Best Buy Co., Inc.: Customer-Centricity

Contents [hide] 1 Basic Information of Best Buy Co., Inc.: Customer-Centricity 2 Case Summary of Best Buy Co., Inc.: Customer-Centricity 3 Case Analysis of Best Buy Co., Inc.: Customer-Centricity 4 External Link of Best Buy Co., Inc.: Customer-Centricity 5 Relevent File Cabinet of Best Buy Co., Inc.: Customer-Centricity 6 Article Purchase Link of Best Buy Co., Inc.: Customer-Centricity

Basic Information of Best Buy Co., Inc.: Customer-Centricity

Author: Rajiv Lal, Irina Tarsis, Carin-Isabel Knoop
Publisher: HBR
Case Number: 506055
Publication Date: Apr 18, 2006
Course Category: Strategy

Case Summary of Best Buy Co., Inc.: Customer-Centricity

Key features
Clear Customer Segmentation:
1. Setting segment leader to deeper understand customers’ need, shopping behavior, and attitude, and to provide practice to make salespeople “customers’ smart friend”.
2. Pay special attention to business users. Best Buy for Business (BB4B) accounts for 29% of the total revenue.
3. Individual stores focus on one or two major segment according to the regions. 
Great Customer Service
1. Adding new specialized positions such as geek squad agents, home-theater installer, and personal shopping assistant.
2. Extensive training on staff to provide customer “complete solution” with attention, service and know-how, and to maximize a customer’s potential contribution.
3. Provide optimal configuration and explain the benefit of other peripherals.
4. Geek Squad provides 24 hours computer installation and repair service.
Flexibility and Delegation:
1. Sales associates can move items around and change the display to better serve their customers.
2. Store managers can tailor their marketing information according to the local situation.

Opportunities
1. Provide customers unique service and shopping experience which would encourage the retention.
2. To maximize the potential contribution from the top 20% customers.
3. Boost the brand image as best service provider and knowledgeable expert.

Challenges
1. May repel other segments while focusing on one or two major segments in each store.
2. Allow front line people to make decision may end up with a focus on everything.
3. To keep well-trained employees and to encourage their staff to provide the best service ever to their customers would be a challenge.
4. Some people’s attribute may fall into different categories at the same time. For example, it is not necessarily that high income people would like to spend more money on home entertainment. They may look for a bargain anyway.

Case Analysis of Best Buy Co., Inc.: Customer-Centricity

To enforce the customer-centricity, Best Buy invests a lot in terms of interface (staff) and service platform (store). These two parts ensure the success of two key features: great customer service and store flexibility/delegation. Organizing model include the relationship among different teams. This change in organization is critical to implement customer segmentation strategy. However, when they cooperate together, each team loses the ability of dictation. There may have some conflicts among them.
Critical Organizational Implementation Challenges
1. Conflict resulted from intensive team cooperation. The challenge is to make GM, Segment Leader, and Merchant Group work smoothly given that they have their own P&L (Profit and Loss).
2. Higher gross profit margin may not compensate high conversion cost.
3. To ensure the innovation is in right direction, every employee must have financial concept to the business, which means extensive training and high labor cost.
4. Imitation from competitors will lower the sales number. The entry barrier of the new approach is not so high.