Best Buy: 20% Of Customers Are Wrong 1234
Mr Show writes "Ars Technica has an article up discussing Best Buy's strategies to drive off the deal hunters. It's a good follow up to the Slashdot story from back in July, and offers some details on what they're actually trying to do."
Best Buy's Reward Zone now ignores rebates (Score:5, Informative)
business strategy... (Score:1, Informative)
best way to deal with this (Score:5, Informative)
Oh, and when you carry that cash, be extra cool and put the money in an aluminum briefcase that's handcuffed to your wrist.
sorry, should have previewed... (Score:5, Informative)
i worked for best buy for just about a year and quit around the time they were doing this training. instead of just one generalized customer, they've created 5 categories that would best fit their target groups. not all stores have all these categories. some stores may be a Jill or Barry, while others may be more of a Buzz. let me explain.
Barry - usual income is over $100,000 - wants a "my guy" type of environment (similar to having a specific mechanic you go to, they want to be the epicenter where "Barry"s go for high end products, installation, information, etc). - time = money, so having a specialized, well trained place (a Barry specific store) to go to grab everything from install to products will be worth the money. they could care less about spending time to bargain shop. - will pay extra to have product delivered, installed, set-up in house
Jill - "soccer mom" - will want a "shopping friend" that will help her pick out all the products with her (a specific Best Buy employee will literally guide her through the store and shop with her) - a prime target for in-home installations
Buzz - early adoptor - wants the latest and greatest and usually doesn't stop to think about the price - 18-30 age group, college students, disposable income
Ray - wife, and 2 1/2 kids - must consult with wife before buying - tendency to look for bargains
Best Buy for Business - small business owner - will have a specific employee assigned to him/her as a conduit for business transactions - target for Best Buy's Geek Squad (tech department; aside from regular computer problems general customers have, Geek Squad for business users will be more of an "on-call" IT department. small businesses don't need a full-time techie on their pay-roll. so Geek Squad can come in for a "small" fee per hour, or last i heard, Businesses can pre-pay for an alotted amount of time per month)
working for Best Buy gives one a different perspective. as the management says, they must continue growing to avoid Circuit City scenarios, or Walmart/K-Mart power shifts. the main competition they see is Walmart, Dell, Amazon, Ebay, and a fifth that slips my mind. so in order to grow, they're trying ot learn more about their customers. they're catering to specific customer needs of the area. so your local store can be labeled one of the 5 possible categories or a mix of them. employees are trained to identify who best fits what mold so they can pass them off to someone who can better help with your needs. the cynic in me also thinks the best employee to grab every possible penny from the customer, but that's just, argueably, business.
just to give everyone the heads up though about a simple fact. from last i heard from management, if you look at the top ten list of what makes Best Buy profit, #1 is home theatre (big screen TVs, etc). want to know #2-10 ? it's their PRP/PSP (product replacement plan and product service plans). that's the main reason they push customers so hard about them.
also, people sometimes wonder how they measure performance. employees aren't measured by individual performence (and that means non-commision). the deparments must reach given daily monetary amounts and percentages for specific things and that's how management keeps track. they make sure each employee says they are no on comission. what they don't say though is, the sales managers that are hounding each employee about the performance of numbers is given a "bonus" for the sales/rank/etc every month. so in essence, *they* are getting the comission.
that's enough rambling from an ex-employee. hope it gives people a clearer picture. and for those wondering, i was in the computer sales / tech departments.
The Article (Score:0, Informative)
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Minding the Store
Analyzing Customers, Best Buy
Decides Not All Are Welcome
Retailer Aims to Outsmart
Dogged Bargain-Hunters,
And Coddle Big Spenders
Looking for 'Barrys' and 'Jills'
By GARY MCWILLIAMS
Staff Reporter of THE WALL STREET JOURNAL
November 8, 2004; Page A1
Brad Anderson, chief executive officer of Best Buy Co., is embracing a heretical notion for a retailer. He wants to separate the "angels" among his 1.5 million daily customers from the "devils."
Best Buy's angels are customers who boost profits at the consumer-electronics giant by snapping up high-definition televisions, portable electronics, and newly released DVDs without waiting for markdowns or rebates.
The devils are its worst customers. They buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts. They load up on "loss leaders," severely discounted merchandise designed to boost store traffic, then flip the goods at a profit on eBay. They slap down rock-bottom price quotes from Web sites and demand that Best Buy make good on its lowest-price pledge. "They can wreak enormous economic havoc," says Mr. Anderson.
Best Buy estimates that as many as 100 million of its 500 million customer visits each year are undesirable. And the 54-year-old chief executive wants to be rid of these customers.
