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Can your business retain customers while raising prices? Businesses in Singapore have been navigating this delicate situation since the country’s Goods and Services Tax (GST) saw a hike from 8% to 9% on 1st Jan 2024.
While a price increase is inevitable, maintaining strong customer relationships can be achieved. With strategic planning, effective communication and innovative tools, raising prices while adopting a customer-centric approach is possible.
Besides moving towards value-driven pricing, tools like Qashier’s customer loyalty program and QashierHQ can facilitate a smooth transition. In this way, businesses can navigate this GST hike without eroding the trust and loyalty of their customers.
First, why are businesses increasing their prices?
The straightforward answer is to cushion the impact of the GST increase. Businesses, in turn, face higher operational expenses as they need to pay more tax on their inputs and services. To maintain their profit margins and ensure financial sustainability, businesses might have no choice but to pass on some or all of these additional costs to consumers through higher prices.
Inflation is another critical factor. Singapore’s inflation rate has increased significantly from 2019, with a consumer price index increase of 4.9%. Besides decreased consumer spending and sales, businesses face increased costs in various areas: rent, utilities, and labour. Raw materials can also rise due to various factors, such as supply chain disruptions or higher production costs. These rising operational costs put pressure on businesses to adjust their pricing.
Coping with inflation is no easy task for SMEs; the challenge is finding a middle ground where the price increase is sufficient to cover increased costs without making their offerings uncompetitive. Another factor to consider is how customers will perceive these price increases. A sudden or unjustified hike can lead to customer dissatisfaction or a shift to competitors. Apart from striving to control retail costs, here are four ways businesses can brace for 2024.
Transparent communication with customers is fundamental when businesses are navigating price increases. Companies must explain the rationale behind the hike in prices openly. This communication should be an informative explanation that helps customers comprehend why these changes are necessary. Such transparency can mitigate potential customer dissatisfaction and resistance.
Proactive engagement with customers is equally important in this process. Businesses should leverage multiple communication channels, such as social media, email, and in-store interactions, to reach their customer base before implementing any price increase. This approach of preemptive communication sets the right expectations and prepares customers for the upcoming changes. By engaging customers early and consistently, businesses can smooth the transition to the new pricing structure.
Value-driven pricing is a strategy where the price of a product or service is primarily determined by the perceived value it offers to the customer rather than just the cost of production or market competition. In implementing price increases, businesses can align this strategy by enhancing the value of their offerings through product quality improvements, additional features, superior service, or exclusive benefits that justify the higher price. This approach shifts the customer’s focus from the price to the benefits and superior experiences they receive. Consequently, when effectively communicated, a value-driven pricing strategy can increase customer satisfaction, as customers feel they are getting more for their money.
For example, take a leaf from AirAsia. The Malaysian low-cost airline has successfully used value-driven pricing by offering affordable air travel with various value-added services, such as convenient online booking, customisable travel options, and premium add-ons, allowing customers to tailor their experience. And what about Singapore Airlines’ KrisFlyer rewards programme? The airline company makes it attractive for consumers to collect miles on their daily expenses, which makes customers feel exclusive, increasing loyalty.
Indeed, a positive customer experience where customers feel rewarded can be the balm for a price increase. Make your customers feel rewarded with Qashier’s customer loyalty program. Companies can build a customer loyalty program straight from their Qashier Smart Terminal, eliminating the need for additional hardware or software. Such an effortless enrollment process is convenient and encourages more sign-ups, broadening the customer base. Furthermore, Qashier’s program offers customisable rewards, enabling businesses to tailor their loyalty schemes according to their specific needs and the preferences of their customers. Businesses can choose from various loyalty program types, such as cashback, points, credits, or packages designed to cater to different business models and customer preferences.
The process is easy if you’re using a Qashier POS: Businesses enrol customers at checkout and apply rewards by entering the customer’s phone number, making it quick and hassle-free. This integration enhances the customer experience and simplifies the management of the loyalty program for businesses.
So, you’ve increased your prices and implemented your customer loyalty program. Now what? Monitoring and analysing customer feedback is essential so you know when to tweak your strategy. Qashier makes it easy for businesses to collect this information if you’re using our smart POS terminals. After every transaction, customers can rate their satisfaction with your store on the terminal. To analyse and understand these customer satisfaction results, businesses can access the QashierHQ online back office to view a comprehensive overview of customer feedback.
This feature is particularly useful for businesses to address any issues promptly and improve their service quality over time. This feedback mechanism is integral to shaping customer retention strategies and refining value-based pricing, helping businesses align their strategies more closely with customer expectations.
Conclusion
Effectively navigating price increases, as seen in a post-GST hike era in Singapore, requires a multifaceted approach. While it might be challenging to find a middle ground, it’s not impossible. With Qashier, a business can focus on what it does best – providing great service and value to customers without sacrificing its profit margin.
More about Qashier
Qashier offers multiple digital solutions, including QR code table ordering, table management (F&B), employee management, customer relationship management (loyalty programs), inventory management, data analytics, and cashless payments, in an all-in-one device.
Qashier promises a seamless setup within 10 minutes, without the need for technical expertise. It boasts a user-friendly interface that is simple for anyone to learn and use. If you require assistance, you’ll find 7 days-a-week responsive technical support from your local team.
Try the Qashier app for free on your own Android device! Alternatively, you can speak to us to see how Qashier can meet your business needs. Schedule a meeting with us here, call us at (+65) 3165 0155, WhatsApp (+65) 8887 7687, or email [email protected].
