The Way To Raise Your Prices Without Losing Customers

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Marketing Podcast with Jeb Blount

Jeb Blount headshotIn this episode of the Duct Tape Marketing Podcast, I interview Jeb Blount. Jeb is the CEO of Sales Gravy and the author of 14 books including Fanatical Prospecting, Sales EQ, Objections, Virtual Selling, and his brand new book — Selling the Price Increase: The Ultimate B2B Field Guide for Raising Prices Without Losing Customers.

Key Takeaway:

A lot of small business owners struggle with charging enough, and that price increase conversation is something many people avoid. The payoff for increasing your prices and retaining your customers and clients along the way is massive. But the problem is, price increase initiatives bring forth fear and anxiety in both your salespeople and you as a business owner — especially if you’re the one who has to communicate that message to your customers.

Yet, when you approach the initiative effectively, customers gladly accept price increases, remain loyal, and often buy even more from you because they see your value. In this episode, CEO of Sales Gravy, Jeb Blount, reveals the strategies and tactics that allow you to successfully master price increase initiatives.

Questions I ask Jeb Blount:

  • [1:21] A lot of small businesses I work with aren’t charging enough — would you say that’s an idea in their head that they don’t think they worth it?
  • [3:18] As a business owner, how do you move past that idea?
  • [5:50] What’s changed in this current climate when it comes to pricing and everything almost seeming like an emergency?
  • [12:01] What’s your advice for people for setting the table for price increases?
  • [16:59] How do you suggest a salesperson handle a price increase when there’s no particular rationale or reason for it and it’s happening simply because the company can?
  • [18:48] Could you talk about your DEAL framework and system you’ve created?
  • [21:12] Where can people find out more about your book and your work?

More About Jeb Blount:

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John Jantsch (00:00): This episode of the duct tape marketing podcast is brought to you by business made simple hosted by Donald Miller and brought to you by the HubSpot podcast network business made simple, takes the mystery out of growing your business. A long time, listeners will know that Donald Miller's been on this show at least a couple times. There's a recent episode. I wanna point out how to make money with your current products, man, such an important lesson about leveraging what you've already done to get more from it. Listen to business made simple wherever you get your podcasts.

John Jantsch (00:46): Hello and welcome to another episode of the duct tape marketing podcast. This is John Jantsch. My guest today is Jeb Blount. He is the CEO of sales gravy, the author of 14 books, including fanatical prospecting, sales, EQ objections, virtual selling, and his brand new book. We're gonna talk about today, selling the price, increase the ultimate B2B field guide for raising prices without losing customers. So Jeff welcome to the show.

Jeb Blount (01:15): Well, thank you so much for having me back. I always love to be on your show. It's one of my favorite podcasts.

John Jantsch (01:20): Thank you. Thank you so much. So, you know, one of the things interesting, I know a lot of the book, you talk about a salesperson that has an account that has to go out and you know, it's like, oh, we've had this cost come. We have to raise prices, but I will tell you working with so many small business owners, they're not charging enough right now. And one of the things I tell them all the time is you've gotta go raise your prices. So a lot of that's kind of in their head, isn't it? I mean, it's like, I don't think I can get this, or I don't deserve this or whatever it is.

Jeb Blount (01:49): Yeah. You know, there, there is the, I don't deserve it. And I think that's, I think that's a very common feeling with small business owners, especially when they're dealing with bigger companies. And I know that as a small business owner, as you know, a company that's growing I've, I've often felt the same way that maybe I don't deserve this and that to somewhat some, you know, some extent is something that is totally in our heads, right? That it's a lie that we tell ourselves. And I mean, there may be some cases where we don't deserve it, but in most cases we do. But on top of that is, you know, the constant fear of the business owner that if I go ask for a price increase, I'm gonna lose my customer. I'm gonna lose the orders. Maybe they'll throw in my face. Something that went wrong in the past and well, there'll be conflict. And, and of course there's a potential that they just say, no, and I get rejected. Yeah. And that makes me feel really bad. So, and those fears by the way, are things that we make up in our own head that we have to get past. And some of those fears could be true. I mean, you could go in and create a lot of problems if you haven't been taking care of your customer and then you go ask for a price increase.

John Jantsch (02:51): Right. Well, and so, so the sales rep of course like a business owner, a lot of times I tell them, you just gotta, you gotta understand the value you bring and go ask for the money. But a sales rep, a lot of times, I mean, somebody told them, go tell the client, the right is going up. Right. It's not, you know, it's not my fault, but I'm the one that has to deliver the bad news. And I might lose that commission. Right. Because they go somewhere else. So, you know, how do you, I mean, be in that particular instance, you know, how do you get over that kinda head thing? It's like, it's not my fault, but I gotta deliver the news.

