owner has asked or is bound to ask themselves at some point in their career.

However, in this time of inflation and supply chain disruption, small business owners are forced to reflect on this question more often than ever.

They must carefully balance raising prices for their products and services with ensuring their customers remain satisfied.

Small business owners may be able to raise their prices while retaining their existing customer base successfully.

Here are four steps small business owners may want to consider to increase prices while keeping loyal customers:

1. Inform customers in advance.

Once small business owners decide to increase their products and services prices, they may want to inform their loyal customers before implementing these increases. This is an opportunity to strengthen customer relationships by proactively informing them of impending price increases. Depending on the business, this may be an email, a letter, a phone call, or a social media campaign. These customers will greatly appreciate a heads-up before these price increases occur. Furthermore, they will be more likely to continue to purchase a small business’s products and services if they are informed that the price will increase. Customers would not appreciate entering a small business, expecting to purchase a product or service at a specific price, and being met with an unexpected price increase. Therefore, small business owners must inform their loyal customers of price increases in advance to ensure they continue to do business with them.

2. Be transparent and explain the price increases.

When small business owners inform their loyal customers of these price increases, they must be completely open and honest with them. They should not attempt to conceal the extent to which prices may increase nor the breadth of products and services that will increase in price. Furthermore, small business owners should thoroughly explain why these increases are occurring. They should not be afraid to admit that these increases will help ensure their businesses can keep their doors open. Loyal customers will be much more willing to accept price increases if they fully understand why they are occurring and how they will benefit the businesses they frequently visit. They will likely not mind paying a little more for a product or service if it helps ensure the business providing it will stay open.

3. Provide excellent customer service.

Once small business owners have informed their customers of these price increases, and why they are occurring, they must be available to answer any questions or address any concerns. Customers will likely have some follow-up questions and need further clarification on when and why prices are increasing. Furthermore, they may have concerns regarding these price increases and attempt to push back against them. Small business owners must be open to listening to what their loyal customers say and provide them with any information that will help them better understand the reason for these price increases. When customers feel like their questions and concerns are heard and cared about by customer service departments, they form deeper connections with the small businesses they represent. This makes them more likely to continue doing business despite price increases.

4. Offer perks to loyal customers.

Lastly, small business owners can take active measures to retain loyal customers after price increases by creating a loyalty program. This program should offer them unique perks, discounts, and promotions for their continued business. Furthermore, it may work to counteract the negative news of price increases they are experiencing, by conveying a message of appreciation to the existing customer base. While customers may not initially be thrilled about paying more for a product or service, this distaste can be lessened by the news of a loyalty program. Small business owners could offer loyal customers a free product or service for every five they purchase or an exclusive monthly coupon for signing up for an email newsletter. Loyal customers will be much more likely to continue to purchase products and services from a small business that rewards them for their continued support in the wake of price increases.

Raising prices and retaining loyal customers can be tricky for any small business owner. That does not mean it is impossible. When small business owners go out of their way to communicate clearly and thoroughly about price increases with their loyal customers, they strengthen their relationships and encourage them to continue doing business with them.

Unfortunately, small business owners are bound to lose customers who cannot afford the price increases. However, when they follow these steps, most loyal customers will be inclined to continue doing business with them for years.

PaySmart is a payroll provider in Mechanicsburg, Pennsylvania, supporting small businesses in the Central PA region. We are dedicated to helping small businesses take care of their payroll needs. To learn more information about how PaySmart may provide payroll solutions, please get in touch with us at 717-766-1777. Our New Client Concierge is waiting for you!