What is bill shock?
The phrase bill shock has been used within the telecoms sector for the past two decades. With the rise of subscription/value-based pricing the concept of bill shock has spread to most sectors. Bill shock is used to describe the negative reaction a customer can experience if their bill has unexpected charges/rises.
It is referred to as ‘shock’ as it triggers negative emotions and can result in a customer dropping their usage or even terminating their subscription. Bill shock can also be a main trigger for turning a customer into a detractor.
How to avoid bill shock with Customer Success?
As with anything, the best way to resolve a problem is to prevent it from happening in the first place. In reality it is quite likely that the more a client uses your service, the more value they are getting from it. However, clients can be sometimes quick to forget this if they are confronted with a bill that is 50% higher than their last. Especially if they haven’t budgeted for the increase.
Pricing is often very emotional. If a customers invoice increases and it comes as a shock, this can drive emotions that are very hard to overcome, such as the feeling of mistrust.
Top Tips for preventing Bill Shock.
- At the start of your relationship with your customer, you should ensure that your customer fully understands your pricing model. If your pricing model is influenced by usage, then highlight this to the user, but also highlight the additional value they are gaining. E.G If a user is spending £1000 more but this is saving them an additional £20,000 by using your service to do this work, make them aware of this.
- Give your clients the tools to check their usage/volumes quickly, easily and in real-time.
- Through your monthly/quarterly reviews with your client, relate the increase in usage back to value, also try forecast any potential increases, such as peak periods.
- Consider building triggers that will make you aware when a customers usage is substantially outside of their typical usage. This could send automatic emails to customer’s or make your Customer Success Managers aware and they can best decide a course of action.
How do I manage a customer with Bill Shock?
If you have a customer with Bill Shock the first three questions you should be trying to answer are.
- Why are they shocked?
- What has caused the increase in their bill?
- How have they benefited from the increase in usage?
As I mentioned earlier, there will probably be a big benefit to your customer from their increase in usage. E.G Your customer spent £1000 more but were able to produce 500 more marketing materials for this. Done without your service these items created manually would have cost £20,000.
Once you have the answers to these questions you will be in a much better position when speaking with your customer.
Talk through the emotions and bring the conversation back to the value that they have received. If they hadn’t have increased their usage, what would the impact have been on their business. E.G. Less marketing materials to support new sales.
Your customer needs to be moved from seeing a rise in cost to a rise in returned value.
In short, the best way to manage Bill Shock is to stop it occurring in the first place. Regularly review usage with your clients, this can be through automated reporting, or during catch-up calls and reviews. Make your pricing as simple as possible and ensure your clients understand it.