Retailers Have Long Feared Showroomers. Maybe They Should Love Them Instead

When San Francisco-based management consultant Vivian Zeldis walks into a clothing store, she expects it to mirror the websites and apps where she now does most of her shopping. "I kind of want stores that look very clean and yet at the same time have all the sizes and all of the colors," she says. “And I want to check out fast. I don't want long lines. If there's long lines, I leave."

For years, traditional retailers have worried customers like Zeldis would hurt their bottom lines. The main concern is that consumers will go to physical stores to look around and evaluate products, then buy online from other sources, often at a discount – a practice called “showrooming.”

The truth is much more nuanced. Based on our research at the Medallia Institute, shoppers who use more than one channel are demanding – they may well abandon a physical store for a web site, and they may well abandon a retailer altogether if shopping across channels is fraught with friction and frustration. But if retailers can win these customers over to their brands, they become extremely valuable.

Using data derived from more than 46,000 customers of a major US retailer operating hundreds of stores, we looked at the buying behavior of more than 33,000 omnichannel shoppers. We found that omnichannel shoppers actually spent 4 percent more, on average, during in-store shopping trips and 10 percent more online than customers who only used a single channel.

The average omnichannel customer also spent more in the future: 17 percent more, on average, with the retailer over the next six months, and purchased 15 percent more items, as compared to those who used just one channel.  They were also more loyal, transacting 33% more during that same time period than single-channel customers.

The key to reaping those rewards, however, is making sure these valuable customers stay with your brand across your store, app and web site, and don’t drift to another competitor offering a better shopping experience.

Our research and interviews suggest the best way to do that is to invest in two ideas:

• Make your customer experience seamless – with consistent branding, design and prices across all your channels, and;
• Make your customer experience frictionless, which means the customer needs to be able to switch between channels without having to start over. Zeldis, for instance, wants apps that automatically update her shopping basket on their web sites. And “if I don't like an app, I delete it fast," she says.

When customers can shop whenever and however they like—moving easily from one experience to the next—they get a shopping experience that’s tailored to their specific needs and personalized to their unique situations. That personalization creates loyal customers who spend a lot at the brands they love.

Do companies see a payoff when they create a better omnichannel experience for their customers? They sure do – a big one. When we zeroed in to quantify the incremental value of a satisfied omnichannel shopper, we found that those happy enough to recommend the retailer spent 22 percent more over the next six months, on average, compared to omnichannel shoppers who wouldn’t recommend the retailer. At the extremes, omnichannel customers with the very best experiences spent, on average, 40 percent more than those with the very worst.

Some steps retailers can take to make omnichannel shoppers happy are easy. For instance, keeping your prices and inventory consistent across platforms is a no-brainer, though some retailers seem to think their customers won’t notice (newsflash: they do).

Some steps are more difficult, especially if you have to retrofit your technology to get your channels to work seamlessly together. But our research suggests you should build processes and technology to track and understand customers whether they’re shopping in the store, on a web site or through an app.

Zeldis and shoppers like her set the bar high. But as more customers use multiple channels to research, find, and buy their goods and services, integrating different channels may be the single most important action you can take to personalize your customers’ experiences. When done right, integration ensures the ideal shopping experience for each customer, tailored precisely to his or her unique needs and context at any given time.

Beth Benjamin leads the CX strategy research at Medallia, a global provider of customer experience management software. She applies organizational science to real-world problems, helping companies adapt to the challenges of growth and market change.

Emma Sopadjieva is a research analytics manager at Medallia. She leads research projects focused on customer-centric culture, employee engagement, and the value of customer experience.