February 07 - 09, 2021
JW Marriott Marquis Miami
Here's How Best Buy Is Changing to a Customer Relationship-Driven Model
Brought to you by WBR Insights
Even big brands can find themselves in dire straits. When these situations arise, they are faced with one of two choices - adapt or die.
This is exactly the position Best Buy found itself in a few years ago. The company lost its CEO, employee engagement was in the sewer, and the company was hemorrhaging money at an alarming rate. Things were looking pretty grim for the famous electronics retailer.
However, just a few short years later and Best Buy is not only surviving but thriving. The brand's final quarter financials for fiscal 2019 saw its stock surge a massive 14 percent with a revenue of $14.8 billion. Best Buy has also offered a solid outlook for fiscal 2020.
How, then, did Best Buy weather the storm and beat the odds to emerge as a serious retail contender once again?
When it came to turning its fortunes around, Best Buy knew cheap marketing gimmicks or promotions weren't going to cut it. A complete change of strategy was required and had to begin with how it modeled itself as a business.
"Seven years ago, people thought we were going to die - we were not in good shape," said outgoing Best Buy Executive Chairman, Hubert Joly. "The first phase of the turnaround plan, dubbed 'Renew Blue' and made public in 2012, was about building a comprehensive strategy to address key stakeholders, starting with customers and extending through to employees, partners, shareholders and communities."
This turnaround began with a shift in corporate culture from being a retail-led business to one motivated and driven by building genuine relationships with customers. Price is still important in 2019, but consumers are looking to spend money with brands that can offer them meaningful connections and meet with them where they are.
Having successfully "renewed Blue", the next step was to start building the new features which would allow Best Buy to build the customer relationships it desired.
"We said we're not in the business of selling products or doing transactions, we have our purpose, which is to enrich lives with the help of technology," Joly continued. "We're making big changes in people lives by addressing key needs - from entertainment to health and security. This sense of purpose is mobilizing everyone and we're innovating in support of that. We don't see ourselves as a bricks-and-mortar retailer. We are company obsessed about the customer and in serving them in a way that truly solves their unique problems."
Two examples of how Best Buy is offering new services to its retail customers can be found in its Teen Tech Centers and Home Advisor Program.
With the Teen Tech Centers, Best Buy wanted to set aside a portion of its infrastructure to help teenagers from underserved and impoverished backgrounds prepare and gain the skills necessary for the technology-based careers of the modern world. Research shows that, by 2020, there will be around 1.4 million jobs which will require candidates to possess tech skills. However, only approximately 400,000 people will be trained for them.
Best Buy's Teen Tech Centers will help young people who may not otherwise have access to this kind of training gain the skills they need to compete in this new landscape, while simultaneously bringing them through its doors and strengthening itself as a serious provider of technology-based products and services.
"By 2020, more than 80% of all jobs will require tech skills. Best Buy Teen Tech Centers help teens prepare for these careers through hands-on experience with tech, such as digital media, robotics, virtual reality and 3D printing," said Best Buy. "We're helping cultivate the next generation of inventors, engineers and entrepreneurs. And we're just getting started."
The Home Advisor program is an extension of Best Buy's highly popular instore Geek Squad service. Whereas the Geek Squad required customers to attend a store themselves to get advice on the Best Buy range of technology products, the Home Advisor Program sends them to customers' own residences to help them decide if and what they want to purchase.
"Advisors are encouraged to establish long-time relationships with customers, rather than chase sales," said Jolly. "In fact, In-Home Advisors don't need to track weekly metrics and are paid an annual salary instead of an hourly wage. House calls are free, can last up to 90 minutes, and advisors are told to be comfortable not closing a deal by day's end."
By providing unique and forward-thinking services, Best Buy shows brands can always turn their fortunes around and it's never too late to take a new direction. By turning its focus to building relationships rather than chasing sales, Best Buy has managed to beat the odds and remain a competitive force in physical retail.
You can hear Best Buy's Head of Strategic Experience Design, Matthew Doty, speak at Future Stores Miami 2020, taking place in February at the Miami Marriott Biscayne Bay, FL.
Download the agenda today for more information and insights.