[Bradbury Anderson]
Mr. Anderson's new approach upends what has long been standard practice for mass merchants. Most chains use their marketing budgets chiefly to maximize customer traffic, in the belief that more visitors will lift revenue and profit. Shunning customers -- unprofitable or not -- is rare and risky.
Mr. Anderson says the new tack is based on a business-school theory that advocates rating customers according to profitability, then dumping the up to 20% that are unprofitable. The financial-services industry has used a variation of that approach for years, lavishing attention on its best customers and penalizing its unprofitable customers with fees for using ATMs or tellers or for obtaining bank records.
Best Buy seems an unlikely candidate for a radical makeover. With $24.5 billion in sales last year, the Richfield, Minn., company is the nation's top seller of consumer electronics. Its big, airy stores and wide inventory have helped it increase market share, even as rivals such as Circuit City Stores Inc. and Sears, Roebuck & Co., have struggled. In the 2004 fiscal year that ended in February, Best Buy reported net income of $570 million, up from $99 million during the year-earlier period marred by an unsuccessful acquisition, but still below the $705 million it earned in fiscal 2002.
But Mr. Anderson spies a hurricane on the horizon. Wal-Mart Stores Inc., the world's largest retailer, and Dell Inc., the largest personal-computer maker, have moved rapidly into high-definition televisions and portable electronics, two of Best Buy's most profitable areas. Today, they rank respectively as the nation's second- and fourth-largest consumer-electronics sellers.
[Best Buy]
Mr. Anderson worries that his two rivals "are larger than us, have a lower [overhead], and are more profitable." In five years, he fears, Best Buy could wind up like Toys 'R' Us Inc., trapped in what consultants call the "unprofitable middle," unable to match Wal-Mart's sheer buying power, while low-cost online sellers like Dell pick off its most affluent customers. Toys 'R' Us recently announced it was considering exiting the toy business.
This year, Best Buy has rolled out its new angel-devil strategy in about 100 of its 670 stores. It is examining sales records and demographic data and sleuthing through computer databases to identify good and bad customers. To lure the high-spenders, it is stocking more merchandise and providing
Re:Not an upsatanding policy (Score:3, Informative)
I know of many people that will never ever shop at "worst buy" again. Mostly because of sheer rudeness and other insanely stupid tactics typical of undertrained and unskilled management.
Best buy had better realize that people have lots of other choices for shopping and they certianly will go elsewhere. Personally, I stopped shopping there because their prices are high compared to online merchants even after factoring in shipping. Considering I recently bought 2 512meg CF cards for $25.00 each online and the cheapest they have on the shelf is $58.00 it was a no-brainer. plus I don't get someone trying to shove an extended warrenty down my throat every 5 minutes.
The Best Buy near here 4 years ago was packed most of the time, now? their parking lot is no where near as populated while their competition has the full parking lots.
They can redeem themselves if they get management that has a brain, or at least wipes their face off after pulling the head out of their butt.
ABC warehouse has friendlier staff and management compared to Best Buy, and they are scumbags.
Re:I love the letter that announced that change (Score:3, Informative)
No Sympathy (Score:4, Informative)
Wow (Score:5, Informative)
- Don't buy their "loss leaders", but stock up on their overpriced stuff.
- People who don't check other companies price, but get attracted by the "Best price policy"
- People who don't return their mail-in rebates.
Why don't you just ask me to give you my money?
On the Canadian side, FutureShop is exactly like that : Best price policy, overpriced stuff... and they "labeled" me a devil, for sure (a seller once "recognized" me : "Yes, I remember you...", first time I meet the guy). When price matching Camera-Canada for a new Canon G5, a seller even told me
-"I can't match that price, maybe remove 50$ off the total but that's it".
-"But your policy is to match the price, and remove 50% of the difference"
-"Yeah but I'll lose money that way!"
-"Well its not MY policy, isn't it?"
They promise you customer heaven, but slowly draggin you in hell. They're the devils, not us, the intelligent customers.
Re:Not an upsatanding policy (Score:3, Informative)
Unfortunately, I suspect they're on the leading edge of the new wave.
Re:Oh really? (Score:2, Informative)
You gotta love our commy government!
Re:Extended Warranties (Score:5, Informative)
And it doesn't "extend the warranty," it goes above and beyond what a manufacturer's warranty will cover. Just simply read the terms of both plans and tell me I'm wrong.
Best Buy shady practices (Score:2, Informative)
And then there's the shady business about offering equipment at price X. When you go to the store, you find out that it's actually price X + $200. You need to fill out an onerous rebate form and then wait a couple months for your "rebate" check. I've never actually received one of these checks even though I've applied for a few. This type of nonsense ought to be illegal.
