Level with Shoppers about Competitor Upsides

For at least some retailers, the miracle in the 1947 Christmas-themed film classic “Miracle on 34th Street” is that the department store Santa in the story recommends to a shopper she purchase her merchandise at a competing store, yet Santa still keeps his job. However, studies at Georgetown University and City University of New York conclude that such a practice can be good business, and therefore is commonplace, not a miracle at all for astute retailers.
     An example given by the researchers is set at a local art gallery. The shopper is interested in a particular painting, but isn’t sure if the price is right, so decides to delay the purchase. Here’s my version of what the retailer could say to change the shopper’s mind and make the sale: “You’ll notice that this painting is unframed. We sell frames in our store, but I suggest you consider looking for a frame at the frame warehouse two blocks from here. We carry picture frames as a convenience for our customers, but the frame warehouse specializes, so they have a broader selection and better prices.”
     The shopper who is unsure of what the painting should cost is reassured that the asking price is proper as the salesperson gives evidence of wanting to save money for the shopper. Circumstances of this sort occur if the item you’re selling is highly distinctive or the consumer purchases items in that category only infrequently. Recommending a competitor for an adjacent—a companion—product or service builds trust when the competitor offers advantages such as a better price or a more comprehensive selection. The results include increased probabilities of making the sale right then and of the customer returning in the future.
     In the experimental studies and in reports from salespeople, competitor referrals succeeded across a broad range of items, such as selling a sink while referring for the disposer, selling shoes while referring for the socks, and selling a first mortgage loan while referring for a construction loan.
     Another force for profitability in all this is that each time you refer to a competitor, they become more likely to, in turn, refer their shoppers to you. Just be sure to let the others know what you’re doing, such as by asking your customer to say who sent them.
     The mutual exchange is reminiscent of Christmas, so ties us back nicely to “Miracle on 34th Street.”

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

Click below for more: 
Transfer Technology to Retailing Adjacencies
Shape Shoppers with Their Negativity Bias
Bundle Expensive & Cheap Synergistically
Hobnob with Your Neighborhood Retailers