When Price trumps Customer Experience

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I have done James wrong. I feel bad, but there’s no getting around it. Despite delivering an outstanding customer experience, furniture salesperson James is not getting the commission for my new furniture—because I got a better deal somewhere else.

“Showrooming,” as it is called, is the bane of retail locations in today’s web-enabled age. People check out the merchandise in a physical location, and then comparison shop using technology. That’s exactly what I did to poor James.

My local furniture store, where James works, has done almost everything right. Their store is attractive, their staff is friendly and knowledgeable, and their selection is good. They even have a playroom to occupy my kids while I shop. James himself was very helpful when it came time to make my final selections. We picked styles, fabrics, colors, and types of trim for the pillows.



And then I left, with my selections in my pocket, to do an online search for the exact same model. I’ll be saving more than $1,000 on my purchase by going with a different vendor.

Big ticket, commoditized products like electronics and furniture are especially susceptible to the showrooming phenomenon. Large chains like Best Buy can leverage their scale to combat showrooming by offering really low prices and other offers. Smaller chains and individual stores have it a lot tougher, as my recent experience shows. I wanted to give James the sale, but ultimately price won out.

What could have saved my business?

Competitive pricing. I would certainly have paid a little bit more in appreciation of the service I received from James, but once we got into the 4-digit savings, I had to go with the retailer with the better price.

Extras. The warranty on my purchase costs the same whether I buy it from James or his competitor. An extended warranty, a rebate, or even a discount on future purchases might have swayed me to overlook the big difference in the ticket price.

Empowered employees. James knew he’d been beat when I mentioned comparing prices. He admitted frankly that he had no power to negotiate. The fact that I could get an identical piece of furniture for such a substantially lower price suggests that there was a margin for bargaining—but he wasn’t able to take advantage of it.

I was upfront with James. He knew when I left that I would be looking for better prices—and that, if I could, I’d be happy to come back and place the order with him. But he was also upfront with me. He had no bargaining power. The price he quoted was the best he could do, so if I found a better deal somewhere else, there was nothing he could do about it.



It’s not fair, obviously, that I wasted James’s time and that he will ultimately not see a financial benefit from the time he invested with me. I promise I’ll recommend him to local friends, though, and his store will be the first place I look when I have another furniture purchase I need to make.

I might not buy anything, but I’ll at least look.

6 COMMENTS

  1. Hi Lisa: thanks for providing this provocative article. You have described a conundrum many of us have experienced. We use one vendor to provide the information and resources we need for deciding whether and what to buy. Once done, we find another vendor to provide “the exact same thing,” hopefully with a lower price, better terms, or both.

    But does the consumer really get the “exact same thing” when buying at a lower price? James either failed to prove that to you, or he didn’t have the opportunity to do so. I am not sure. Also missing is the proportion of the $1,000 price delta you have indicated, so I don’t know its significance in this transaction. In absolute terms, for me $1,000 is a lot of money, so I’ll go with that . . .

    It’s curious that in an era of easy comparison shopping, James would have stonewalled his ability to negotiate. That seems a poor tactic to me. But maybe his motives were altruistic, and oriented toward ensuring your shopping experience was positive with a no-haggle approach. Imagine if instead James pressured you into a purchase by telling you he would be helpful and would offer his “best deal,” but only if you were ready to buy today – a la car sales. For most customers, that would be awful.

    Or, what if he offered his pre-sale services, but for a fee, to be rebated contingent on purchase – a practice that many companies do. Maybe that would have protected James, but this transfers much of the risk onto the buyer, and adds tension to the shopping experience.

    What James needed to do was quantify the value of what he provides, which would diminish the price delta you were inevitably going to discover: decorator services for style and color selection – $200 (this is cheap!), product configuration – $200, babysitting $40 . . . You got quite a bit of pre-sale support! I haven’t listed everything, and the gap has been reduced by $440. What’s the value to you of in-showroom testing? What about delivery turnaround? Delivery time windows? On site set up? Post-sales support in case the table or chair wobbles? All of these, and more, add value for a consumer, and they are often very difficult for the cut-rate retailers to provide. And while many give lip service to transparency, few put caveat emptor on their payment pages. They should.

