Turning away genuine customers while avoiding free loaders

An interesting story about people who try things offline and then buy online has been published here. It seems that offline stores bear the brunt of staff costs, when staff help customers make choices about buying. Many times , the supposed buyer just walks off after testing the product and later buys the same thing from an online store, often at a discount. The retail stores are then left with lesser sales and higher costs. Their frustration at this behaviour of buyer seems justified. The online stores do not have costs of hiring sales staff and paying for them. The offline stores is then angry with both buyers and online stores for taking away the revenues. How would you as a small business owner cope with such a change? Is it good to blame buyers for what they are doing? When you open a shop, it means that you want people to visit it. There are all kinds of shoppers that you will get including
  • People who decide fast
  • People who decide slow
  • People who will try at your shop and buy at another store or online
Can anyone tell which kind of customers they are, when they walk in? Probably only a very skilled salesman can. It is practically impossible to get in the head of a buyer.  A lot of bargain customers will check out tens of shops before they decide to buy something. This process has been going on since probably the word “competition” entered business terminology. Now it is just easier to follow when one has a computer and an internet connection. The response from retailers is to sue and make the competitors bend to will and to achieve parity with respect to prices. But there are following assumptions in this thought process
  • Everyone is looking for a bargain
  • Online retailers are responsible for lost customer sales
  • Everyone is buying online
And you know all these assumptions can be questioned. Not everyone is looking for a bargain. A lot of them want the cool comfort environment of a shop with helpful sales people around. Some customers are driven by higher social status and seek exclusivity. Some of them hate online shopping. It is all about kind of crowd your store attracts. If your store is attracting bargain hunters, be aware that you cannot stop them from looking elsewhere. They will do that online, offline or anywhere else. They will travel many miles just to get that right price. It is just impossible to stop them and restricting their choices would make them more angry against their businesses. Bargaining has been in existence from time immemorial and it is not going to go away because of social etiquettes. Since, there is no option to bargain price in stores these days, a bargain hunter keeps looking for bargain at many places. The major problem that store faces is the cost of sales people. A lot of people get the free ride and there are cost to hire sales people. When I launched my eBook which took me four months to write, I gave it in exchange for email. To my surprise , people used fake email ids to download the eBook. I had to mention on the page of the download that free fake ids reduce chance of interactions and it is not a great thing to do. After that fake ids disappeared. The point is that no matter what you do , free riding will exist. There are a few ways one can reduce it .
  • Raising awareness about the cost and time spent to help customers.
  • Sell more high margin products
  • Use technology to understand customer behaviour. Institute rewards program
  • Consider going online.
  • Change the way business is done. Attract repeat paying clients more. Move out of commodity business. Get into exclusivity.
Suing competition or charging buyers for service/advice is not a great idea because that way you may be turning off the buyers who are willing to buy but have not made up their mind. One needs to be innovative to keep free loaders at bay while attracting genuine buyers. Image courtesy of YaiSirichai / FreeDigitalPhotos.net