It cannot have escaped the attention of any small business owner that price pressures have been taking their toll on your bottom line, to the inevitable end result of needing to increase your prices.
Many businesses see price increases as an immediate risk of losing all of your customers as they will all instantly run to your competitors – but is this really the case? While nobody likes to hear that the price they pay is going to increase, this is not the only consideration when choosing a supplier.
Recently this self same decision landed on our desks, so should we move to a new supplier? The answer in the end came down to a simple question. Do we feel we are receiving a good service and do we have to spend a lot of time chasing for answers and updates? The result, in this case, was a resounding – stay with this supplier.
If you have read some of our recent blogs, you will have noticed a certain bias we have towards looking at the lifetime value of our customers rather than immediate profit. This means that we would rather do a little bit more work for free today, on the basis that we will earn this back later.
A certain amount of this ‘short-termism’ has been experienced recently where companies, and some large national ones at that, have flip-flopped between focusing on one area which shows a current slightly higher profit and then suddenly changing direction when another area is more attractive. The saying is “easy come, easy go” and this can be applied to this scenario. Any customers that are won through this short-term selling will leave just as easily when they feel abandoned as the company’s focus changes. So, it comes down to a simple choice, do you want £200 today or £2000 over the next 12 months? If you couple this with the fact that it costs 10 times less to keep existing customers than win a new one, it becomes a bit of a no-brainer.
As small business owners ourselves, we hope and expect that even when forced, reluctantly, to increase our prices owing to external pressures, nearly all, if not all our customers will stay with us, as they can see and feel the benefit of working with a company that focuses on the long-term relationship value and not just what we can earn out of them today.
Creatively Yours Ltd helps businesses like yours succeed online through website design, website development, and our Helponomics system that offers support and training as you need it and highlights areas that could increase your sales.