Jeb Blount (03:23): Yeah. Well the, with the salesperson, the same fears are in play. So the, one of the biggest problems for salespeople is the boss says, you gotta go get a price increase. Right. When I, it wasn't uncommon. You know, when, back when I was working for a boss that they would come in, bring you your accounts and say, we need 6% across the board. Go figure it out. Right. And you know, you're sitting there like rolling the dice on which customer are gonna take the price increase too. And very much like when we were talking about, you know, the business owner says, well, I kind of don't deserve this. I think salespeople get the same thing in their head. We don't deserve this. Or in a lot of cases, they feel like they're doing something to their customer versus doing something for their company. And by the way, that's, that is exactly true for the business owner as well.

Jeb Blount (04:03): Sure. So for me, you know, the, I, you know, I just like everybody else, I've experienced the anxiety of having to do a price increase as a salesperson. And I've experienced the anxiety of having to deal with price increase as a business owner. And one of the things that helped me really get over that hump is understanding the power of a price increase. So there's a reason why you tell your clients, you gotta go get a price increase. And one of those reasons is that a price increase is almost pure drop through to the bottom line. Now forget about a time that we're in right now, where we've got inflation or, you know, there are supply chain issues. Whenever you get a price, increase the drop through on a price increase versus going out and getting a new piece of business is about 400% higher to your bottom line.

Jeb Blount (04:47): That's a big number. So what I had to do as a salesperson and later on as a P and L owner, is to really understand what the purpose of a price increase is also it's important. And this is also important for business owners who have salespeople working for them. And you gotta go tell your salespeople to go, to get a price increase is understanding how that new profitability helps the health of the company. And for, especially for, you know, for the group of people that pay most attention to you at duct tape marketing, you know, there's nothing in the world that is more important than free cash flow, right? And a price increase is instant cash flow in instant revenue increase. And that is by the way, as long as you keep your customers, you may have to get the price increase and keep your customers and keep your orders. And essentially that's what the book is all about. Yeah.

John Jantsch (05:34): So you mentioned the current climate we're in, you know, it used to be like the annual price increase, but obviously people are dealing with weekly and monthly. I had a remodeling contractor give me a bid on something. And he said, this proposal is good for 24 hours because I don't know what it, you know, the door's gonna cost tomorrow. Right. So, so what's changed in this current client about, you know, the approach. I mean, because some of it's just like emergency, right?

Jeb Blount (05:58): Yeah. You know, there, when you start thinking about approaches or you're thinking about is messaging, right? So there are, there's essentially a couple of different ways that we deal with price increases. One is a price increase that we just give to our customers and then we defend it. So we tell our customers, you're getting a price increase. And then we deal with the objections. We message it. We talk about it, but we give everybody the same price increase. And typically you do that when the risk of losing your customers or the orders is relatively small against the gain that you get on the price increase. And typically the price increase itself is gonna be small relative to what your customers are spending. The other is when you, the price increase may be negotiable or there is some risk. You may either present the price increase as if it's non-negotiable, but you'd be willing to negotiate.

Jeb Blount (06:43): Or you go in and you ask your customers. So for example, if you're a small business like mine and you're dealing with big multinational fortune 500 companies where the risk of losing that company to my company is really high. Then I'll typically go sit down with my customer and I'll message it. Like I'll build a business case for why I deserve the price increase. And that could be based on past value I've delivered. It could be on some future value that I'm going to deliver, but in a time like this often it's an economic fairness message. In other words, what I'm doing is I'm laying out to them where my costs have gone up, where I'm getting impacted. So for example, in my world, because we fly all over the place, it's travel, you know, the cost of travel has gone up exponentially over the past few months.

Jeb Blount (07:25): So we have to go to our customers and say, we're raising the price on what we charge when we travel someplace. And this is why, and the good news is that because most people, this is humans. Okay. So most humans have an innate sense of fairness when you can articulately lay out the case, the economic fairness case for why this should give the pricing increas. In most cases, the probability is relatively high. They're gonna say, yes, you just have to be able to make that case. And in a time like ours, where it's, it is an emergency in some cases, and it is a moving target. What you really have to be prepared to do is to deliver that message. So you wanna sit back, practice that message. And by the way, deal with any objections you might get and have rebuttals for those objections. So

John Jantsch (08:10): One of the cases I make sometimes where we're getting people to raise their prices to, to a level that might be fair is that they actually might be better off losing some of the clients that leave for that. I mean, you talked about the bottom line, right? If, you know, drop 20% to the bottom line, but you lose, you know, 3% of the customers doing it, right. You're better off. And in some cases, not always, but in some cases, in my experiences, that's a client that you probably didn't have a great relationship with anyway, and that may be your fault, or it may just be that it wasn't a good fit anyway.

