TECHTOWN | Erik Sherman

How to Counter-attack Those Big Box Web Deals

Amazon has an app to lure customers out of your stores. EBay's offering incentives to shop online. It's time to fight back -- with a counterintuitive strategy.

How to counter-attack those big box web deals

Flickr/TORLEY

 

Last weekend, Amazon paid shoppers to scan prices in brick-and-mortar stores with the company’s mobile app and then buy online with a discount of up to $5. This weekend brings the flipside: eBay provides a $10 store voucher for Toys “R” Us, Dick’s Sporting Goods, or Aeropostale if consumers spend $100 online using PayPal at the same company’s website.

It’s the battle of the consumer spiffs. Parries and thrusts are all about bare-knuckled market share hunting. Amazon wants to lure people away from stores because there’s a limit to its potential growth otherwise. At the same time, eBay tries to blend online and real world experiences, getting big chains to use the retail platform it bought earlier this year for $2.4 billion. Small retailers may feel like their heads are getting whipped back and forth. Just remember that both of the giants have missed a lesson from a famous Beatles’ song: Can’t Buy Me Love.

A happy core clientele is the basis of a good business. You have already invested in getting them into your door (physical or virtual). The longer they do business with you, the more profitable they are. Plus, there’s a pleasure in seeing the regulars. These are the people you want to attract as customers.

Not all customers are good. There is another type: needy, opportunistic, always looking for another discount or special or promotion before they’ll buy again. Stop the flow of goodies even momentarily and they prowl for the next bargain. Such people are more expensive to do business with because you must acquire them each time, including the effort and cost of telling them about the new opportunity to get more for less. Margins are always low, as a result. You might even find all told that such people cost more than they bring in.

One of the smartest commercial moves you can make is to get such customers to do business with your competitors, no matter what size. That sends your potential headaches and red ink to them while you focus your efforts on retaining the good customers. The customers that Amazon or eBay and its clients pick up are likely only there for the bargain. Tomorrow, they’ll see who can charge less.

When the big boys use such tactics, take an aggressive but counterintuitive stand. Explicitly welcome the competition. Put up signs telling your customers about the promotion. Become an expert in using these price-matching apps and offer to help customers to use them correctly. That helps put them into a different psychological state where you can communicate and possibly sell to those who are open to a relationship.

Explain that if they’re in such a tight economic squeeze, you’re happy to take a little off the price because, after all, you’re neighbors. Ask them, off-hand, how much it costs them in time and postage to return an item if there’s a problem. Chances are, you’ll nail the sale (you’ve got instant gratification on your side) so you’re not out the business. In effect, the big company has done the customer acquisition for you. If they stick with the big competitors, you’re better off shipping the bargain fiend off. Plan ahead, and you might even get local media attention for the response.

Remember, when big competitors want to send you lemons, open up a lemonade stand.

Erik Sherman's work has appeared in such publications as the Wall Street Journal, New York Times Magazine, and Fortune. He is a blogger for CBS MoneyWatch and InsideInvestorRelations.com. @ErikSherman