Bottom line: don't shop at Best Buy. You get better deals on the internet. In terms of brick and mortar stores, I've gotten MUCH better sales service at PC Richard and J&R Music World (in NY).
Cheers,
Umm... I don't think so. Try again. (Score:5, Informative)
Go ahead. Try this. Apply for the rebate (by submitting the UPC symbol) and then return the product. You can't.
Crap detector going off big time.
Re:WSJ has more on this too... (Score:5, Informative)
Not plagiarism so much as piss-poor editing.
Re:Upstanding but treacherous (Score:5, Informative)
http://www.newegg.com/
your surprised by this? (Score:1, Informative)
Re:I love the letter that announced that change (Score:2, Informative)
It's not stupid it's advanced.
Re:Not upstanding? (Score:2, Informative)
Because I didn't feel like driving all the way back across town.
Often, if you take advantage of price matching, the retailer then goes back to his supplier and puts pressure on the supplier to stop supplying the usually-smaller business that is undercutting him.
I won't say which was which but in my example I had visited CompUSA, Circuit City and Best Buy. None of them is going to force any of the others out of business.
I believe there is an ethical problem with taking advantage of price matching.
Low price guarantees are there for a reason. For us to use them.
Don't punish the person competing and thus keeping prices low.
I'm not going to punish myself either. If it's the same item and I don't need any support from the retailer, I'm going to go with the lower price.
LK
BB is local, and where I shop (Score:1, Informative)
I even applied at a BB store once, only to be shuffled from one "manager" to another after I took a piss test. They were (and should have continued to be) excited about me applying at first because I was a (smart?) college student and willing to work hard and learn a lot. Maybe they don't hire smokers, but they sure seemed to have their heads up their asses. They never called me, it was me following up with them, after they were "sure" I would work out. I've seen better organized mobs.
I used to know someone who worked at their corporate office. He knew some about thier accounting, and was surprised that they made money given how poorly managed the business was.
And after finding out just how bad BB's markups are (especially on cables), I rarely shop there any more. (My friend also got the BB employee discount, where you get to buy for cost +5% or something, excluding CDs.). As observed elsewhere, anyone on the sales floor is a moron.
I DO SHOP HERE:
MicroCenter - I was just there yesterday, and this sales guy ASKED ME if I was finding everything. Shocking. And he even gave me advice to go to Home Despot to find wheels to attach to my case, as they didn't realy have what I wanted. Another time, I was grilling this sales guy on their PowerSpec PCs. He knew (or found out) everything I asked. The mobos are FIC, etc.
CompUSA - Haven't been there in a while, but they're OK. Somewhat knowledgable.
Circuit City - They sell Onkyo, which happens to be my (current) brand of stereo equipment. I may move up to Rotel, which may cause me never to go to CC again.
Online - Pricewatch, fatwallet, amazon
Re:Upstanding but treacherous (Score:4, Informative)
As for online stores, I second the vote for newegg. They consistently have among the best prices of any reputable online reseller, and their service is always top notch.
Re:Best Buy is not that evil... (Score:3, Informative)
Essentially, BBY views these people as devils because they ignore everything in the "low price guarantee" other than the words "low price guarantee." If they're anything like people I've run into while working retail, the "slapping down" indicates that they're prepared to argue about all of the fine print, which does indeed make them a "devil."
Re:Upstanding but treacherous (Score:1, Informative)
Best Buy doesn't have an inkling of care for its customers. I used to work there as a PC tech and saw nothing but schemes incorporated to confuse and frustrate customers.
That 20%? That's the percentage of customers that go into a Best Buy with an educated opinion. People that won't buy the offered service plan on every item they buy. People that know what they want, know what they need, and where to draw the line.
They want people that can be sold rocket rides to the moon. They want to be able to tell the customer not only what they need but also what they want.
Since my employ there, I refuse to purchase anything at Best Buy.
Thank goodness for NewEgg.
Re:Upstanding but treacherous (Score:3, Informative)
Honestly, very few brick and mortor chains would fit your requirements. You'd need to find locals stores that have people you trust. Of course not ALL locals stores are trustworthy. Talk to your friends in the area.
I used to do most my shopping on buy.com, though I had some problems with DVDs ariving scratched. While they replaced them free of charge (including shipping) both times, it was a hassle. Since then I have used amazon.com and have been very happy with them.
Re:Umm... I don't think so. Try again. (Score:3, Informative)
Go ahead, try it.
