IBM: Showroomers Should Be Targeted
Although the notorious ‘showroomer’ makes up only 6 percent of all public buying traffic, they’re young, active and influential and should be considered retail’s target customers, contends a new study from IBM.
"This is not the enemy," said Jill Puleri, VP and global industry for retail at IBM Global Business Services, at a session Sunday at NRF’s annual convention. "This is your best friend. They’re your advocates and you should be bending over backwards to make your experiences worth sharing to them. These are your ‘chief executive customers.’"
Ms. Puleri spoke along with Erik Qualman, author of Socialnomics, as part of a session entitled, "Socialnomics – Transforming the Way Retailers Do Business in the New Social, Mobile and Digital World." Ms. Puleri revealed some insights from IBM’s Chief Executive Customer study, which was based on 26,000 respondents across 14 countries.
On showroomers, the study found that 48 percent use the store to research products with no plans of making a purchase. About a quarter plan on making a purchase inside the store but get "turned off" by prices, lack of sales help, etc. and wind up making the purchase later online. A third use mobile devices to search prices and find product information in-store.
On the positive side, 58 percent visit online communities more than once a day and over half write a positive review. They’re also typically young, 18 to 34; typically male; affluent; and global, with the largest percent of showroomers in India, China and Japan.
"They are actually incredibly active consumers," said Ms. Puleri. "They’re social creatures who are very likely to share their opinions with their peers."
The study also found that while brick & mortar still dominated holiday selling this past season, many are considering shifting to online. Of the 84 percent of respondents who said their last purchase was made in a store, 56 percent said they’d "go back to the store" for the next purchase, 35 percent were undecided, and the remaining nine percent were planning to shop online. The last group, labeled "Store Abandoners," tend to also be in the 18-to-34 group and are "are probably not coming back," said Ms. Puleri. "Guess which group is likely to dictate the future of retail," she asked.
Ms. Puleri describes the emerging "Chief Executive Customer" as smart, "emboldened by transparency," "in full control," and "dictating their own terms." For retail, the task is learning "where to look" to communicate with them across the wide space of mobile and social media.
That set the stage for Mr. Qualman’s presentation, which covered how to tackle "socialnomics," which he described as "word of mouth on digital steroids." He noted that such word-of-mouth only promises to increase in importance with tools such as Facebook Connect, which Trip Advisor and Yelp are using to drill down into reviews by trusted Facebook friends. But he said only 10 percent of companies are even making lists to learn from positive and negative comments circulating across social media.
Discussion Questions
Should showroomers be targeted and even cherished as customers? What may be the challenges of reaching showroomer-type customers for brick & mortar stores? How might social and mobile approaches need to change to reach the potential showrooming consumer?
The showroom customer is likely lost, but should not be shunned. First, the retailer got them into the store. Second they are buyers. The question is how to convert them. The answer could be with add-ons. If you don’t sell the TV, what about the DVD player, home entertainment center, game console or movies which can be more profitable?
All customers should be cherished and respected, not just showroomers. To achieve this goal, the shopping experience needs to be improved. Great customer service should be the norm, not the unusual. Sales people need to be knowledgeable and empowered. Products must be in stock. Retailers need to listen to their customers and engage them in dialogues.
This is not rocket science, but it does take a commitment on the part of management. It’s easy to drop prices. It takes commitment to create a better in-store experience.
Yes indeed—target the showroomers!
This reminds me a lot of the early days of Napster and other file-sharing services. Those users were the music industry’s most engaged customers, but idiotic firm policies chased them away and destroyed the industry.
The parallels here are striking: in both cases, customers are voting with their feet (or fingertips) because traditional retailers aren’t doing a good job of keeping up with technology and meeting customer needs.
And it’s not just about price; last week’s announcement by Target was a big step backwards. The retailing war will be won or lost based on factors such as service, selection, quality, and convenience at least as much as price.
Listen to the voice of the market before it’s too late….
One of the clear themes at NRF this year is that brick and mortar retailers need to turn the showrooming model on its head, and get shoppers to use their devices to learn more about items they are researching while in-store, and ultimately make the purchase there.
