WSJ - Analyzing Customers at Best Buy

[James Fee]

<div class='os_post_top_link'><a href='http://online.wsj.com/article/0,,SB109986994931767086,00.html?mod=yahoo_hs)http://online.wsj.com/article/0,,SB109986994931767086,00.html?mod=yahoo_hs' target='_blank'>http://online.wsj.com/article/0,,SB109986994931767086,00.html?mod=yahoo_hs)http://online.wsj.com/article/0,,SB109986994931767086,00.html?mod=yahoo_hs</a><br /><br /></div>"<i>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.</i>"<br /><br />It seems that Best Buy is trying to find out who spends money without thinking and focus upon those fools. It appears people using sites such as <a href="http://www.slickdeals.net">SlickDeals.net</a> have figured out the system and only buy the heavily discounted products while walking past the HDTVs.

[Chris Gohlke]

There are so many problems with this:

A - The rebate thing has got to be made up. You have to almost always send in the UPC on a rebate and you can't return something without a UPC, so how is this a problem for them? And how about the fact that they are terrible about paying rebates in a timely manner and they often involve a phone call to get them fixed.

B - I admit I am a bargain shopper and a Fatwalleter. But I am also a Buzz. Plus I am the person most people I know come to for advise on exactly the products BB sells. So even if they don't make a bunch off of me directly, they need to be aware of the indirect effects of ignoring me as a customer.

C - They are mad at customers for taking advantage of them! As long as a customer is working within the stores policies, more power to them. Do you think as a business they don't take every advantage they can in dealing with contracts with vendors or in filing their taxes. Why should they expect their customers to act any differently?

D - Service contracts - They want customers to buy them so bad that they lie about the benefits. I still have employees tell me that you can purposfully break it and get a replacement. Needless to say, the regret telling me that after I am done with them. :twisted:

E - Customer service - This area needs an improvement. Their employees by and larger are bunch of idiodts, right up there with the folks at CompUSA. Heck the guy at the counter at the local target knows way more about electronics than any of these clowns. Plus, nothing like having to wait in line for 15 minutes to buy a new release on Tuesday because they only have one register open at lunch time even thought they have 3 people working security at the door.

F- Then they have this new Geek Squad concept. As a geek, I find this offensive, as I would never want to be associated with these guys.

G - The Reward Zone program actually sent out a mailer that they changed the program to require more points for the same reward. Then they had the gaul to say that they made the change as a result of customer feedback. I'd like to meet the customer that said that!

OK, off my anti BB soapbox. Needless to say, I only shop there as a last resort anymore.

[mcsouth]

I'm surprised that they would actually come out and admit this type of sales plan - this is not generally the kind of information that you would generally banter about in public.

I agree with Goldkey about the points made, and have to wonder - how do they plan on tracking this? I would assume that they can use credit card and debit card information for tracking, but what about cash sales? I have actually gone back to doing more cash transactions at brick and mortar stores - it's pretty hard to overspend when you know exactly how much cash you have in your wallet.

The other issue is how are they planning on utilizing their data - targeted advertising to only their "best" customers? Problem with that approach is that you are artificially limiting yourself to a finite set of customers. What about dealing with the "problem" customers? Are you going to start denying sales to them in retailiation? I agree with the statement of dealing within the store's policies - BB sets those policies, not the customers. If abuse is occurring, they have the option of changing the policies.

I never mind wandering through BB to check out the latest stuff. I generally don't buy anything there, though - I can usually find what I want cheaper on-line anyways....