In Part 1, you learned how to avoid raising your customers’ ire — and raise your prices the easy way. In Part 2, I told the story of how I successfully raised prices for our existing customers… and convinced them to choose to pay more.
Now it’s your turn.
First, remember why customers get furious
A refresher from part 1 on why customers get soooo angry about price increases:
The idiots broke the oldest rule in the book: They tried to change a contract after the emotional ink was dry. Which is not a thing trustworthy people do. And how do we react to people who show themselves to be untrustworthy toward us? Anger. Anger is our defensive mechanism.
So of course their customers reacted with heat.
Wherever there’s a fiery fumarole of customer rage, I can pretty much guarantee the seller is following this playbook:
- Little or no warning
- Little or no adjustment period
- “Pay up or your account gets it” - no grandfathering, no accommodation
- No concern for customer needs & wants
- No additional value for the customer (or if it exists, no explanation)
Sounds like pretty crappy behavior when it’s laid out like that, doesn’t it?
So how can you raise prices in a positive way?
Simple: Take the Rulebook for Rage above and do the opposite.
- Always give ample warning, with multiple emails.
- Provide an adjustment period for people to get used to the idea.
- Grandfather, it’s the easiest… but if you need (or want) to raise prices on your existing customers, you can still throw them a bone in the form of a special deal.
- Focus ruthlessly on your customers’ needs and wants, in word and deed — and make sure they know it.
- Provide additional value for the customer in exchange for additional price, and make sure they know it.
In short: Segment. Deliver value. Communicate.
Then sell the hell out of the extra value you offer them.
What should you offer your customers?
That’s a good question. Which leads to more questions:
What do they value?
That’s the core of the questions that will lead you to mo’ value, mo’ money:
- Who are your best customers?
- What do your best customers — the ones with the most to gain and the most to spend — value?
- What hurts them?
- What frustrates them or wastes their time, energy, etc (with your product)?
- What do they need?
- What do they want?
- What creates results for them?
Find out, then use your creative powers to bring it into existence. Then offer them a way to get it… an upgrade path.
Who are your best customers?
It’s important to zero in on your best customers because they’re the ones you want to serve. They’re your most valuable, highest LTV, lowest support, longest contracts… they get the most value out of your service. They’re the ones who are willing and able to pay more.
They’re the ones most likely to choose to pay more for more value. They’re the ones you want most to retain; you want to attract more of them, too.
That’s why it’s critical that you get specific about who they are. So you can figure out…
What do your best customers need & want?
Maybe they need help onboarding their team. Maybe they’ll pay extra for a concierge service. Maybe they need a guide or how-to session.
Maybe they need help persuading their executives.
Maybe they are wary of switching or upgrading costs in terms of time and process. Maybe they’ll pay extra for a special kind of backup, or a special kind of integration. Maybe they have a specific feature they really and truly need. Maybe they have payment rules they have to follow that you can accommodate (if the dollar value is high enough).
Real world example: I designed Freckle Time Tracking for consulting agencies. Turns out… I was wrong! While many of our best customers are agencies, the rest of our highest LTV customers are departments inside larger organizations.
My best customers need stuff that the small teams don’t:
- fine-grained permission controls
- recurring budgets
- time sheet approval
Freelancers and tiny agencies, otoh, don’t really give a fig. They also don’t have a lot of cash. So, we don’t spend much effort trying to get home to pay more.
I can’t tell you what exactly they need, since I’m not you, your business is not mine, and our customers aren’t the same. But I can tell you:
This approach is customer-centric, respectful, and above all profitable.
Once you’ve gotten to know your best customers…
Figure out the nexus between what they want and what you can reasonably do — and make it happen:
- Create a premium offering and charge a premium price.
- Offer it to them just like you would launch a new product — with all the copywriting, persuasion, and pacing you would give to a brand new launch.
- Keep lines of communication open; don’t issue a decree, start a conversation
- Remember: Selling them on a higher price is easier than selling them in the first place, but you’re still selling them. Your customers aren’t locked in; they can go elsewhere.
- Follow up later with customers who do not take the offer, weeks or months later; maybe even do some old-school manual outreach (aka personal human-to-human calls or emails)!
This approach will make your customers feel valued and persuade them to choose to pay you more today.
Bonus: it’ll make it easier for you to attract new Best Customers, too.
Now… how do you best communicate all of the above? Well in part 4, I give you the exact email templates we used… that gave us an existing-customer conversion rate of 6.1% on the first try…