Market headwinds have created various challenges for today’s buyers, who are facing increased costs and diminished purchasing power amid high inflation. Similarly, businesses are weighing challenging pricing decisions given supply chain constraints and global uncertainty.
While maximizing operational efficiencies and engaging in cost reduction programs are appropriate tactics during a time of uncertainty, to stay ahead of the competition, increasing prices will likely be inevitable. As such, 68% of respondents to our recent survey stated that they raised prices over the last year, with an astounding 83% of survey respondents having experienced some form of subsequent customer churn.
To learn more about how to mitigate churn during times of uncertainty and increasing costs, consider the following tactics.
Develop a Client-Centric Pricing Strategy
It is five to 25 times more expensive to acquire a new customer than it is to retain an existing one.
— Harvard Business Review
When assessing which pricing and sales strategies to implement during a downward trending economic cycle, consider leveraging customer segmentation tools to identify the most valuable customers and of those, identifying who can potentially absorb price increases. In these cases, a phased implementation consisting of gradual price increases would likely help customers acclimate to the change, thereby reducing the likelihood of immediate churn and boosting customer retention. Insights gathering from segmentation exercises can prove to be extremely valuable from a data collection perspective.
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