Tuesday, August 21, 2007

Solutions for a Sticky Situation

Buying gas in San Diego is always an interesting experience. Not only is this a commuter city with limited public transportation, it's also an expensive city - the gas prices reflect that, and you never know what you're going to get at the pump.

Lucky for the gas companies, they don't have to speak directly to their customers when they raise prices. Unfortunately, at some time, you as a salesperson may have to do so.

Dave Kahle is a veteran of communicating price increases. Here's some of Dave's advice to help you make the transition with ease.

How do you manage to pass on a price increase without losing business or giving away margin dollars? Anxiety abounds: "Will the customer refuse to accept it? Or solicit prices from a competitor? Will I have to give away gross margin and absorb the price increase in order to keep the business?" These kinds of doubts lead to anxious and intimidated salespeople, declining sales and shrinking margins.

Here's a series of seven specific ideas to help you effectively manage price increases.

1. Set up the situation.

The announcement of an 8% price increase on a major product line shouldn't come unexpectedly out of the blue. Of course the customer is going to react strongly to the suddenness of the information. Nobody likes to receive price increases, and even worse, nobody likes to receive them without any indication that they are coming.

It's like the day I received a bill for health insurance which was 60% higher than the previous month was. No prior notice, no hint of the increase, no letter explaining it was on the way, no preparation - just a much higher premium. I reacted conventionally, and immediately picked up the phone to complain and solicit other sources. The sudden nature of the bad news fueled my negative reaction just as much as the details of the increase.

Don't let that happen to your customers. Don't wait until the price increase is a fait accompli to inform the customer. Weeks before, have a conversation with that customer about the trends in the economy toward more price increases. Share the big picture with him. Then mention other price increases that you have received in the past few months. Be specific with names of manufacturers and products to which he can relate. Mention the soaring price of oil and the inevitable downstream effect that has on all kinds of products. Mention that you are expecting an increase from XYZ component or manufacturer.

Build into your customer the general expectation that prices are going to go up, so that when the deal happens, he isn't blind sided by the information.

For the rest of Dave Kahle's tips for communicating price increases, click here.

Dave Kahle is a consultant and trainer who helps his clients increase their sales and improve their sales productivity. He speaks from real world experience, having been the number one salesperson in the country for two companies in two distinct industries. Dave has trained thousands of salespeople to be more successful in the Information Age economy. He's the author of over 1,000 articles, a monthly ezine, and six books including: 10 Secrets of Time Management for Salespeople and Transforming Your Sales Force for the 21st Century. He has a gift for creating powerful training events that get audiences thinking differently about sales.

His "Thinking About Sales" Ezine features content-filled motivating articles, practical tips for immediate improvements, useful resources and helpful tips to help increase sales. Join for NOTHING on-line at www.davekahle.com/mailinglist.htm.

You can reach Dave by e-mail at [email protected] or by phone at 800-331-1287. Check out his website at www.davekahle.com

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