3 Steps for Communicating Price Changes to Your Internal Team

“By failing to prepare, you are preparing to fail.” Benjamin Franklin’s words are especially true regarding the process of prepping your employees following a product line price increase. The bottom line is you are asking for more money; one of the biggest mistakes you can make is to underestimate the feedback that will inevitably come pouring in from your customers.

If you are not preparing your team to communicate price changes, the initiative will likely fail. So where do you start? Here are the three steps you can take to ensure your internal team is communicating your price changes efficiently.

Step 1: Create a Core Group to Secure Executive Support

Before you start to communicate internally to your broader sales or marketing organization that you are going to increase prices, you need to form a core team engaged in the process. To have a successful price increase strategy, both internally and externally, you must have executive support.

Over the years, we have seen one thing to be true: If an executive leader is engaged and supports pricing, then internally, you will have fewer issues. And it all begins with the core committee for your pricing initiative.

Step 2: Discuss the Price Increase with Your Staff

A mistake organizations often make is taking a top-down approach. Perhaps the CEO blasts out an email and, without further explanation, the price change becomes the new decree. In this instance, there’s not enough effort in helping employees understand the reasoning for the increase or developing buy-in.

What people really want to know is why the price increase is happening. Think of it this way: You need to sell you staff on how to sell their customers on the “why” of the increase. Whether you choose to do that at an all staff meeting, via department heads or through a memo, the reasoning must be communicated thoroughly.

Step 3: Communicate the Right Message with your Sales and Customer Service Teams

While you are discussing price changes with staff, there is one important message that should be ingrained in the minds of any employee who speaks with customers: Our organization deserves to be paid for the value it creates.

Too often, manufacturers think about getting the price they set and are disappointed when “customers are difficult to manage” or they “can’t get the price.” This way of thinking should be reversed; instead, think, “It’s not about getting the price, it’s about balancing what the right price is so we get paid for the value we create.”

This makes a division abundantly clear:

• There will be products and services where you don’t create a lot of value. Perhaps you are not differentiated enough in the marketplace, so you are forced to have a lower price and, thus, a lower margin. That is OK, assuming you have sales that fit into the next category.
• On the other hand, there will be pockets of products or pockets of customers where you are creating a lot of value. Your product or service is highly differentiated, is higher in quality or solves a problem your competitors can’t. Therefore, you are able to generate higher margins and higher revenues.

Being able to segment your products and/or customers and communicating that difference to your internal team will ensure success when you negotiate prices and communicate a value-based message.

The Bottom Line

When communicating pricing initiatives internally, there is one statement to fall back on: We deserve to be paid for the value we create. By utilizing this message, your staff will begin to see the big picture of pricing rather than just their one piece of the puzzle.