August 18, 2021

Is There A Long-Term Impact When Prices Increase?

Customer Development is predicated on doing things today to increase customer counts, and those activities result in having a bigger and healthier business tomorrow.

Now, if we take the example from a few days ago ... we increase prices by 10% and see spend/customer increase 10% but see rebuy rates and new/reactivated buyers decrease by 10% ... well ... then ... on the surface, everything should calc out just fine.

For one year, yup.

After that? Nope.

Click on the image to expand it ... you'll see that you eventually have fewer customers and those customers aren't capable of making up the difference, are they?

What happens if price increases every year by 10%?

So that's not optimal.

Now, I get it ... you "have" to raise prices as your costs increase ... you can't absorb the costs, and somebody "has" to absorb the costs, so push 'em on to the customer.

Just realize that there are consequences ... one of those consequences are a shrinking customer file incapable of delivering growth.

And that means you have to combat this situation with a Customer Development strategy that grows customer counts profitably. You can offset what is coming ... you're smart enough and talented enough!

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