Jeb Blount (08:42): Yeah. I use, uh, to analyze where, which customers I'd like to lose. I just use a, basically a four quadrant. I call it a fit matrix. And at the very top right hand quadrant is, it's a, it's easy to work with. Yeah. And high profit. Yeah. And right below, that would be easy to work with low profit. Yeah. On the left hand side, it is hard to work with high profit. And on the bottom left hand side, it is hard to work with low profit. Yeah. It's the hard to work with low profits that I typically go after. And this is, you know, me as a small business, I had a fortune 100 company that we were working with. We had closed a deal. We celebrated it in about a year into it. We realized that we made a grave mistake. They were killing us.

Jeb Blount (09:23): They wanted so many of our resources. You know, they had 20 people for every one of my people and they would just had this endless just line of requests for us. And my whole team said, we gotta fire this customer, cuz we were really hard to work with. We weren't making a lot of money. And so I didn't wanna go burn the bridge because I just felt like it would be a bad thing just to go tell a big company like that when I'm a little tiny company, just go away. So I went in with a 300% higher price than I had previously given them when we signed the deal in the first place. And I expected them to throw me out the door. And when I gave it to them, the buyer simply the person that I was dealing with with the contract and procurement said, how can you justify this?

Jeb Blount (10:04): I, then I explained it. I said, you guys are really hard to work with. Were a small company. You asked for all these things. A lot of the things you ask for are off contract and we feel obligated to do it for you because you're, you know, you're the big gorilla and you know, your team needs things done right now. And the only way that I can keep serving you is I gotta hire more people in order to come in and do this. And the procurement person just, you know, they just looked down at the contract for a minute and looked at me and goes, you're right. We are really hard to work with signed the contract. And then we were good again, like it felt, I mean, I felt like we didn't resent them. They signed up for more, which was a good thing for us.

Jeb Blount (10:38): And I found that happens often that in a lot of cases, you're undervaluing yourself. Yeah. That's the first thing you and I talked about. But if, if you can, if you can put your customers in segments like that, it's a lot easier when you look at it and you realize I'm not making any money at this, it doesn't make a difference how much revenue you're making. If you're not dropping to the bottom line, you have no cash flow. You have no cash flow, you're dead. So you can at least look at it and go, okay, that gives me the courage to go in and have a conversation with them cuz I'm not making any money. And oh, by the way, if a few of these went away, I could probably spend those resources right on the easy to work with high profit customers and make them even more profitable and sell more things to them.

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John Jantsch (12:02): So one of the things you, uh, mentioned already also was this idea of relationship building. And I think it's like a lot of things you get that next sale or that price increase months before it actually happens. Right? Yes. And so, you know, what's your advice to folks to say, look, it's inevitable. You're gonna have to go ask for this. How do you set the table?

Jeb Blount (12:23): Well, if you think about price increases in the suite of things that we sell, price increases are on the expansion side of the, of the equation. In other words, I already have the customer, I need to expand the relationship. So price increases should not be, as we think about this time that we're in right now, something that we're thinking about right now, price increases are something that we've gotta be thinking about forever because we're always looking to expand those accounts. And when we're in that boat, it's in our best interest to make sure that we're managing our accounts in the book. I just break down something really simple, but I just tell you the truth. And that is that about 70% of the time when you lose a customer, it's because of neglect. Yeah. And that would be true is if you go in and you ask for a price increase or you present a price increase and your customer gets mad at you is probably because you weren't taking care of them.

Jeb Blount (13:13): So the easiest, fastest way to get price increase is just manage your accounts. You just take care of them, do the things that you're supposed to do as a business, delight your customers, deliver a great customer experience, make sure you're constantly solving problems. And if you've ignored an account for a long time, and that happens in business and it happens with salespeople as well in their portfolios, if you've ignored it, don't let the first conversation you have with that customer in six months, be about a price increase, put yourself together, a campaign, go in and set the stage, go solve some problems, do an account review, rebuild a relationship and then come back in with a price increase. But the biggest problem that we, you know, that we see in with price increases across the board is that because they're unpleasant for both parties, the, the party that has to bring the price increase to the customer has a tendency to put it off.

