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Don't Understand Your Customers? Charge Them!

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Brian Cantor
04/08/2013

"Um, I’m pretty sure that was an Onion article."

That was the reaction from a colleague when I referenced a Gawker story about an Australian retailer charging a $5 fee to those customers who are "just looking." And, to his credit, what other conclusion could a rational thinker reach? Clearly there was no way a store would charge shoppers for the mere privilege of walking around!

But legitimate it was, so much so that the owner of Celiac Supplies, the gluten-free shop in question, recently defended the policy in an interview with the Brisbane Times

Regarding the policy, which explains that "this store will be charging a $5 per-person fee for ‘just looking’," owner Georgina (no surname provided) declares, "I have to wake people up, everything in life is not free.

"I'm not a charity, and I'm not doing community service."

Though it was her store’s iteration of the policy that made headlines, Georgina claims she is not the first to implement it. She does, nonetheless, stand by it as a means of combatting a growing retail trend.

According to the posted sign, "There has been a high volume of people who use this store as a reference and then purchase goods elsewhere."

That trend, dubbed "showrooming," particularly involves the practice of evaluating products in a brick-and-mortar environment and then purchasing them from lower-cost online retailers. Mobile shopping applications have only made the process easier, and it is certainly within reason that online customers are taking advantage of Celiac Supplies’ "showroom."

Winning on price, losing on the experience

Or are they? Since the policy contends, "These people are unaware our prices are almost the same as the other stores plus we have products that are simply not available anywhere else."

And there lies the confusion. If Celiac Supplies truly prices competitively—and has exclusive merchandise—why would customers be taking their business elsewhere? The "showrooming" scenario obviously exists at stores like Best Buy, which charge significantly more than online retailers for certain items, but if such a pricing disparity did not exist, why would customers willingly trade away the convenience, transparency and instant gratification benefits of being able to buy the products from the brick-and-mortar location?

Indeed, Georgina’s explanation goes beyond the competitive pricing concern. Rather than focusing solely on losing business to competitors, Georgina is also worried about the cost of time she is devoting to serving customers who ultimately do not buy.

"I don't want to take the job of a dietician, I don't want to take the job of a naturopath or a nutritionist, but people are expecting freebies all the time and when you say 'hey, you're costing me time and effort', they don't like the idea of paying," says Georgina.

Essentially, her stance is that if you ask for her input or advice on certain products, you better be prepared to buy something! And if not, you should at least pay her for her time, because her answers are products in and of themselves!

In her world, if you want the salesman to open his or her mouth about the product, your wallet better already be open! Because, apparently, the prospective customer’s attention is worth nothing to her.

So forget about researching cars at a dealership or browsing homes in a new community. The advice associated with the sales process is only free if you contractually commit to buying something.

And with that, Georgina reveals a glaring disconnect between her business philosophy and effective customer management strategy. Where most customer-centric professionals see an opportunity to gain the customer insights and build the customer relationships needed to create meaningful revenue down the line, Georgina sees the pre-sales experience as a nuisance. She is not there to serve customers—she is there to sell to them.

Report after report confirms that customers, especially when factors like price and quality are not in play, are almost certain to gravitate to those merchants who win their trust and loyalty with a more valuable customer experience. Wanting to buy from a specific merchant contributes immensely to the decision-making process.

By establishing herself as a trustworthy advisor and customer-centric salesperson, Georgina would have an unparalleled opportunity to connect with customers, push them towards certain products and drive revenue. As a bonus, she would have an unobstructed window into her audience and thus a wealth of insights for improving her business.

By not taking that opportunity, Georgina is not only missing those opportunities but actively signaling to customers that she does not want to be their trusted advisor. At Celiac Supplies, providing a quality experience is only worthwhile if it results in an immediate sale.

Ignoring customer value

Further baffling about the Celiac Supplies situation is the fact that its owner actively trumpets the fact that certain demographics are exempt from the browsing fee. "The regulars don't get charged, handicaps don't get charged, pensioners don't get charged, kids don't get charged."

In a late-season episode of "Curb Your Enthusiasm," Larry David confronts a restaurateur about only receiving two napkins with his messy meal. The restaurateur attributes the napkin count to policy, and he notes that a handicapped customer recently made due with the two napkins.

"Do they eat differently than the rest of us? What’s the handicapped reference?"

Just like that bizarre napkin policy, Celiac’s exemption list has no obvious root in reality. It seems to be nothing more than the product of Georgina’s own whim.

Beyond the PR benefit, there is little logic or customer-centricity to be found in the exclusionary policy. Do kids, "pensioners" or "handicap" necessarily carry a greater customer lifetime value than those in other demographics? Would regular customers, who presumably already know about the products and trust Celiac Supplies, more greatly benefit from a quality experience than new customers, who are still rendering a verdict on the establishment?

Perhaps there is a hidden method to her madness, but it seems that Celiac Supplies’ owner is allowing a punitive mindset—some customers shopped, asked for advice but did not buy—to cloud her judgment about the most customer-centric and revenue-centric policies.

Why not build a better experience?

Absent from her rants about freeloading customers and her dismissals of Facebook "trolls" who are sharing unwanted opinions about her business is a frank discussion of how she can improve the experience to better satisfy customers. If she is routinely providing a quality, information-rich customer experience to shoppers, and they are routinely refusing to buy, something is obviously going wrong. The implication that all of the customers are wasting her time for the sake of wasting her time seems overly short-sighted and dismissive.

Thousands of businesses struggle to get a customer’s attention. Celiac Supplies apparently does not face that challenge.

But in the ultimate epitome of looking a gift horse in the mouth, Celiac Supplies is deeming that opportunity worthless. In many cases, it would rather an inquisitive customer stand outside its walls than provide its staff with the opportunity to build a relationship.

Most online critics vehemently reject Celiac Supplies’ strategy, but there are a few who have dubbed it an economic reality in the age of online shopping. If businesses cannot compete on price, who can blame them for seeking alternative means of revenue?

The problem is that the "alternative means" should involve creating customer-centric value at the point of contact. Rather than contributing to the value of the experience—and thus making customers excited about buying—Celiac Supplies is instead focusing on penalizing those who leave empty-handed.

Even if it works in isolated instances, is this strategy going to build lucrative, long-term customer relationships?

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