On Black Friday morning I wasn’t feeling well, so cancelled my plans for the rest of the day, and went back to bed. When I turned on the TV, nothing happened. Sick as I was, I needed a working television. Somehow, I got myself together and walked over to Best Buy. To buy a new TV. On Black Friday in Manhattan. What was I thinking?
It was midday, and the store was crowded with shoppers clutching their circulars, competing for what was left of the doorbusters. There were lines everywhere. I was not looking for a doorbuster, just a basic television at a reasonable price, which I knew I could get at Best Buy. I’d looked online before leaving home just to get a sense of how much this outing would cost. I got to the store, commandeered a sales person, asked a couple of questions, chose a television that seemed to be the right size and price and told the sales person I needed to get out of the store quickly. The sales person escorted me to a counter, the TV boxed and in hand, and told me I’d be the next customer. My transaction completed, I was in and out of the store in ten minutes. Ten minutes.
I’d been to Best Buy many times before, both in store and online, but never really thought much about it. It is a place to buy consumer electronics — a category that is not particularly exciting for me. It is convenient, the assortment is good, and the brand image is OK – neither compelling nor negative. It never occurred to me to think of Best Buy as a store with good customer service. I know from my experience working with retailers that good service can be a distinct competitive advantage. Now I was both intrigued and impressed with Best Buy. How did customer service fit into its strategic mix?
Standard and Poors recently described Best Buy as the “best-of class U.S. consumer electronics retailer based on its digital product focus, knowledgeable sales staff and effective marketing campaigns.” I decided to do some stealth shopping to see how Best Buy was delivering on “knowledgable sales staff” and other parts of the value equation, and talked with dozens of customers and associates about their experience at Best Buy.
My overall impression was good. The sales associates I spoke and shopped with were energetic, fairly knowledgeable, upbeat and helpful. Many of them were relatively new to Best Buy and had been on the floor for three months or less. Several approached me as I was looking around and asked, “Can I help you?” None were disappointed or disconcerted when I said I’d like to think about it. One associate was pleased to be in television/home electronics because it accounted for the most significant percent of the store’s sales. She was not on commission, but her management knew how much she was selling.
One associate who helped me had only been on the floor for three days, but she was smiling and knew the key talking points: “LEDs have a clearer picture than LCDs, it is a newer technology, LEDs are thinner, use less energy, last longer…” “Samsung is the best television made today.” DeIivery options were explained clearly and cheerfully. I could “take it with me, have it delivered free, which would take a few days, or have it delivered immediately for $30.”
Best Buy associates get a week of training. Most work part time. Many are students, and have flexible, school-friendly schedules. During training they are taught category essentials and general customer service tactics. Most did not see themselves on a career path at Best Buy or in retail, but, were positively affiliated with and proud to be working at Best Buy.
One associate in Best Buy Mobile was especially knowledgeable. In addition to her engaging performance about why I should shop Best Buy for a phone vs. Verizon or other mobile retailer — she explained perkily that Best Buy has a better selection, non-commissioned staff, competitive pricing and back up service and protection. She then checked my Verizon contract on the spot to tell me when I was due for a new phone. She explained the difference and some feature benefits between a Droid and an iPhone. She had started in security just a few months before, but her manager “pulled her out” because she had “too much personality not to be on the floor.” In addition to personality, she had sufficient knowledge (which she got in a one week training program in Boston.) Ten minutes with this young woman convinced me that I was better off buying a new mobile phone at Best Buy than I ever would be at Verizon.
Customer service as a competitive advantage in the computer department was more difficult to assess. One shopper told me he buys all of his Apple products at Best Buy because of the convenience and service warranty back up. Two women I spoke to had just purchased a laptop and were waiting 30 minutes for the installation of software. They were happy to wait and preferred Best Buy to online shopping of any kind because they wanted to see, touch and feel the products. For them, Best Buy was a destination. “They have everything.” Yet another loyal Best Buy customer suggested that I shop at the Apple Store but buy at Best Buy. He told me that I’d get better prices, service and protection at Best Buy.
A UPS guy in his neat brown uniforms told me he shopped “by SKU” at Best Buy to search for the best price, then purchased at Amazon, letting UPS deliver it to his house. For him, Best Buy is a mere laboratory to search and research items. Another consumer agreed: “I buy everything at Amazon. It’s cheaper. And, because I always go above the $25 minimum, I have it all shipped free to my sister’s house in New Jersey so I don’t pay sales tax.”
Surprisingly, none of the customers or associates I spoke with mentioned the Geek Squad, Best Buy’s technical service and support department which pre-dates Apple’s Genius Bar. Geek Squad is a store within a store at Best Buy. It’s branding – logo, typeface, associates uniforms, and overall identity is completely separate and distinct from Best Buy. If you see a Geek Squad trademark vehicle on the road you might not recognize it as a part of Best Buy. The Geek Squad website includes the Best Buy logo only at the very bottom of the home page. There was only one tiny promotional offer for the Geek Squad, “Bundle and Save,” in this week’s pre-Christmas Best Buy circular.
Geek Squad agents, who are self-taught and have technical certification, arrive at Best Buy with significant technical knowledge, so no special training is either required or provided by Best Buy. Each one I spoke with seemed confident and competent (“we can fix anything!”) and invited me to bring my computer in for a free diagnosis. Most customers seemed generally trusting and appreciative of the Geek Squad, although one was concerned that they would be overly expensive and might even invade computer privacy. Geek Squad agents assured me that while they might be able to see files in my computer, they are not able to open files. Overall, the Geek Squad did not appear to be a significant factor in either destination or purchase decisions.
Best Buy has stiff competition in price sensitive categories and therefore currently faces distinct challenges. It has had to cut prices just to remain competitive and to draw traffic. It recently adjusted its earnings estimates after third quarter net income fell 29%, missing analyst expectations.
The question remains: in an era of ever increasing price, can superior customer service translate to increased profits at Best Buy? As consumer electronics, mobile phones and computers become increasingly complex, there is a need for a better shopping experience and supporting technical service which can engage consumers at the store level and give them the knowledge they need to select the product that is right for them. Superior customer service is just one part of an overall good shopping experience. And, it is the most difficult part to deliver consistently and across a store network. Morningstar noted recently that “Best Buy provides a shopping experience that mass merchants and online retailers cannot presently match…”
Good customer service is one key to distinction for Best Buy going forward. Whether it can translate to increased profit and value over time is unclear. But, for now, I can say that Best Buy has me convinced. My stealth shopping suggests that Best Buy has a good training model. In this difficult economy, there is an abundant pool of capable people who are willing to work part time, are engaged with technology and anxious to learn. Certainly there will be a significant segment of consumers who need and appreciate service and will form bonds with a store who can deliver it consistently. Will they pay more for it? Likely not too much. And there’s the rub.