Jeb Blount (14:03): Yeah. So they end up dropping a price increase in the customer's lap, but don't really give them any time to deal with the price increase. Yeah. And if you're just, if you're a business, you know, you're and you buy things from other, from vendors, like most of us do, you can imagine that what, that the sort of, what that would put you in terms of a, you know, a bad spot or how it might back you into a corner. If one of your vendors came with you as came to you with a price increase at the last minute, and you didn't have time to figure out how you were gonna absorb it or pass it on to your customers or deal with it. And that typically happens because we, we just don't want to confront our customer with the truth.

John Jantsch (14:40): Yeah. It's funny too, because nobody likes change. It's really funny of any kind. I mean, I swear there have been times when I've tried to give somebody something for free and they were, you know, suspect. I hadn't told him why I hadn't said because. And I think that's, you've been talking about this price increase. Like it's just a unilateral kind of price sheet kind of thing. But as I listened to you, describe this. It's almost like you can, if you have the right conversation, you can actually come to an agreement together on what's the right approach. Can't you?

Jeb Blount (15:09): Yeah. I mean, if you've got a great relationship with your customer and in, in the book, I give you eight different narratives, right? That can be woven together in ways that allow you to have that conversation with your customer. But if you've got a great relationship with your customer, and I think, you know, that most of us do what I found is that the thought of going in and having the conversation about the price increase is way worse than the actual conversation itself. and it's a lot better. If you can go in and you can make your case, just build a good business case and sit down with your customer and work it out with them that in most cases, because human beings are inherently fair to each other, that you'll be able to work something out without a lot of objections. And it's also important.

Jeb Blount (15:53): I think that you start thinking about how do you set the stage? Because what you talk about is you don't really like change. Nobody likes change. If you spring it on someone, you're likely to get a really tur response or you may get pushback. If you start setting the stage forward, if you start talking about the marketplace and your price is going up and you know, I'll even say to someone, you know, we've been raising our prices on our other customers right now, we're holding the line with our existing customers, but there's a pretty good chance that we're gonna have to come to you with a price increase sometime in the near future. I didn't actually put a price increase in their lap, but I began to get them accustomed to the fact that it's gonna happen. Yeah. And they're thinking about it. So, and that typically makes it a little bit easier for them to absorb the price increase in our conversation or notice, I guess probably a better way of saying that.

John Jantsch (16:41): All right. What about the sales rep that's faced with the situation? We all know there are companies out there that, that do this where the real reason they're raising the price is because they can. Right. And so now the sales rep is faced with that's their only, I mean, they're obviously not going to go in and say it. That's why we're raising the price, but that's their only real talking point. So, you know, how do you suggest somebody handle that when they really don't have a great rationale?

Jeb Blount (17:04): Well, first of all, you wanna make sure that you are being professional and you're being nice and that you don't walk in already defensive. I've had that happen where I've had a salesperson come with a price increase and they're te and they're, you know, they're cold because of their own emotions rather than mine. Yeah. And you don't wanna do that at all. And certainly right now, if you're in a situation where you can raise your prices and drop more money to the bottom line, you absolutely should. I mean, as a business, that's your job to make profit. And by the way, there's a difference in, you know, doing that. And then, you know, shoving something down someone's throat and doing, you know, doing something that, that lacks in the integrity. I'm just talking about. Yeah. The regular course of doing business, you're in a situation where you can drop more profit in and continue to serve your customers.

Jeb Blount (17:47): You should do that. So you start off with again let's so let's start setting the stage. Let's build a campaign, let's start, preframing the price increase early. Let's be professional. Let's be super nice. And then go back to our narratives. One of the narratives that you want to use in a situation like that is past value. Here are all of the things great that we have done for you. Yes. You're gonna be paying more for the same thing you were getting before, but look at all the things that we have contributed to you and your business over the years. And, and when you use that approach, most people will accept the price, increase most business people, especially people that you know, that are in the B2B world, right? They get it, they understand what's happening. They don't like it. And they're not gonna be, you know, jumping up and down and, you know, bringing in a bras band to welcome your price increase in, but they understand and they get it. The key is the way that you approach it, relaxed, assertive, professional confidence. It wins the day. Every single time

John Jantsch (18:48): You have a framework and I'll just kind of tease it and you can talk about as much as you want, but obviously it's a big part of the book and that's, so there is actually a system, you know, for going out into, and you actually call it deal, you know, an acronym for that, that has four parts. So I'll let you just kind of take that as far as you want it to.

