Best Buy’s Competitive Strategy to Beat Amazon: Educate Consumers

Filed in Blog, Customer Service, Retail by on July 18, 2016
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Best Buy’s CEO, Hubert Joly, “wants his company to be the place that makes it easy for consumers to understand technology.”  That’s their plan to combat Amazon, according to a Fortune May 26th article. Joly says that customers need more advice than ever; that makes sense.

The article goes on…”In Best Buy’s most recent quarter, U.S. comparable sales, which include e-commerce and sales at stores open at least a year, fell 0.1%, better at least than the 1.2% decline Wall Street analysts expected, according to Consensus Metrix. The results showed how Best Buy, which only four-years-ago was widely believed to be destined to go out of business, has managed to hold its own against the likes of Amazon.com AMZN -1.11% and curtail shoppers’ habit of browsing in its stores, then making purchases online elsewhere. Best Buy is having to redouble its efforts to give shoppers a reason to come into the store as electronics are seen by many consumers as commodity products.

As Joly sees it, the growing complexity of tech and interconnection of devices people use, gives his company a golden opportunity to prove its usefulness to consumers as Best Buy establishes a firm foothold and looks to regain strength and growth. Joly says, “there is a growing gap between what technology can do and what we as consumers understand what technology can do.”

To bridge that gap, Best Buy is making changes in many parts of its business. Some of the changes include:

  • Training store staff to become product experts
  • Beefing up the capabilities of the Geek Squad army of specialists
  • Ramping up smart home offerings, along with services to help customers with installations

Best Buy has also invested in its website to help guarantee online sales rather than customers drifting to Amazon. Online sales rose 24 percent last quarter, one of the best performances in retail. Online revenue generated $4 billion; an impressive number. So their plan is working.

Best Buy’s new tag line is:  “Expert Service: Unbeatable Price”.

I concur that Best Buy is on the right track. Amazon is all about price. Just the other day, I had to call Amazon about an order I placed that was not delivered. I went on the Amazon site with the thought I could easily find Amazon’s customer service telephone number. However, I had to go through 5 screens before I got frustrated and decided to do a Google search for “Amazon’s Customer Service Telephone Number.” That extra step should not be necessary. The Amazon representative I spoke to was polite but not overly proficient.

On the Best Buy site, I found a link for 24/7 Support after 1 screen.

Best Buy is on the right track regarding customer service.  But, if I were Hubert Joly, the following would be implemented:

  • Make sure the 24/7 Support tab is prominently displayed even if the site asks a few questions before the customer is connected with an agent to either chat or speak with. Customers become frustrated quickly if they have questions and a treasure hunt is necessary just to find the customer support telephone support on the web
  • Add photos of technical advisors to the website and let customers select a particular sales advisor. Perhaps the customer grew up in the Midwest or likes dogs. When the customer is allowed to select the agent in advance, the customer will have a higher propensity to purchase the product. It gives the customer a feeling of control
  • Train store associates to not only become product experts, but also teach them the value of building relationships with individual customers. If the associate is able to create a personal dialog with a customer (person) the customer will be less likely to purchase the product for less money if the price differential is reasonable
  • Create detailed checklists of additional information that customers would find helpful. According to our company’s research, ninety-five percentage of customers are delighted when an associate provides them with information they didn’t expect to receive
  • Empower associates to make deals, offer promotions and even surprise customers in good ways. If the customer spends a certain dollar amount for a home entertainment system, for example, have the associate send the customer a plant or flowers as a special way to show customer appreciation
  • Keep in touch with customers after the sale. Don’t bombard customers with sales offers. Thank you notes can go a long way to build and cement customer loyalty

Best Buy has a history of defying the odds.  Even with Amazon chipping away at everyone’s business, they have substantially increased their online revenues. Their motto of Expert Service will continue to work especially as technology becomes even more complex.

What do you think?

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