Intel is also showcasing a number of digital solutions that enable shoppers to engage with the endless inventory of the internet and benefit from the possibilities of video analytics while helping retailers retain sales that would otherwise be lost due to out-of-stocks.
The “showroom” consumer is committed enough to the buying process to walk into your store in the first place. The IBM study is absolutely correct that these are prime targets for converting a store visit into a sale. It’s up to the retailer (Best Buy, for example) to figure out how to make this happen, with a combination of a price-matching policy and a more engaged sales team.
The “showroomers” are early adopters of technology and ought to be prized by retailers, not shunned by them.
Influencers, advocacy and a positive shopping experience. The IBM story has identified showroomers as social media influencers.
Having influencers as brand advocates pays dividends in many ways. Most obviously as the purchases that they will make, but also as the others they will influence to make purchases from the brand. Creating advocates by ensuring a positive shopping experience should be a no brainer since that should be the goal of the store to begin with.
The telling statistic is that ~25% of the showroomers intended on making an in store purchase but did not. By creating a positive shopping experience with friendly, well trained staff and store policies that encourage in store purchasing (i.e. price matching), retailers can capture an additional 25% of showroomers’ purchases. This does not include the purchases that they are influencing or non-showroomers that are leaving the store without a purchase when they had intended to buy something.
I stand by the idea that it is the loyal or best customers that a business should focus on and cherish … making sure of course that you also delight new brand engagers.
If showrooming is important for these individuals, then it will roll-up into an important strategy for the business.
Being able to build strategy “bottom-up” from these individual level insights not only ensures the strategy is accurate; it enables the now expected personalized execution in social, mobile and traditional channels.
Data integration is critical to both reconcile this understanding at the individual level and then to act upon it and measure success.
“…retailers should embrace showroomers…”—as opposed to what? Actively discouraging them from entering their stores? Posting video surveillance and escorting anyone observed checking a price on their phone from the store? Come on!
Of course retailers should be “embracing” showroomers. Showroomers are by definition “shoppers.” Probably heavily engaged and highly influential shoppers. Retailers need these people out there using and talking about their stores.
One of the toughest paradigms for business people of all stripes—but particularly retailers—to overcome is their parochial view of “competition.” Here’s a vivid example from the entertainment business. Heavy consumers of movies tend to get them from multiple sources. The heaviest movie theater goers are also the heaviest users of TV and online subscription services and of DVD rental services such as Netflix, Redbox and Blockbuster.
So, what would logically be the most productive location for a DVD rental kiosk? Outside a movie theater? Check. Got the heavy user there already. You know they are going to be renting a DVD after they leave the first run movie they just watched in your theater. Maybe it is tonight or maybe it is tomorrow—but they are going to rent a DVD. So why not have them get it right outside your theater instead of outside the local Jewel or Walgreens? Makes perfect logic—but it is an emotional “Bridge Over the River Kwai” for movie theater owners that they just have not been able to cross.
Retailers can take a similar lesson from showroomers. They are power shoppers and you need to capture as much of their time, attention and business and you possibly can. Not shun them because they “shop the competition online.”
The answer is a bit obvious: of course, but based on upfront SOR/SOW expectations. There is not ONE marketing strategy that appeals to all consumer/customer segments, and spend should be carefully aligned both with the size and the economics of the customer-target opportunity.
Showroomers, as the article contends, offer WOM benefits—invest on them relative to the value they create. Ultimately, for the true incremental margin gains, a modern retailer that combines online and brick-and-mortar operations should follow the trail to the truly profitable customers. This is not a game of ROI alone, but efficiency AND scale (penetration of key consumer targets and recurring profit streams).
Jill Puleri of IBM understands Showroomers: “This is not the enemy.” If you have a customer standing in your store, interested in buying something and technologically savvy enough to use their mobile phone to price shop, this is not bad. On the contrary, this is an opportunity to not just make a sale, but to start to build loyal relationship.
The “low price” shopper can be turned to recognize the value the store provides and become a repeat buyer.
What’s important to recognize is that they are “repeat buyers” and not “loyal customers.” They are more loyal to price than to the store. But getting the customer into the habit of buying from you is better than them buying elsewhere—and gives you the opportunity to build a relationship that will become less price sensitive.
