hands and heart

How To Manage A Customers’ Complaint About Pricing

Written by Ian Landsman, published on 11.08.2016

The contract is signed, the customer is on-boarded, and the first month’s subscription has already been collected, as well. In some cases, the first year’s fees have already been paid.

Pricing negotiations have been conquered! For the moment…

Don’t be surprised when pricing comes up in conversation again. You run a business, and you understand the need to reevaluate your company’s expenses on a regular basis. Your customers do the same. How your customer service team manages the customer relationship will go a long way toward reassuring customers of your value and retaining your customers in the months and years to come.

Evaluating the Initial Pricing Concern

There are a number of reasons a customer may express concerns about your pricing, and the first thing you’ll want to do is get to the heart of why these concerns exist.

  • Does your service not provide them what they expected, leaving them disappointed by initial results?
  • Have their business needs changed, leaving your product less necessary than it was before?
  • Was an upcharge for an add-on not anticipated by the customer, who’d thought everything was included for their monthly price?
  • Has the financial situation at your customers’ company changed, causing them to tighten the grip on their wallet?
  • Does your direct contact have new bosses casting doubt on this expense, causing your contact to reevaluate options?

The first three reasons are quite different from the second two. Talking to a small business owner who’s not confident your software is worth the price requires different conversations than helping a mid-sized company’s employee regain approval for existing expenses.

Customers may or may not be open with why they’re reevaluating price, so your customer service team needs to be trained to ask questions, and more importantly, listen to everything the customer says. The more you can gain from initial conversations, the more likely you will be to convince your customer to stay (good for you) and feel really good about their decision to stay (reassuring for them, even better for you).

When pricing concerns come up, make sure you know the answers to questions such as:

  • How was our service intended to be used at our customers’ company?
  • What problems or processes does our product impact at their business?
  • Are they running into any issues where the tool itself isn’t supporting their needs?
  • Are there internal processes limiting the ability for the use of this tool to reach its full potential?

Having this background information will help set a good foundation for pricing conversations to proceed.

Collaborating with Your Sales Team

Your customer service team can’t say to the customer, “Pricing is a sales issue, that’s not my thing.” Pricing is very much part of the ongoing relationship. Proving value is critical to sustaining that relationship. Therefore, a pricing concern of an existing customer absolutely must be handled in part by their customer support rep.

However, there are certainly times where the sales team can add some much needed help. They might have built their own relationship with the customer, and can interject to help address new questions or concerns. They might have broader knowledge of existing case studies helpful to show examples of how other businesses have found the tool valuable, or how they can implement it more effectively within their own business.

Your salespeople may also be more prepared to negotiate the actual terms of the contract – should lowering the price or adding new features become the solution. While your sales team does the contractual work, the customer support person should never leave the conversation. Their job, as always, must be to make sure the client has what they need to use your service successfully, see value from it, and ultimately, become a vocal advocate for your brand to others who may find it valuable.

Identifying Ways to Regain the Customer’s Trust and Interest

Most people concerned about the price of something are going to want to know how they can get the same service for less money. Some will even want more for less. Your team will be forced to be savvy and identify how far you’re willing to go to keep business, as well as what simple tasks can be done to provide added value to those who are on the fence about your service. Consider questions such as these:

  • What are the profit margins for this customer? Is their user base so large that negotiating a 2% discount might make nice with the concerned boss over there, without hurting your profit margins?
  • What easy add-ons can you provide that are not resource-intensive? If a custom email template could save your clients’ 5-figure subscription, would you provide it at a lower cost or for free?
  • Is a lack of product training the issue? Could you spend more time teaching individuals at the business how to use it appropriately, in order for them to truly understand its value?

Supporting Your Price with Points of Proof

Throughout these conversations, you always need to be armed with examples – and data, where possible – to reiterate the value your product or service can bring to the company. Don’t just focus on the “what” you provide. Speak to the “why” it’s needed and “how” it’ll impact your clients’ business.

Harvard Business Review shared this great example about Goodyear:

“…customers were unwilling to pay a premium for the innovations the company introduced to extend tread life. Without a clear reference price for tires, buyers experienced sticker shock and gravitated to the lowest price. Goodyear solved that problem by pricing its various models on the basis of how many miles they could be expected to last rather than their engineering complexity; this highlighted the advantage of those innovations for customers and taught them a new way to compare offerings that was perfectly aligned with the company’s value proposition.”

Your product should be valuable to the company that’s using it. You have to be able to speak to that value and show proof of it. Actual case studies and data are much more convincing than lofty conversations about the hypothetical benefits one might experience.

Knowing When It’s Best to Part Ways

You never want to lose a customer. You certainly never want to send them away, to your competitor or otherwise. But you also want to make smart decisions for the customer and your own company.

Maybe the cost of your product isn’t right for their budget or their priorities. If you know that, and they know that, you’re more respectable for saying so. They’ll be more likely to come back to you when their budget or needs change. You don’t want to be the company that added unnecessary stress on their budget, filling them with regret that they didn’t end (or pause) their service sooner.

You also need to know when to stick to your guns. Your service costs what it does for many reasons. You know how much time it takes to provide it, you know what it costs to run your business and pay your employees, and you know what you want to invest back into your research and development. Undercutting your set prices too often can set your company’s roadmap back, sacrifice the quality of your services and create a reputation for being overly flexible with your pricing.

You want to make sure the customer feels supported. You’re there to look out for them, and to provide them with what they need for their businesses to run better. By having honest conversations (and again, listening!), you can arrive at pricing solutions that are right for everyone involved.

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