Darryl Rosen

Untimely Price Increases

Click here for a FREE PDF of this article

What?  The price is going up on November 1^st?

Last week I was working with a group of salespeople in Ohio.  From the back row the following question was hurled in my direction.

XYZ wine is going up $2 a bottle on November 1^st!  How do we sell in that price increase?

I remember when products went up in price just prior to the holidays.  That logic, raising prices, just before a time of year where millions of consumers see your products, was a move I never quite understood. So much risk at a crucial time of the year.  

To be sure, price increases so late in the year are confusing for distributors, retailers and consumers alike.  Here is how I answered the question.

First, it’s imperative to let your customers know about the increase as quickly as possible for your holiday planning.  The reality is that you’re probably going to lose a few cases. You will get resistance.  Some pushback will be strong, and some mild but it’s much better to figure that out now, as opposed to the 2^nd week of December.  Share this information in person and not via email or fax.  You will gain much more respect this way.  Don’t hide behind your computer screen or your blackberry.

Second, if you think the price is too high, you will inadvertently communicate that to your customer!  Be very matter of fact about the increase.  Don’t invite your customer to beat you up by saying, “Are you sitting down for this?” or “You’re never going to believe this new price!”  The price is the price, and you should practice relating the new price until you can say it as nonchalantly as you would the time.  Make sure to point out that the brand is still price competitive with its major competitors if that applies.

Third, get with your team and brainstorm a few additional reasons to buy the product.  I call this sharpening your argument.  Now is the time to work together as a team.  Use the umpteen years of experience collected in your sales room to create ideas that generate buzz and excitement for your customers.  Always think average tickets, customer accounts and bar rings.

Fourth, point out the positive. Pre-holiday price increases can be an opportunity to induce a buy in against the price increase, allowing your customer to pocket extra margin or run a hot ad.

Finally, communicate! Encourage the first person who sells the product at the higher price to document and communicate how he or she achieved this success.  This is where I believe improvement can be made in the area of teamwork.  I would suggest that the first person literally emails the rest of the team with feedback from the successful sale.   How did she get it done? What happened? Then the second person (who makes a successful sale) should do the same.  Then the third person.  After all this communication, all the members of the team should have some tried and trued ideas for overcoming the price increase.

Remember to explain the reasons for the increase.  Keep your pulse on the market.  Identify where the resistance is coming from as this may be a sign consumers aren’t buying the new price/quality equation.  Always protect your integrity in check. Credibility is more than a good word for scrabble.  It is your most valuable commodity.