Can a business justify a 13.4% price rise and if so how?
I'm always intrigued by how businesses share difficult news, and price rises, inevitable in the prevailing economy, fall into this category for me.
Getting it right is about tone and content.
Today, an email from #VirginMedia #o2 announcing a significant price hike, provided an interesting case study.
The challenge Virgin Media o2 's communications faced is communicating a 13.4% price hike. With #Trustpilot ratings of 1.2/5 'Bad' for Virgin Media and 1.3/5 'Bad' for o2, it was always going to be a challenge.
The approach taken to have the communication email to customers 'voiced' by Gareth Turpin, Chief Commercial Officer of Virgin Media O2, who 'wanted to write to you personally to let you know that the price of your monthly o2 plans is changing,'?was interesting and fraught with risk. The justification that the hike reflects the prevailing Retail Price Index (#RPI), something that is buried in the T & Cs, is flawed.
I get that, like Virgin Media o2, businesses can point to?'increases in the costs of running our network and supporting our customers'. ?However, all of this feels very 'thin' when the service levels experienced by customers is rated as 'bad'.
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In the spirit of transparency, when it comes to o2, I am a 'detractor', having once been a fan. Signal strength at my home and office has declined significantly. The same lack of connectivity and reliability is something I experience all too regularly on the road as well. o2's response has been lamentable. As with Gareth's email, they have pointed to my T&Cs to say connectivity is not guaranteed.
o2's T&Cs may entitle them to hike prices by 13.4%, but is it the right thing to do for their customers and can they justify it to them?
If a business wants to put its costs up 13.4%, then for me, it can only do so from a position of strength, and I do not mean monopoly or oligopoly, but rather from superior customer journeys. Charging more for substandard experiences, even if linked to 'jam tomorrow', has to be a perfect marketing opportunity for competitors delivering good customer outcomes to capture the hearts, minds and wallets of disaffected customers.
This year across financial services, the #FCA Consumer Duty will come into force from July 31st. Embracing the #ConsumerDuty is an opportunity. Superior service does add value, and people may pay a premium for it. In the short or long-term, people will not stick with businesses that attempt to charge a premium for a declining experience. Inflation or not, rising prices are best justified by rising customer experiences and, to quote the FCA, 'Good Customer Outcomes.'
As always, I welcome your views.
CEO Automotive Solutions Group
2 年Hey Graham hope all is well - this doesn’t surprise me and it’s a simple equation for them - those who stay are locked in or didn’t have the time to move to a new supplier, those that leave will be replaced with some smart marketing campaign, and the balance of numbers will be flattish …. But it’s a great story to tell the board of an increase in revenues per person …. It’s all in the spin I guess …. the old demand v supply for some brands results in little resistance to price increases if you can spin with a little rebranding remessaging - I guess for many the cost of living and pay increases will help justify the cost of service and goods going up ….