Follow On TwitterDo Hard Economic Times Justify Sleazy Sales Tactics?
BizSugar
Lately, I’ve seen a ton of bad press about various retailers using sleazy sales tactics to boost profits. Because of the recession, businesses are under so much pressure to make a profit that they are resorting to deception and underhanded methods to make a sale. For example, I was completely shocked last week when I read that a very large and well known electronics retailer was accused of purposely denying price match requests and refusing to sell computers without service contracts.
The other day my wife and I were shopping for cell phones only to be bombarded by hidden fees tacked on at the register. While the display price for the phone we wanted to purchase was extremely attractive, it apparently didn’t include a bunch of extra costs that really pissed me off.
Photo By Bonked Producer
What annoyed me wasn’t the money per se, but how the fees were conveniently introduced after we had already filled out a few pages of paperwork. Even though we still bought the phones, we left the store with a bitter taste in our mouths.
As if my shopping experiences couldn’t get any worse, I was recently trying to buy a new digital SLR camera body online when the store I called tried to tack on additional costs for the battery and AC adapter. All of those accessories should have been already been included in the cost of the package yet this retailer tried to deceive me and sell me them separately.
Is this what the world of retail is coming to? Are retailers so strapped for cash that they have to resort to these tactics? I’m a firm believer that while these methods of extracting additional money may make more money in the near term, they can have devastating effects to a company’s reputation in the long run. Instead of trying to extract every last cent from customers, why not try these tactics instead?
Be Upfront About Prices And Add Value
Instead of adding little fees here and there to your products, why not just charge what you want to charge and be done with it? If your prices are higher than your competitors who are resorting to lowball tactics, why not focus on adding additional services or value adds that can justify your prices?
A perfect example of a store that adds value is “The Runners High”, a running shoe store located close to where I live. Now this store never has sales. They flat out charge full price for all of their shoes and never offer discounts for anything. So how do they stay in business?
For one thing, the store’s staff is composed solely of former collegiate and semi-professional runners. They take the extra time to analyze your stride and recommend the perfect running shoes for your feet.
I remember the first time I walked into the store, the sales rep spent over a half hour analyzing the arches of my feet and watching me run around the store before recommending me a pair of shoes. Anyone who is willing to spend so much time analyzing my smelly feet deserves a sale in my opinion:)
Anyways, the point is that these guys provide value and expertise to justify their prices. Sure, I could have taken their recommendation and saved about 20 bucks by purchasing the shoes online but I didn’t. I was perfectly satisfied paying the extra premium for taking advantage of their expertise.
Contrast this to my cell phone buying experience where I got blindsided and pissed off with my purchase. I wouldn’t have minded the extra fees if they offered even a little something in return. Heck, just tack on this fee into the cost of the phone or offer me a free month of service instead. The cell phone store extracted an extra 18 dollars from me at the expense of my happiness.
Honor Your Store Policies
Most stores offer low price guarantees and insurance plans on purchases because they know that you are highly unlikely to take advantage of them. The worst part is that some stores will try everything that they can in order to avoid paying out those that do. If you’re not serious about a store policy, don’t even bother implementing it.
Recently, a friend of mine tried to get a price match on a hard drive that he purchased from a well known electronics retailer. Less than a week later, he saw the same exact hard drive offered for less elsewhere so he brought his receipt back to the store for a price match.
But the store would not honor the lower price and the reason they gave was a bunch of bull. Basically, my buddy was denied the price match because clearance sale items at competing stores are not eligible. Does that sound reasonable to you? The amount that the store saved by not performing the price match was about 15 dollars. Was 15 bucks worth pissing off a loyal customer?
Make Your Customers Leave Your Store Happy
How about focusing on making all of your customers leave your store happy and satisfied for a change? I recently had a conversation with one of my friends in the retail electronics industry asking them why they resort to hidden fees and other sneaky sales tactics.
His reply? Because it works. They have detailed software programs that analyze pricing structures and model customer satisfaction based on store statistics. The computers are telling them that this strategy will bring in more money so that is why they continue to do it.