Price and item advertising has been around since the Stone Age. Those who like to comparative shop are now “showroomers” because they have a device in their hands. Honestly, this is silly. As shared, of course you service and support this customer behavior, because you want to convert the shopper into a buyer. That is what sales is all about.
Now, for some store concepts/formats it makes sense to invest in technology to support this dynamic, but not necessarily encourage it. If you enable technology to in effect promote price comparisons which in the end lower the price on that which you are selling today, you have just cut into your profit margin. Why exactly are you encouraging what may be in effect “clearance” buyers to convert on the floor of your store?
The expectation and/or promise of social influence to then drive new or incremental sales is just that – a hope that by supporting showrooming you may sell one more washer/dryer or 62″ LCD that day through referral, but there are no guarantees this will be the result.
Showrooming is the new paradigm and all retailers should strategically address the practice.
As the Millennials gain purchasing power, their practices will become the norm. With the aging boomers losing mobility, technology becoming more affordable and easier to understand, the shopping behavior will be driven by the younger audience.
As I said a few days ago, in 10-years, the only real reason for a brick and mortar store to exist will be to act as a showroom.
The defined showroomer today may only represent 6% of all public buying traffic, but as IBM says, “they’re young, active and influential.” But more important than that is the fact that as each year goes by, there will be more of them and they will be the premier target customers of tomorrow. Be assured, when they are, they will not change their behavior to fit the retailer’s desires.
I don’t meet goals on spec. I need the numbers in the register. And at the same time, I need to adjust for returns from the web.
The best way to do that is to concentrate on the customer in front of you and keep in touch with your customer. Be polite to the looky-loo, but focus on your real customer. No company gives you credit for web sales.
I just read a study that got to the reason customers showroom in the first place: poor customer service. No one waited on them and no one answered their questions, so they went online and found the answers, and oh-by-the-way, a better price.
Given that, it seems like showrooming could be solved with some blocking and tackling: good customer service.
Apple’s got that figured out (along with a lot of other things of course). While in my local Apple store this holiday, I counted 30 associates on the sales floor of a 6,000 sq. ft. space. Needless to say, everyone was waited on and then some.
I’m clearly looking at things differently than others here. Are we talking about showrooming as being good for the manufacturer, or for the bricks & mortar retailer?
Clearly in consumer electronics, shoppers do want to pick-up, view, and hold the product before purchasing. So it’s not surprising that they go into a bricks & mortar retail store. And yes that can be a great opportunity for the retailer. But once the shopper finds what they want they begin to compare price. A chain like Best Buy with hundreds of stores needs to buy more inventory than an online merchant with just a few physical warehouse locations at most. They must pay to ship that inventory to all their stores. They need to rent, heat/cool and light all those properties, deal with loss and damage to merchandise on the retail floor, keep the stores clean, insured, provided with store security, and manage and train all that staff. With all those factors (and many more I haven’t mentioned) I’ve never been able to understand how that they could be even remotely price competitive with online only merchants and still make a profit.
Certainly in cases they do have the benefit of providing instant gratification, but with all those stores and all those human interactions with customers they also have a less controlled environment and many more opportunities to provide a bad (as well as a good) customer experience.
I believe that the bricks & mortar retailers do need to embrace the showroomers. At least in consumer electronics it’s probably their future. But they need a new model in which they sell their showrooming services to manufacturers and stop trying to fight the battle on price with online merchants.
Showroomers are early adopters, that means they will drive what’s coming down the line. Since retail is a reflection of culture I think that cherish is a good sentiment.
Since this is ultimately a design problem, I will recycle the misquoted Henry Ford line—”If I had asked people what they wanted, they would have said faster horses”—to highlight the challenge. We don’t have a showrooming problem, we have a retailing problem.
Showrooming describes a part of how this important audience shops. The entire storyboard, from the moment of inspiration, through the evaluation, purchase, ownership and use are how we need to think and of course, social and mobile tools can be there along the way to help and add value.
Your customers don’t want faster horses! They want drive-thru on the superhighway as they travel to their vacation destination.
I read the article, I read the piece from IBM, I read the comments and I’m scratching my head.
