One of the biggest threats to any “brick and mortar” retail business these days is the customer known as the “showroomer.”
You know the type, and I’m willing to bet you may have even done this yourself on occasion. A “showroomer” is someone who visits a store, examines the merchandise at great length, asks dozens of questions of the store personnel, spends lots of time playing with the product and getting their grimy fingerprints all over the display models, and then . . . goes home and buys the product online to save money.
“Showrooming” is costing the retail industry millions of dollars, and is forcing many department stores to close their outlets, or convert them into “showrooms” to facilitate online sales of their merchandise. There is even a new retail store chain known as “Hointer” (www.hointer.com), where customers can buy clothing without human intervention of any kind.
One of the saddest commentaries on human nature (at least for a small business writer like me) is that while people genuinely want the extra service, handholding and advice that can only be provided by human beings in physical, “real world” stores, they don’t want to pay extra money for that customized service. The easy availability of discounted merchandise online (with free shipping and no sales taxes) empowers them to become “showroomers”, and it’s killing traditional retail outlets.
Why? Because it costs retail stores more money to provide that extra service, which they don’t recoup when customers “showroom” their stores and then buy from an online competitor.
Now here’s some news: the “showrooming” phenomenon is no longer limited to the world of retail. It’s happening in service businesses as well.
Like, for example, mine.
I make a fair amount of my annual income by forming corporations and limited liability companies (LLCs) for people forming small businesses. Having a corporation or LLC gives entrepreneurs some protection against liability, and (sometimes) some tax benefits as well.
Up until a few years ago, you had to hire a lawyer or accountant to help you form a corporation or LLC. Not anymore. A bunch of online services (the most popular of which is Legalzoom.com) offer to form your corporation or LLC for you, at a price significantly less than what most attorneys and accountants charge for the same service.
I also make a fair amount of my annual income by drafting and negotiating contracts for small businesses. Up until a few years ago, you had to hire a lawyer or accountant to help you do that. Not anymore. A bunch of online services (the most popular of which include uslegalforms.com and findlaw.com) provide you with all kinds of contract “forms”, with drafting instructions, for a measly few dollars.
Now, these services don’t do the whole job, which is why they are so inexpensive. They also do not provide you with one-on-one advice as to whether you should form a corporation or LLC, or guidance on customizing and negotiating the “boilerplate” form contract (if they were to do this, they would run afoul of state laws prohibiting the “unauthorized practice of law”).
How can a penny-pinching business owner get the advice they need and still get the everyday low prices the Internet offers? Well, a growing number of them are calling up professionals like me, asking a million questions about how to set up their businesses or how to put together their deals, asking me for a fee quote, saying they will “get back to me,” and then forming their company on Legalzoom.com or downloading a contract from Uslegalforms.com once they have the necessary advice. Without paying me a nickel. I am being “showroomed”. And I don’t like it.
So what can lawyers, accountants and other professionals do to stem the tide of “showrooming” other than just sit back and watch while technology renders their core services obsolete?
The answer is simple: start charging your clients for giving advice.
Starting this week, I have put the following language at the bottom of all of my e-mail messages: “Please be advised that there is a minimum $75 charge for advice or information given over the telephone, via e-mail, or by text message. If after receiving any advice from me you choose to retain my services, the $75 will be applied towards my retainer fee. Otherwise, the $75 will be invoiced separately and will be due within 30 days. Any request for advice should be accompanied by your name and mailing address for billing purposes.”
I am also thinking about putting a shorter version of that message on my telephone answering service, but may wait until I actually speak to the client before informing them of my new “minimum service charge”.
Some clients may still “showroom” you, but charging a fee for your advice makes you more competitive with your Internet-based competition, and drives home the point that if you want to do things yourself, “you get what you pay for”.
Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.