Saturday, October 30, 2010

Outsourcing Selling

An interesting sight took me back to the desktop years of my life. It was a kiosk in front of a computer shop where you could mix and match components of your choice for an assembled computer. It instantly gave you a consolidated price without any involvement by the retail outlet manager. The manager had outsourced some of his job to technology.

For us buying an assembled desktop computer used to be a more interesting experience. And since all the friends bought computers roughly at the same time, trips to the computer shops had become quite common. The process was time-consuming and most of the times finding limits to your decision-making. Even if you clearly had in mind what configuration you want, still the shopkeeper would come up with offers which resulted in greed for more capacity splitting the mind.

Typically, he used to take out a big pad with names of most of the parts that went into making a computer written on it. Then you would discuss each component. He would tell you the price; you would oscillate, trying to balance the price and capacity with offers and counter offers.

The challenge for the shopkeeper was first that of the complexity of multiple customers with highly customized demand. Secondly, he was sitting and spending time with only a 'potential' customer. The buyer would take similar quotes from multiple shops before making the final decision. Afterall it is in our buying culture, specially of expensive items.

But a seller was more successful if he was more involved. One who educated the customer and helped resolve the conflicts. Giving the pros and cons of the components and many times not hesitating to tell that a certain part was expensive and not necessary for the needs of say a college goer. There were other sellers too, who just mechanically jotted down what you demanded and told you the total cost. They thought of you only as potential customer who is here to get one of the quotes among many from across the town. 'Why spend time on him? We will focus more when he comes to actually buy'. But the buying was done from the  person who had 'helped' take us some decisions.

A kiosk is definitely less hassle for the outlet, specially considering that a consumer today is far more knowledgable and knows what he wants. But it is definitely an opportunity lost for up-selling, cross selling and most importantly making a relationship which can help in completing the sale. A recent article in McKinsey says:
Many retailers assume that customers walk into stores for purely transactional purposes: they know what they want and just need to buy it. Yet McKinsey research indicates that as many as 40 percent of customers remain open to persuasion once they enter a store, despite undertaking extensive product research, reading online reviews, and comparing prices on their own.

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