Earlier this year, Best Buy held its Q4 earnings report, where it unveiled strong overall financials resulting in an immediate surge of 17 percent to Best Buy’s stock price. Things are certainly looking up for the electronics retailer. But the picture was not always so rosy. Back in 2012 the company’s stock price had bottomed out at around $11 a share when its current CEO, Hubert Joly, took over the reins. Not only has Best Buy avoided following in the footsteps of other large electronics retailers such as Circuit City and Tweeter, they have, in fact, become a remarkable turnaround story. At the time of this writing, their stock price is sitting at around $72.
As a custom integrator, you are probably thinking, “Best Buy’s business looks nothing like mine, why should I care about their story?” In fact, their turnaround contains profound insights about the power of a long-term vision centered on the customer experience.
Best Buy’s Strategy
Best Buy’s current successes took root back in 2012 when the company introduced its “Renew Blue” initiative aimed at “improving the customer experience and fixing what was broken.” Sales were way down and employee morale was at an all-time low. Perhaps most troubling, however, was the growing trend of “showrooming,” where customers would use Best Buy stores to check out new products, then go shop around online for a lower price. Sound familiar?
The tired products, people, and services of yesterday’s Best Buy have been replaced. Shop there today and you’ll greeted by an open and airy layout buzzing with customers and an army of helpful “Blue Shirts” ready to walk you through your next purchase. Renew Blue completely transformed the in-store experience, and the numbers prove it worked.
As successful as Renew Blue was, Best Buy continued to innovate with their “Best Buy 2020” strategy, unveiled in 2017. Best Buy 2020 seeks to take advantage of an “opportunity-rich environment, driven by innovation and customers’ need for help.” Examples of their strategic focus include building a leadership position in the smart home market, launching Total Tech Support, and expanding their In-Home Advisor program.
Putting the Customer Experience First
Underlying both Renew Blue and Best Buy 2020 was a shift from selling products to selling experiences. The company’s official announcement of Best Buy 2020 sums it neatly: “Best Buy is evolving how it sells to focus not on just selling products but solving customers’ underlying needs.”
Best Buy’s latest efforts to bring the experience out of the store into the home are where things get interesting the CI space. Their Total Tech Support program in particular is an offering worth paying attention to. The company has garnered 1M subscribers in 10 months and plans to continue investing heavily in the “development of the customer experience, in order precisely to build these stickier customer relationships.”
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What Has Best Buy Got to Do with Me?
Best Buy’s business model and target demographic may look very different than yours. However, dismissing their remarkable turnaround entirely as a result would be to miss a very valuable learning opportunity. The idea of selling experiences over products is a truism uttered so often in our industry that it can be all too easy to overlook what it actually means at the ground level. Best Buy provides a case study in how to establish a vision based on the customer experience, propagate that vision across the organization, then see it through to success.
If you are looking for a long-term strategy to differentiate your company, follow Best Buy’s lead and start asking the hard questions now. What does your integration business look like three, five, or ten years from now? Will your current model stand up to the rigors of a market where literally everything in the home with a battery or a power cord is connected and your customers are looking for a single point of contact to manage it all? How will you attract new customers from the growing throngs of competition? How will you maximize lifetime value? As Best Buy has proven, the key to all these questions lies in the customer experience. So, what’s your plan?
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