How Best Buy shifted from being retail-led to customer relationship driven

US technology retailer talks about how it's now competing successfully with Amazon through a turnaround strategy that harnesses data, customer journeys, brand purpose and human exchange

Best Buys CEO, Hubert Joly (left) with Adobe's Shantanu Narayen
Best Buys CEO, Hubert Joly (left) with Adobe's Shantanu Narayen

Measuring commercial success in retail must shift away from traffic and conversion rates to how many customers you have relationships with and how you retain those customers in a way that’s relevant to them.

That’s the view of Best Buy CEO, Hubert Joly, who took to the stage at this year’s Adobe Summit to share the seven-year transformation story of the technology retailer as it sought to recover from the impact of Amazon and put customers at the centre of its new-look business. And key to this change has been the combination of data, employee enablement, purpose and customer experience.

“Seven years ago, people thought we were going to die – we were not in good shape,” he told attendees.

The first phase of the turnaround plan, dubbed ‘Renew Blue’ and made public in 2012, was about building a comprehensive strategy to address key stakeholders, starting with customers and extending through to employees, partners, shareholders and communities.

At a more practical level, step one had to be taking price off the table, and Joly said Best Buy made sure prices are competitive with Amazon.

“We then focused on the experience – we redid the website, invested in search, and in information,” he continued. “We have used shipping as a key tool too – we ship as fast as Amazon and for free.

“We then invested in experience in-store and invested in employees, which has seen turnover now reduce to under 30 per cent. And we partnered with our key technology companies – we see ourselves as being the gladiatorial field where they all fight for customer attention. As tech companies, you need a place to showcase all that R&D.”

As a result of these efforts, almost $2 billion of cost has come out of the business, Joly said.

Having gone through the first phase of transformation, Joly said it’s now about reinventing the company through a strategy known as ‘Best Buy 2020: Building the new blue’.

“We said we’re not in business of selling products or doing transactions, we have our purpose, which is to enrich lives with the help of technology,” Joly explained. “We’re making big changes in people lives by addressing key needs – from entertainment to health and security. This sense of purpose is mobilising everyone and we’re innovating in support of that.

“We don’t see ourselves as a bricks-and-mortar retailer. We are company obsessed about the customer and in serving them in a way that truly solves their unique problems.”  

Critical is building a reputation as a good corporate citizen. Initiatives along this line include reducing Best Buy’s carbon footprint, and launching ‘Teen Tech Centers’, interactive spaces assisting teenagers to better understand technology and its role in modern lives.  

The strategy also means doing more to enrich customer experiences outside the store, Joly said. He noted three examples, the first being Best Buy’s ‘In-Home Advisor’ service. This aims to help customers better choose, buy and integrate technology and sees Best Buy staff coming into homes for free to provide consultative services.

The second example is ‘Total Tech Support’. A big step up from its Geek Squad, which has historically been attached to a single product or vendor, this $200 per year service supports all technology in the home, Joly said.

“No home is mono brand. If Netflix doesn’t work, is it Netflix, pipe to the home, Wi-Fi, TV, streaming device? We are the ‘honey’ who comes and fixes it,” he said.

A third example of Best Buy’s purpose-driven innovation is a focus on ageing seniors and ensuring they can stay in their homes living independently for longer. In this vein, Best Buy acquired Jitterbug last year, a company focused on utilising technology to support the elderly living at home.

“We put devices in the home, monitor activities of daily living of ageing seniors. Through AI, monitoring and humans, we can detect if something wrong is happening or about to happen, and enact an intervention,” Joly said.

Data as the enabler

Through all of this change, it’s been imperative to align the organisation around data, Joly said.

“You can talk about transformation, but if you don’t have enabler, it’s just talk,” he said. “Data has been a key element of transformation from day one, applied to every one of processes, starting with customer journeys and digitisation of those journeys. These go across multiple touchpoints, from website and the personalisation we can do there, to using AI and machine learning in search.

“If you order a TV online, for example, and want to pick up in our store, we have a feature called ‘on my way’, so staff can bring your TV from the back to front of the store to collect quickly. We then send emails with unpacking and install instructions around your purchase.”

In addition, Best Buy personalises information based on which products a customer owns. The retailer is also using virtual reality to help customers choose TV and visualise how it’ll look in their home.

Digital marketing has been another key priority. Seven years ago, 80 per cent of Best Buy’s media spend was in mass marketing. Today it’s 90 per cent digital. In just one case, the company is sending 40 million versions of its promotional emails.

“We have built a huge customer database, with 12,000 attributes,” Joly said. “It’s been a huge undertaking – we had data across the entire company. Being able to put it all together with a single customer identity is a huge foundation. From that, you can do so much more targeting marketing.”

In customer relationship management, Best Buy has then armed all in-home advisors and tech support with information about customers to ensure staff know the individual customer is and everything they have in their home, so service is more effective.

Changing measures of success

It’s for all these reasons that the metrics around measuring success are changing, Joly said.  

“In retail, we’ve often focused on traffic to stores and conversion rates. The metrics are changing,” he argued. “In Las Vegas, for example, we’d look at how many consumers live in this market, how many are our customers, who we have relationships with, how we are helping them in an ongoing fashion.”  

Complementing such an approach is culture and mobilising 25,000 Best Buy employees to make those customer-centred experiences happen, Joly said.

“Whether it’s digital or physical, we are a human organisation made of individuals working together in pursuit of particular goal. If you can connect purpose of individuals working for you with purpose of the company, magic happens,” Joly said.

“The imperative is to make money but it’s not the purpose. In our case, the purpose is to enrich lives through technology. How you orchestrate at scale makes it a privilege to work at Best Buy.”  

  • Nadia Cameron travelled to Adobe Summit as a guest of Adobe.

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