Personally, I find it hard to believe that these computers can possibly model the intricacies of human interaction and loyalty. Can a computer model the likelihood that someone is going to recommend your store to a friend? Does the program account for the effects of negative comments made about your customer service?
The reality is that human nature lends us to focus on short term results. Computer programs can tell us how we can make more money given the status quo but can’t possibly predict the long term effects. Stores should stick to their guns and focus on providing excellent customer support at the expense of making the short term buck.
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You know, you have to watch your items ringing up at the cash register, too. A lot of times when merchandise is “on sale” you get up to the cash register only to find it rings up for the regular price. If you don’t keep a Hawk’s eye on those prices, you’ll get home and realize how much more you paid when you look at your receipt–if you even look at it. Not everyone takes the time to watch closely because life is busy and hectic. I think businesses take advantage of that at the checkout line.
So sorry for your experiences. It’s a shame they tacked on those hidden phone charges, and asking you to pay extra for a battery and AC adapter?! That’s crazy–and sad. I was taught that the customer is always right–even if they really aren’t, they are because without them you don’t have a job.
Great post, Steve! Gave this one a stumble.
*smiles*
Michele
@Michele,
Come to think of it, that has happened to me quite a bit lately especially at the grocery store. But for some reason, I don’t get as annoyed. Thanks for the stumble!
@Jace
I think that they can get away with it because they are retail giants with huge marketing budgets. What you say about social conditioning is so very true. I’m more inclined to believe that I’m getting a better warranty and/or support from an established company. While it takes extra effort to seek out the mom and pop stores, in general it’s worth it if you can find a hidden gem.
@Stephen
The tactics apparently do work because the numbers and computers say so. I’m just waiting for all of these sleazy methods to backfire one day. All it takes is a new worthy competitor and the customers will flee
I think retailers continue to condone shady tactics without fear of losing loyal customers because their tactics just have to suck less or the same as the competition. It’s rare to have a business like the one you mentioned go above and beyond so instead of competing at customer service, they just aim for just above the bottom of the barrel and most people don’t have much choice. I can get shafted at [insert big box retailer #1] or I can get shafted at [insert big box retailer #2]. Unless I want to drive out of my way to go to an independently owned shop and pay more (which like you said, I don’t mind most of the time), I have to choose whether I want high prices and add-ons or pushy downright rude salespeople. We’re so conditioned that this is the status quo, a lot of customers don’t realize they have that choice. Most think that a product from [big box retailer] has to be better/more supported than getting the same thing from Joe’s Electronics down the street right?
I’ve also had similar experiences. Since they are so widespread, I have to think they work in the short-term. Sure some of us may pay more to get more quality service, but most people must not or the market would weed many of these businesses out. Regardless I think the key to long term survival as a brand requires that you develop a band of loyal customers who are willing to pay for quality. At least I hope so.
This was a great article and very timely.
Nice post! The “quick buck” artists always make money, but long-term loyalty from your customers is earned through integrity and service. Good message.
I’m in retail and I’m fed up with the tactics being used by customers to get discounts. We have a small store and we do our mark ups by formula. I don’t mind customers asking for discounts but we just can’t – we don’t build artificial markups into our stock in order to APPEAR to give a discount at point-of-sale. But this is rarely if ever accepted by the customer. Favourite tricks arre wasting 1 hour of your time before they ask for the discount and lately, abuse. Yes, abuse. This recession is bringing out the worst in people and frankly I’m thinking of getting out of retail altogether
The issue of money has a way of revealing the true colors of individuals and businesses. These sleazy practices may always work with some, but consumer intelligence and awareness are rising, while tolerance for such tactics is shrinking. Eventually, they will reap what they sow.
It has become a “buyer Beware” world. So not sign on the dotted line before you read EVERY word, however long it takes. I recently purchased pnones from verison and the salesman made not mention of the astronomical fees charged. When all was said and done he printed out a mile long receipt which listed all the fees, I am still in a state of shock …. and now am stuck for 2 years.