IBM study says showroomers should be targeted

The following is an excerpt from a recent conversation on RetailWire, reproduced here with kind permission.

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 during last month's NRF 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.'"

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." 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.

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"They are actually incredibly active consumers," said Puleri. "They're social creatures who are very likely to share their opinions with their peers."

The study also found that while brick and 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 Puleri. "Guess which group is likely to dictate the future of retail."

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 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.

(Photo by lululemon athletica.)

RetailWire BrainTrust comments:

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? - W. Frank Dell II, CMC, President, Dellmart & Company

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. - Max Goldberg, Founding Partner, The Radical Clarity Group

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. - Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania

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