Maybe it is just my age catching up with me. I actually remember the newspaper. I even remember a newspaper that had ads in it. I also remember shoppers in the supermarket with multiple retailers ads in their pocket or their cart.
In the world I grew up in, every customer that entered the doors was our best customer—our best customer!
One of the problems with what we think we know today as a result of data and technology is that we think we know.
What we lose sight of is that no matter what we think we may know, we never know what we can or might be able to do with any customer that enters the doors if we treat them right. The possibility is limitless.
There is a tremendous amount of ignorance in these types of interpretations. The scary part of it is that we see business decisions made on this basis.
There is a really novel idea that comes to mind. We can reach the customer that enters our stores—showrooming or not. Yes, we can actually reach them. A good start is good morning, good afternoon, or even a simple hello!
A showroomer is a person who comes into a brick-and-mortar store with the sole intention of gathering information about a product. They want to “kick the tires” so to speak. They want to gain information about a product and then comparison price that product with the same or similar products online. These showroomers are using their smart phones to comparison shop from the sales floor. Great!
I have worked in retail for the last thirty-eight years. I have been a mystery shopper for various companies for the last seven years. I think I have an unusual insight to most shopping experiences.
I think that stores should embrace the showroomer. If I can get you into my store to comparison shop, then I have over half the battle won. I know I can’t convert 100% of the people coming in my doors, but if I can convert even one of them who come in simply to comparison shop, then that is one more customer.
If I offer great customer service and I have the product in stock and at a reasonable price, then I have a great shot at converting the showroomer into a paying customer. Perhaps by creating displays of more popular items that give actual comparisons of different online retailers listing their prices along with shipping charges and estimated delivery dates, then I can help my showroomers make the decision to buy today.
By having knowledgeable salespeople who are helpful and friendly without being overbearing or using high-pressure techniques, I provide something the online stores can’t: face-to-face service. Even in today’s highly competitive market, people want to deal with people. Most people have dealt with those faceless companies that offer little in the way of customer service. Many have decided it is better to deal with a company that speaks their language and is available when they need help.
By placing the product in their hand and getting them to take ownership of the product in the store I have an advantage over the online stores. You can’t feel the product online. The only differentiator is the price. If I can get my price in the ballpark, then I have the sale. Some people don’t mind waiting, but many are looking for that immediate gratification. Send me all the showroomers you have.
Showroomers are not a threat, but an opportunity. They are clearly highly involved in the purchase process, as they are spending the time and effort to research the product and prices, and thus are very likely ready to buy the product.
As such, the focus should be on making sure they have access to the information and service they need, and very importantly, that you are “right-priced.”
By right-priced, we mean not only providing a price-matching policy that requires the shopper to do the work of going to an associate to get the price match, but by proactively ensuring that you have the right price on your product at the time the showroomer is viewing it. And the right price does not need to be the lowest price; rather, it is the price that that represents the best deal when taking other important purchase factors into consideration, such as convenience, instant gratification, return policy, service, and so on.
The fact that showroomers are often online while in your store represents a great opportunity to engage with them; using location-based/personalized promotions and having a high quality mobile app are great ways to engage with these consumers to close the sale, or otherwise keep them in your store.
One interesting forward-looking possibility that occurred to me while viewing solutions at the NRF Big Show this week is in marrying shopper tracking video technology with price intelligence. For example, what if retailers tracked the number of shoppers who viewed prices on their mobile devices against their eventual sales for that product, and then correlated those numbers with their price competitiveness for those products? This type of capability, which is achievable through the joint integration of leading price intelligence and video tracking solutions with the retailer’s POS data, would enable the retailer to obtain an understanding for the precise amount of over-pricing the shopper will accept to still proceed with the purchase.
I’ve always encouraged retailers to embrace showrooming and in turn, to be aware of showroomers and cater to their needs as shoppers. As Puleri mentioned, showroomers are already more knowledgable, more engaged and more technologically savvy than the average customer. As such, they have the potential to be your most powerful advocates.
Retailers should equip their staff and their stores with the technology to cater to showroomers—offering transparent pricing, product and inventory information, as well as objective third-party product reviews—in order to convert showroomers during their visit to the store.
Ultimately, the goal is to convert as many sales opportunities as possible, whether a customer is there to showroom or not.