“Selling” a price increase – Motivation

With price increases everywhere around us, top on the list of priorities for directors and business owners through 2011 will be how to increase prices and build margin. This ought to be a straight forward task though don’t be surprised if your customer-facing sales staff don’t welcome this with open arms…

There are two main reasons for this being a difficult area for them. The first is Motivation; sellers don’t want to do it. The second is Capability; sellers don’t know how to do it.

You’ve seen it before… Motivation x Capability = Success

This week I’ll examine the first of these, motivation. Next week we I’ll move on to capability.

Sellers don’t like to be the bearers of “bad” news to their clients, it conflicts with their “need to be liked” (a behavioural driver of top performing sellers), and also because they will feel it (through that other important driver, empathy). If your sellers are not motivated to take a price increase out, congratulations, it’s probably because they have the drivers that actually makes them good sellers.
So how do you motivate your sellers to get past their instinctive behaviours?

Behaviours are supported by beliefs. Beliefs are held deep inside us and attach to our own personal values. You don’t just change your beliefs because someone tells you to, and neither will your sellers. You can help your sellers to re-frame their own beliefs about the justification for a price rise with workshop discussions using “belief busters” like:

• The cost drivers that affect your pricing are completely out of your control and are usually out of your company’s control. Work through the key numbers with your sellers, they will need to have a proficient understanding of these when they talk to their customers.
• The company has worked hard to mitigate the effect of cost increases. The increase is the minimum necessary. For most businesses the process of raising prices lags behind the impact of the cost increases. The chances are that as input costs have increased, your business has adopted all sorts of processes to minimise the impact on margins. Sellers need to understand these.
• The company has a need to maintain its margins to secure its future trading position. Companies in similar positions are also putting their prices up. This includes your competitors. You may already have market intelligence about your competitors pricing (your sellers certainly will have second hand evidence about this).
• Professional sellers can sell price increases, it’s just one of the things that demonstrates their capability. Engaging in a discussion about professionalism and skills development is always helpful and highly motivational. If your sellers consider themselves to be gifted professional sellers then selling a price rise is just one of the skill sets they should be proficient at.
• Your buyer has switching costs, and risks associated with doing this. Sellers can overlook this area though their customers will not.
  It is unlikely that your sellers have explored their beliefs about pricing before, though if they are to confidently communicate your pricing model, they need to be certain to their core, that your pricing decisions are fair and rational (to their own way of thinking).

In our experience, this is an exercise that’s well worth running, in as relaxed a setting as you can find. With facilitation, your sellers can volunteer the beliefs they hold about pricing, that makes it hard for them to discuss this important area with customers. When your sellers can get past these, you will be on your way to getting your price increases delivered.

I hope this is helpful for you? Next week, I’ll map out a simple three-step process your sellers can use that will address the issue of capability.