Re:Umm... I don't think so. Try again. (Score:3, Informative)
1. Photocopy the UPC.
2. Return the product.
3. Call the rebate center and claim you sent in your rebate and want to check the status. They'll look it up and tell you, "Sorry, you aren't in the system."
4. Act surprised, say "Damn! Well, I have a copy of all the info I sent in, can I fax it to you?" They'll say yes.
5. Fax in your photocopied UPC, the receipt (photocopy it before returning it), and you're done!
Best Buy sued by Ohio Attorney General (Score:2, Informative)
Caveat Emptor.
Re:Upstanding but treacherous (Score:2, Informative)
http://www.google.com/search?hl=en&lr=&safe=off&c
http://www.google.com/search?q=fry's+electronics+
etc, etc...
Comment removed (Score:2, Informative)
Re:Wear a Name tag! (Score:2, Informative)
Ripped from the Headlines of the Wall St Journal! (Score:1, Informative)
I've alway respected Ars reportage, but the lack of attribution is unacceptable. Sent email to Caesar.
Besides, the WSJ article is a lot longer and more interesting.
Re:Wear a Name tag! (Score:4, Informative)
Personally, I think that an instant rebate with the deduction at checkout would eliminate the buy-and-return. But that would make it so everyone would actually get the rebate, and they don't want that.
Best Buy doesn't WANT informed staff and salesmen. (Score:3, Informative)
When I bought a TV at Best Buy, the salesperson tried to sell me a Monster Surge Protector for like $70 or so. When I declined, he fed me this line of B.S. as to why I should buy it. I still declined.
THEN he tried to sell me the extended warranty. I declined again. He countered back by saying it was highly likely my TV would break within a year (it has been over two years now, past when the Best Buy warranty would have expired, and the TV still works just fine).
The thing is that he sounded genuine. I knew the words coming out of his mouth were pure BS, but I think he was trained to believe what he was saying was truth.
That's not what IBM taught me ... (Score:5, Informative)
Very well... (Score:2, Informative)
Some other dirty secrets about the PSP/PRP that few employees even know about:
1) The PSP/PRP can is only valid when the product is used in a non-commercial enviroment. You sold all those business users a useless plan!
2) On monitors and laptops, the "pixel damage"/"pixelation" coverage matches the warranty's coverage. Despite what your peers tell you, there is no benefit over the manu. warranty in these cases.
3) On laptops, most manu. cover the battery. L-ion batteries typical life is 4 years, NOT two years. "PSP = free battery"-line is @#%$.
4) The Samsung series of monitors all have a 3-year manu. warranty. There is absolutely no advantage what-so-ever for getting a PSP on these monitors. As such, it sickens me how hard other salespeople try for the PSP on these monitors, or even why Corp has this monitor as PSP-applicable.
5) Parts that are used to repair electronics under the PSP are refurbished...another way to say used.
6) Best Buy is authorized to repair most PSP-applicable stuff when it is under manu. warrenty. I've seen the "you have to ship it out to the manu. to get it fixed, both ways!" to promote the PSP.
7) The PSP is structured in such a way that it covers you at just the time you would be least likely to use it. For instance, laptops are most likely to fail within the first year and then after the fifth year after purchasing. The PSP covers you in year 2 and 3, the years you're LEAST likely to use it.
There are plenty of other things I didn't cover, but you get the idea.
Re:Best Buy's Reward Zone now ignores rebates (Score:4, Informative)
Reward Zone Program
Reward Zone program membership fee is $9.99 for a 1-year membership. It is available to U.S. residents 13 years of age or older. Reward Zone lets you earn points towards reward certificates, which are redeemable towards future in-store purchases. Points are not awarded for online purchases, prior purchases, Gift Cards, sales tax, shipping charges and restocking fees. Full program rules are available in store or at www.MyRewardZone.com.
source [bestbuy.com]
Re:Ripped from the Headlines of the Wall St Journa (Score:3, Informative)
Re:I love the letter that announced that change (Score:4, Informative)
Re:Very well... (Score:1, Informative)
According to the terms outlined in the plan, yes, this is true. However, when it comes down to it, do the Geek Squad agents ever ask if the person is a home user or a business user? How can you differentiate between the two, unless you explicitly state this every time you bring the system in?
2) On monitors and laptops, the "pixel damage"/"pixelation" coverage matches the warranty's coverage. Despite what your peers tell you, there is no benefit over the manu. warranty in these cases.