    But with comparison shopping, I believe there is (or should be) an expected quid pro quo on the buyer’s part. Like you, when I intend to compare prices, I let the vendor know up front. But when a vendor has been particularly supportive, I think it incumbent on me to help him or her preserve the sale. That means providing the opportunity for last refusal. I know well that supporting prospects toward a purchase comes at a cost – and one that I expect to pay for. If I cannot make a purchase without those services, but do not intend to pay for them, then for me, I cannot ethically engage with that vendor.

    It’s immaterial whether James actually had the latitude to negotiate with his customers but chose to say he didn’t, or whether his employer restricted him in price haggling. He certainly should have invited you to compare, and encouraged you – probably strongly – to hold your last conversation with him before buying.

  2. You hit the nail on the head Lisa.

    People will pay more for exceptional service but how much more? That’s part 1 of the equation — finding out how much of a premium is acceptable.

    How do you encourage the purchase when a competitor is offering the same product at a much lower price because they don’t have the expense of a showroom or salespeople? They are effectively “using James and his employer” as their sales team to answer your questions and narrow down your options to the item you want. That’s part 2 of the equation — finding a way to reduce or eliminate showrooming, which has a huge cost to the businesses who are relying on customer service to make the sale.

    And perhaps the most important factor — customer experience is the “total package” in your journey to buy your furniture. It’s the great service James provided, it’s the great training James’ employer provided, it’s the location of the business (convenient for you to do your research in) and it’s the products and services offered. And, as you pointed out… it’s also the price.

    I don’t pretend to know the answer, however, I believe a shake-up needs to happen.

    What if James and his employer were paid by the manufacturers to be their showroom? What if the manufacturers said “we’ll find the best location, the best service people, the best collaborative sales people” and we’ll pay them as agents to be our representatives? Their role is to pre-sell our products compared to the alternatives.

    Perhaps the answer is the Tesla model — a unique product sold in company owned stores with no other options.

    Perhaps the answer is the Apple model — many distributors all selling at the same price.

    Perhaps the answer is something completely unique.

    The challenge is to find a business model which is profitable while delivering what people expect in terms of overall experience.

    It will be interesting to see how it plays out in retail as well as many other industries where the service like James provided is offered as a way to presell without a commitment to buy from the customer (travel, real estate, consulting are other examples).

    Thoughts?

  3. Your example of retail furniture store commoditization is apt. Price, as a lead competitive value element,has long proven to be a retail sink hole. For every WalMart, there are countless one-trick ponies like Bradlees, Herman’s, Filene’s Basement, Caldor, Jamesway, Ames, Korvette, Circuit City, Payless Cashways, and Rickel that neglected, or forgot how, to create and deliver an emotional and memorable bonding experience for customers.

  4. It’s a problem that I don’t know how to solve, clearly! Ultimately, I received everything I needed and I didn’t end up paying the person who provided much of it.
    There’s an ethical question about my behavior here, but on the other hand James and his employer were willing to provide those services with no guarantee that I would complete the sale with them.

    Thank you Andrew, Carol, and Michael for your insightful discussion!

  5. I think retailers have been getting smarter about dealing with showrooming. In some cases, they are implementing digital tools within the store to help customers and keep them engaged.
    http://customerthink.com/new-touchstore-solution-says-in-your-face-to-showrooming-threat/

    People still like to shop at stores, and they will pay a small premium for the experience. Best Buy, for example, has worked to be more aggressive on pricing and uses the in-store experience (and pickup convenience) as a differentiator.

    But it seems to me that the case for this furniture store is simple too big a gap. Yes, the rep should have done more, but in today’s world most customers won’t pay a big premium for standard products they can get multiple places. I think the lumber example is different, because the “solution” is a more complicated collection of products.

    I know a door/window installer that deals with this issue by charging separately for the detailed planning/consulting work required to know what to buy. That seems to me perfectly reasonable.

    One thing I don’t think is ever a good idea is putting a “guilt trip” on consumers. Retailers simple have to have a game plan to identify and deal with pure price shoppers that will never buy, and spend quality sales time with the rest.

    In my business/sales career, I’ve always erred on the side of trying to be helpful, even when the prospect was clearly kicking tires and price shopping. Most of these deals went elsewhere, but some returned later with a better appreciation of what the full value was all about.

  6. This is a great example that the best service can still lose out to price. That doesn’t mean that price wins every time. As pointed out in the article, competitive pricing doesn’t mean lowest pricing. I believe that great service may not make price irrelevant, yet it can make price less relevant.

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