What Retailers Can Learn From Grudge Purchases

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Most retail salespeople – even commissioned ones - can make a sale by showing a cheap product first.

Here’s how it works…

A customer comes in and tells the salesperson what they want. The salesperson shows them what is on sale, tells the customer how much they will save, and rings up the purchase.

The salesman feels he did a good job. It’s less hassle, less time and requires no rapport building, no negotiation, and little salesmanship ... and little product knowledge.

But if those retail salespeople followed a consistent sales process, they could sell more expensive products just as easily.

Case in point, has your car had a case of the shimmy shakes? If you weren't driving on bad roads, you had no choice but to go to the shop and have it checked out.

What if you found out you needed new tires? Then you are in a world you probably don’t know much about. You want to trust the person telling you what it will take to fix it.

Humans innately, when they are in over their heads, are willing to trust others to help them as if they were their best buddies, especially if it is a grudge purchase like tires – one you have to buy, but get little thrill from.

Recently I was talking with a tire representative who told me 70% of tire consumers take the recommendation of the retail salesperson.

Let that sink in…

70% take the recommendation of the salesperson.

He went on to tell me that the challenge for tire dealers is that too often salespeople start immediately with telling the customer what is on sale or how they can save money by buying one tire that is “just as good” as another.

Like other retailers, many tire stores are hiring guys who can’t imagine themselves not buying the less expensive products.

I wondered if that’s why, in most tire shops, the salesperson immediately starts talking about low price instead of suggesting the more expensive, better tire.

“Yes,” the representative said. “50% of the time your customer is very price-conscious, but employees still have to have the discipline for going through a sales process.”

A frequent refrain about what’s wrong with retail right now is that “customers know more facts about the product than the salesperson.”

That misses the point.

Just adding more iPads with facts and figures still leaves the bigger issue - the salesperson should have more wisdom about what to select.

If you have a 2001 Pathfinder with 150,000 miles on it, you don’t have to put premium tires on it as it won’t make a difference in the ride. A value tire, in this case would be best because it fits the vehicle and its age.

However, if you have a more modern car with fewer miles, the manufacturer will have a specific brand of tires matched to their performance specs. Any tire salesperson, who says they can put you in a less expensive tire to save you money, risks a dramatic difference in terms of performance.

“We are losing the premium market because it’s just a price to them; they haven’t driven the car when it was new or after cheaper tires are installed to know the difference.”

There are a lot of products that are grudge purchases: a roof, a mattress, a clothes washer – you get the idea.

Retail salespeople have a magical power.

Like Aladdin, they can help their customers buy what’s best, not just what’s cheap. Instead, they are using their powers 70% of the time to dumb-down the sale.

And that’s what’s happening in many retailers’ shops; it’s just a price.

The problem is that if a guy comes in to a hardware store looking to replace a hose for his garden for example, he’ll be shown to the outdoor section. There he’ll be confronted with a variety of choices – everything from the $7 special to the $50 deluxe job. The customer thinks, “It’s just for water, I’ll get something cheap.” When he asks the employee, he shrugs and says, I’d go for the cheaper one too.” And, taking our tire salesperson recommendation rate, 70% of the time, the customer will take that.

Now if that hardware store had a trained salesperson who built rapport and shared their wisdom, that customer might have found out that the most expensive hose was much lighter weight, so if he was watering a large lawn, it would be easier to lug over his shoulders to move around.

But that rarely happens, so the $50 hose sits until it’s put on clearance as the manager tells the sales rep, “It’s too expensive for our store.”

No, it’s not too expensive for your store, its too expensive for your employees who only sell by price.

My points to you.

The better suit that fits off the rack, the better hotel room with the view, the better window covering with remote control doesn’t inherently sell.

No one says, “Price is no object. Charge me what you will.”

But they do all want the best product for their needs and wants.

Here’s what to do

If you are serious about providing an exceptional experience for your customers and you are indeed a tire dealer, demonstrate the differences in tire quality to your crew. Ask to take either their own car or a friend’s car that needs tires for a drive with you. Point out the road noise, the roll and comfort. Fit the car with a value tire, take it for the same drive. Then put the premium tires on. If the employee can’t tell you the difference, help them use words to describe it to you. That's how they gain wisdom.

If you are a coffeehouse, compare a store-bought brand, a competitor like Starbucks and your own using the same brewing techniques. Again, help them describe how each coffee tastes.

If you sell cashmere sweaters, order a couple cheaper or even more expensive versions online and have your crew try them on during a meeting. Again, get them to notice how the hand of the material feels, the shape of the garment when worn once, you get the idea.

In Sum

It’s a growing challenge in retail that everything is perceived as the same.

It’s a growing challenge that employees, especially Millennials, will sell based on price.

Unless you help your employees understand that just because something is the same product – whether tires or timepieces – your crew has to be able to understand what the differences are – not just the prices. That takes wisdom.

Especially on a grudge purchase where the customer will already be wary to not overpay for something that doesn’t deliver a thrill from purchasing.

Your employees are Aladdins, train them to use their magic power to sell the best, not the cheap.