In reaction to increasing competition online, Best Buy is kicking off a new service this month. Designed to unlock latent consumer demand, the service features Best Buy personnel meeting with customers in their homes to answer their questions, assess their situations, and recommend what devices and technology fit their lifestyles. “This is Best Buy looking at a long-term user-based strategy rather than a one-off, shopper-based strategy,” stated Carol Spiecherman, an expert on retail and brand positioning. “Something like this is truly solving a need vs. attempting to come up with shiny objects that will appeal to an emerging generation.”
Jeff Shelman, Best Buy spokesman, further clarified the firm’s positions. “We know that consumers love technology but frequently need help getting the most out of it. We feel uniquely positioned to serve consumers by offering products, services, and support wherever the customer wants it, including our 1,000 stores, on BestBuy.com, and in homes millions of times a year.”
In researching what Best Buy can do to better compete with online stores such as Amazon, company personnel discovered two important factors. Shoppers are spending more time at home than in stores, and they are uncertain as to how to use emerging technology. From this information, management decided to roll out this new service.
Best Buy has tested this service in five markets, assigning it different names to check on different target markets. In the Twin Cities, the service was called Assured Living and aimed at assisting adult children in setting up technology in the homes of their aging parents. The monitors and devices they had installed in their parents’ homes allowed them to keep track of their parents. The intent was to keep their parents’ independent and provide peace of mind to the children.
The national roll out of the new service is not so narrowly focused. With it, Best Buy is offering in-home consultation to anyone who walks into the company’s stores and talks to a sales associate about the store’s products. The associates are now trained to suggest an in-home visit to customers. The person doing the visit will be a sales associate who is not paid by the results of the visit but by the hour. While Best Buy is promoting this service as a way to help customers, skeptics are concerned that these consultations will encourage customers to buy unnecessary products.
If Best Buy management is wise, that will not be the result. However, one aspect of this service points to that happening. The service is free. Now you may think, Isn’t free a good idea? That’s a way to help customers and get them to purchase what they need. It’s also a way to differentiate Best Buy from online competitors who cannot from a distance have that person-to-person contact. It’s a showcase of Best Buy personnel’s expertise, an extension of the Geek Squad.
While that may all be true, here’s the challenge. Unlike the Geek Squad whose work can be directly assigned to the revenue generated, these “free” consultations will not be directly assigned to revenue. The sales associates performing the consultations will be taken off the floor to visit homes. In doing so, they will not be able to cover the floor. That means additional personnel will need to be hired to cover those floor hours. This could increase floor payroll substantially. If these visits do not result in corresponding revenue gains, management will deem the visits too expensive and likely discontinue them.
Unfortunately, Best Buy management discovered an opportunity and acted on it without thinking it through. That may herald the demise of the new service. Had they thought it through, they would have realized that customers who want assistance with technology would pay for these visits. Rather than treat these visits as come-ons for more business, management would have seen them as new streams of revenue. Instead they may disappear because they either will not generate enough revenue to support the additional payroll, or they will push unnecessary product onto customers and further deteriorate the Best Buy brand.
When you find an opportunity for more revenue, think it through before implementing it. Look at it from all angles. Get input from your customers. Consider how it can generate revenue. Will customers pay for it? Give it the best chance to be successful.
This week's marketing trivia challenge is How did you think through a new opportunity? E-mail me your answer.
Jeff Shelman, Best Buy spokesman, further clarified the firm’s positions. “We know that consumers love technology but frequently need help getting the most out of it. We feel uniquely positioned to serve consumers by offering products, services, and support wherever the customer wants it, including our 1,000 stores, on BestBuy.com, and in homes millions of times a year.”
In researching what Best Buy can do to better compete with online stores such as Amazon, company personnel discovered two important factors. Shoppers are spending more time at home than in stores, and they are uncertain as to how to use emerging technology. From this information, management decided to roll out this new service.
Best Buy has tested this service in five markets, assigning it different names to check on different target markets. In the Twin Cities, the service was called Assured Living and aimed at assisting adult children in setting up technology in the homes of their aging parents. The monitors and devices they had installed in their parents’ homes allowed them to keep track of their parents. The intent was to keep their parents’ independent and provide peace of mind to the children.
The national roll out of the new service is not so narrowly focused. With it, Best Buy is offering in-home consultation to anyone who walks into the company’s stores and talks to a sales associate about the store’s products. The associates are now trained to suggest an in-home visit to customers. The person doing the visit will be a sales associate who is not paid by the results of the visit but by the hour. While Best Buy is promoting this service as a way to help customers, skeptics are concerned that these consultations will encourage customers to buy unnecessary products.
If Best Buy management is wise, that will not be the result. However, one aspect of this service points to that happening. The service is free. Now you may think, Isn’t free a good idea? That’s a way to help customers and get them to purchase what they need. It’s also a way to differentiate Best Buy from online competitors who cannot from a distance have that person-to-person contact. It’s a showcase of Best Buy personnel’s expertise, an extension of the Geek Squad.
While that may all be true, here’s the challenge. Unlike the Geek Squad whose work can be directly assigned to the revenue generated, these “free” consultations will not be directly assigned to revenue. The sales associates performing the consultations will be taken off the floor to visit homes. In doing so, they will not be able to cover the floor. That means additional personnel will need to be hired to cover those floor hours. This could increase floor payroll substantially. If these visits do not result in corresponding revenue gains, management will deem the visits too expensive and likely discontinue them.
Unfortunately, Best Buy management discovered an opportunity and acted on it without thinking it through. That may herald the demise of the new service. Had they thought it through, they would have realized that customers who want assistance with technology would pay for these visits. Rather than treat these visits as come-ons for more business, management would have seen them as new streams of revenue. Instead they may disappear because they either will not generate enough revenue to support the additional payroll, or they will push unnecessary product onto customers and further deteriorate the Best Buy brand.
When you find an opportunity for more revenue, think it through before implementing it. Look at it from all angles. Get input from your customers. Consider how it can generate revenue. Will customers pay for it? Give it the best chance to be successful.
This week's marketing trivia challenge is How did you think through a new opportunity? E-mail me your answer.
No comments:
Post a Comment