Marketing
Issue No. 5 - April/June 2002
How to get them to Pay the Price
by Dr David Corkindale
The skilful management of presenting our prices and the bill can improve our income.
Keeping our customers happy and keeping them paying the bills can be a difficult juggling act. Relationships that were good while the work was underway can cool after we send the bill — and the client may not come back next time. It would be nice to know how to avoid this and have them pay gladly and a higher amount. Is this possible? Surprisingly, the answer can be yes.
When taking on a project, one service provider suggests an indicative fee, but warns the client that there could be some call for a higher amount. He gains agreement in principle, while stressing it is just a precaution. When the work is nearly complete he rings the client with the good news. If there has been extra work, at this point he also intimates that extra charges are necessary, being careful to listen for hints of concern and disappointment. If there are none then the amended fee is acceptable. If there is genuine concern he explains that, as a favour, he can probably ‘lose’ or absorb some of the extra cost. He then has a grateful client who pays the bill thinking a concession has been won.
When mobile phones were being introduced many phone companies experienced very high customer ‘churn’. One company bothered to investigate the phenomenon and found a high proportion left after receiving their first bill, which included sundry one-time expenses. The company instituted a procedure where a sales rep would ring a customer a day or two before bills went out to explain that it was quite normal for the first bill to be large, but that subsequent accounts would be much lower; they also re-iterated the benefits of their service. This simple procedure cut churn from 40 to 12%.
The lesson from these two examples is: prepare your clients for receiving the bill. Nobody likes nasty surprises; the charge you are making may be justified, but the client will resen...
