Retail showroomers aren’t all cherry-picking deal-hounds– they’re potentially your best customers. Here’s how to leverage the tools of loyalty management to win them over.
Guest Blog By Rick Ferguson and Bill Hanifin
Before the advent of mobile devices, shoppers had to take pricing promises on faith. Today, it takes 30 seconds on an iPhone to figure out that the 52-inch flatscreen TV in your store is 14 percent cheaper online. As smart phone penetration increases, consumers are relying ever more on mobile devices to navigate their lives, and they will only grow more adept at finding the lowest price online.
Showrooming — the use of mobile devices while in a store to find and buy a product at a lower price online — has sparked a retail war. On one side we find the big-box retailers, who have become the global poster children for those afflicted with terminal showroom-itis; on the other side we find online retailers, the go-to villains for those looking for a scapegoat to blame for their sliding sales and disengaged shoppers. And in the middle of the war we find consumers themselves, who are guilty only of pursuing their own self-interests.
However, as we’ve seen from the recording industry, which responded to a permanent change in consumer behavior wrought by disruptive technology by declaring war on its own customers, fighting showroomers will not win the battle against showrooming. It will only serve to alienate retailers’ customer bases.
So how can brick-and-mortar retailers keep their sales in store? One way is by embracing showroomers by leveraging the tools of loyalty management. A recent study conducted by Aimia reveals a great deal of information about retail showroomers that hasn’t been reported in the press — particularly in regard to their attitudes and opinions about brand loyalty and reward programs. We learned that showrooming behavior indexes higher among younger consumers — three-quarters of US showroomers come from the Millennial generation. And Millennials also over-index on loyalty programs: 77 percent of Millennial consumers claim participation in loyalty and reward programs.
And as all veteran car salespeople know, a customer doesn’t come onto the lot unless he’s ready to buy. So how can retailers deploy the tools of loyalty management to convert showroomers into paying customers?
- Use hard benefits to reward desired behavior: The value of hard benefit rewards such as loyalty currency lies in the currency’s function as a lever to influence customer behavior. When you find a showroomer looking up the price of that 52-inch flat screen, invite him to join your reward program—perhaps with a rich bonus offer on his first purchase. The cost of the bonus points is far less than the gross margin contribution you’re losing on showroomed products.
- Link soft benefits to upper-tier smart phone users: By lavishing showroomers with exclusive access and experiential rewards based on customer data, you’ll enjoy the opportunity to provide a truly unique customer service experience.
- Steal the online thunder: Offer your own showrooming app that combines price transparency with product reviews. An app that is available only to your loyalty program members ensures that every action conducted through it results in proprietary data that goes to you – which is far more valuable than a lost sale.
- Deploy an aggressive partner strategy: Work with and share opt-in data with partners and suppliers to combat showrooming together. By offering exclusive products, you’ll draw more people to your store to buy, which benefits retailers and suppliers.
Retailers have an unparalleled opportunity to adopt current technology to create new value propositions that reward customers for physical visits, promote personal service, and deliver both relevance and value. Success will require you to embrace this technology, rather than abdicate to your online competitors. So when you wake up in the middle of the night in a cold sweat, worried about showrooming, take heart—the tools to build profitable relationships with showroomers are already at your disposal.
Bill Hanifin is Consulting Practice Leader for Aimia, while Rick Ferguson is Aimia’s Vice President of Knowledge Development (www.aimia.com).
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