Same as above...as explicitly stated in the plan. I've seen it myself where the Geek Squad steps outside of the terms. When it comes down to it, for one thing, the monitor would have to be shipped out for repair ($$$ shipping costs). Two, dead pixels appear over time due to regular usage , and are pretty unlikely to appear within most manufacturers warranty (1 year). What's the likelihood of getting 6-8 dead pixels in one year? Now, how about 3 years?
3) On laptops, most manu. cover the battery. L-ion batteries typical life is 4 years, NOT two years. "PSP = free battery"-line is @#%$.
Wrong. Flat out wrong. Manufacturers do not cover consumeables, such as batteries. Unless you can present me with the wording from a manufacturer's warranty, this is wrong. 4 year battery life is a pretty hopeful figure. It's actually somewhere around 18 months under regular usage. Regardless, the actual terms in the PSP pamphlet are "We will repair/replace the battery when the original is deemed defective by us." Defective means if you lost a significant charge (roughly 45 minutes off a 2 hour battery) or lost all charge. Most (I said most, not all; it depends on the battery usage) people are eligeable for one new battery per year. At $150-$200 per battery, well...you do the math. Your assumption that this is "@#%$" is wrong. I've seen it with my own eyes.
4) The Samsung series of monitors all have a 3-year manu. warranty. There is absolutely no advantage what-so-ever for getting a PSP on these monitors. As such, it sickens me how hard other salespeople try for the PSP on these monitors, or even why Corp has this monitor as PSP-applicable.
No advantage? Here's a few reasons. One, you have to pay for shipping to send the monitor out. How long will you be without a monitor? Two, they're probably just going to refurb it for you, so you don't get a brand new monitor. The flipside of that is with the service plan, you bring it to your local Best Buy. Depending on the status of the monitor (whether it's to be sent for service or sent back to the manufacturer), you may get a brand new monitor right off the shelf. No waiting period, no shipping. You get full price, minus any Best Buy mail in rebates. That $700 you spent on a 17" LCD a few years ago? Guess what, you're getting a 19" LCD now.
5) Parts that are used to repair electronics under the PSP are refurbished...another way to say used.
Wrong, at least for desktops (I can't vouch for what the service depot uses). Parts for desktops are replaced with new-in-box parts directly off the store shelf. Everything inside the computer, minus the CPU/mobo, is available on the sales floor. With manufacturers, you're pretty much guaranteed a refurbished part. Some manufacturers will send you the part to put it in yourself. Great if you know what you're doing, but not so great when you have no idea, which a huge portion of customers do not.
6) Best Buy is authorized to repair most PSP-applicable stuff when it is under manu. warrenty. I've seen the "you have to ship it out to the manu. to get it fixed, both ways!" to promote the PSP.
I believe we just act as the middle man between you and the manufacturer. We send it to the service depot and not do anything in the store.
7) The PSP is structured in such a way that it co
Re:I love the letter that announced that change (Score:5, Informative)
Insightful? I think not.
Game theory and Oligopolies (Score:3, Informative)
You also assume that stores won't try to differentiate somewhat and compete on things other than pure price. Your example would be better for a gas station. And it works for things like Books, DVDs, etc because you are getting the same thing at amazon.com as best buy or musicland (hard to "differentiate"). When it comes to some things though, like any kind of display or maybe a sound system, stores certainly can provide more differing levels of service than for something like a book or DVD.
What you are saying certainly isn't wrong, but it IS a little more complicated of course :D
Re:I love the letter that announced that change (Score:3, Informative)
Re:Shopping cart madness (Score:5, Informative)
The area where I work had this problem; the scrote housing down the road had shopping trolleys lying about on street corners where they'd simply been discarded, having finished being useful. They'd get wrecked, dragging into the canal, littered about on the industrial estate...
You have to understand just what animals some people are, and how little concern they have for anyone or anything outside what they want to understand why supermarkets do this. They have absolutely no regard for the expensive involved for the shop or the inconvenience for customers for whom there are no longer enough trolleys.
They won't even push them back the next time they go, because it's uphill and now they let go of the trolley, it's not even "not their problem" anymore. It's not even in their environment.
So Asda bought a whole new fleet of shopping trolleys along with the wheel locks and little red "don't cross" lines.
Net effect is that at least most of the trolleys are abandoned at the red lines now... although we STILL find them in the industrial estate, lying wrecked where they were abandoned because they'd made it down the hill that far before getting bored of dragging something with one locked wheel...
The trolleys are, actually, quite expensive. The stores cannot afford to go around giving away a "disposable" 200 pound trolley with every tenth purchase of a bag of potatoes.
Think of it as a tragedy of the commons thing - some people are such mindless thugs, they can't be trusted to borrow and return a shopping trolley and they've wrecked it for everyone else.