Jeb Blount (19:05): Yeah. The deal framework is simply a framework for negotiating a price increase. So in, in some cases, especially with your higher risk customers, and there's also a risk profile matrix inside the book that allows you to take your accounts and drop 'em into that risk profile, to make a decision about how you want to approach them with the price increase. But the deal framework is simply the process of if you begin negotiating and they, you typically sounds like this, John, they'll say something like, um, Jeb, like, like I totally get that. You gotta give a price increase, but we're, we can't pay this much. We haven't, we don't, we're not budgeted for that. Okay. Well, that's great. So you've accepted the price increase because you said I get it, but I'm not paying that much. Now I gotta work out something with you. So I wanna get onto the table what their issues are.

Jeb Blount (19:52): So I, I don't wanna negotiate before I do that, then I want to give them, you know, my point of view. So, so I want to, I wanna explain the price increase and the reason why I'm doing the price increase and the business case behind it, even though if I've already explained it before typically a negotiation, people get amnesia. So I wanna come back and explain it again. And then what I wanna do from there is I want to get to a place where we can both agree. And for me, the one thing that I wanna protect during a price increase negotiation is my points. So let's say I'm doing a 10% price increase. If I give up five points, that's 50% of my price increase. So the way that I do that is I try to find things like funny money. And what funny money is something that I have that I can give my customer's valuable to them, but really doesn't mean that I'm giving up anything on my end.

Jeb Blount (20:42): So for example, let's just say that I'm a business and I offer training for my customers and I'm giving a price increase to a big customer and the training typically they have to pay for, and they don't, they haven't paid for it. I might say, I'll give you the training in exchange for the price increase. Well, the training's probably online. It's not costing me a whole lot of money to, to run it. And I didn't give up my price increase points. Cause you gotta remember those price increase points. Those are, you know, those are gonna be adding up. Those are they're they're, they're, they're, you know, they accumulate over time. So giving up five points over months and months of time can be a really big number for you. So I, compoundings the number of the word that I'm looking for, but they compound over time.

Jeb Blount (21:22): So, so you want protect your points at all costs. And so that's typically what I'm doing. So, so deal is just discussing the issue. It's explaining my, you know, my situation or my business case. It's aligning on an agreement typically a little bit of give and take. I want to give away things that don't cost me anything while I'm protecting my points. And the L just stands for locking it down with a handshake or an agreement or a signed contract or money in the bank or something that, that symbolizes the fact that we have come to an agreement.

John Jantsch (21:55): So I know you work with a lot of sales managers who are tasked with coaching, a group of people around doing this. And so you do finish off the book with a nice section for those folks as well. And I, so if you're a salesperson sales manager, there's gonna be something in, in you in, in this book for everyone, J Jeb, you wanna tell people where they can find out more about your work at sales gravy, and then obviously all the books and, uh,

Jeb Blount (22:18): Yeah, absolutely. Well, the best place to find out about books is go to Amazon Barnes and noble, wherever you buy books. And you'll be able to find selling the price increase there and my other books. And then if you wanna learn more about me, you can go to my website, jlu.com. My last name is spelled B L O U NT, or to sales, gravy.com, where you can check out all of our resources that we have for sales and sales people and anyone who is customer facing.

John Jantsch (22:44): Awesome. Well, Jeb's great to appreciate you taking some time to step stop by the duct tape marketing podcast. And hopefully we'll run into you one of these days soon out there on the road.

Jeb Blount (22:53): Yes, sir. Thank you.

John Jantsch (22:54): Hey, and one final thing before you go, you know how I talk about marketing strategy strategy before tactics? Well, sometimes it can be hard to understand where you stand in that what needs to be done with regard to creating a marketing strategy. So we created a free tool for you. It's called the marketing strategy assessment. You can find it @ marketingassessment.co not .com .co check out our free marketing assessment and learn where you are with your strategy today. That's just marketingassessment.co I'd love to chat with you about the results that you get.

This episode of the Duct Tape Marketing Podcast is brought to you by the HubSpot Podcast Network and Semrush.

 

HubSpot Podcast Network is the audio destination for business professionals who seek the best education and inspiration on how to grow a business.

 

Everybody’s online, but are they finding your website? Grab the online spotlight and your customers’ attention with Semrush. From Content and SEO to ads and social media, Semrush is your one-stop shop for online marketing. Build, manage, and measure campaigns —across all channels — faster and easier. Are you ready to take your business to the next level? Get seen. Get Semrush. Visit semrush.com/go to try it free for 7 days.


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