The other day I saw that Joshua Kahn had posted the following:
Where Should Mobile Developers Focus? - A VC http://goo.gl/fb/b25Gu
I think about this subject more often as customers seem to be bringing this up more often. I believe that we have many parallels out there to look at that will help determine who will win and why.
Lets start with why I think Apple is on a course to lose:
Apple has been in this position before: lots of great advertising, exciting new technological advancements happening every six months, large base of potential customers. What I am referring to is the point at which they were fighting against IBM with products like the Apple IIe and the Lisa. Part of the reason that Apple has never been able to win the OS war in PC v. Mac is because of the resistance to allow the Apple OS to run on other companies' hardware.
This is the issue that they are running into now, with one carrier and 4 versions of the iPhone vs the multitude of Android devices. (Let's not forget the RIM has manufactured more Blackberries that I wish to count).
Why is RIM (Blackberry) on a course to fail?
Blackberry devices were the dominate smartphone for business for so long that I think that RIM has forgotten that business users are just a niche market. This company has lost sight of the mainstream as many companies do throughout the history of personal computing there have been companies like Iomega and Alienware that have come out with great products, but have fallen short due to not being able to appeal to the mainstream.
Blackberry phones are amazing for Blackberry users, but they are primarily for work first and entertainment second. The current mainstream population wants it in the opposite order, but all is not lost. The Blackberry Playbook looks like it will be the most integrated tablet on the market - more on integration later.
Why Android hasn't crushed the competition:
The Android operating system has a great foothold on this war. With the ability to place it on any product for free, this is very attractive for manufactures, thus we have explosion of Android devices. The problem that this OS faces is that it doesn't play well enough with others yet. For the most part the Android phones are islands to themselves with little interaction outside of the phone.
Also, this OS is like Linux in more ways than being open source. The Android OS isn't as flashy as the iOS, it is getting more and more like it, but the strengths of only having one current version of the iPhone at a time are the same strengths Apple has in their computers. These strengths include stability and performance.
So if they are all destined for failure who will win?
The first part is integration. The first company to provide a way for a person to move their current project from one "screen" to another the same way that a person running dual-monitors can drag an application from one monitor to another, will be the front runner of integration. Imaging being able to start viewing a website on your phone and with a flick of a finger view it on your TV or on your computer monitor. What if you could do that in reverse as well, for when you are about to commute? It doesn't just have to be a website, it could be a text document, a slide show, a video game. That will be the winner. The Blackberry Playbook does a bit of this in their teaser video, but who knows how much will actually happen. Also, it isn't the first company to make one happen, it is the first company to make it happen well.
The next part is carrier selection. Currently Blackberry and Android phones are available on multiple carriers, the iPhone isn't. If any of these rumors about the iPhone moving to another carrier actually happen this will be a big shot in the arm for iOS, but the question then becomes is it too late? Will Android users move to the iPhone just because it has come to their carrier? Only time will tell.
Software development is a big part of this as well, and I am surprised to see that the big video game companies are not jumping in on this as much as they should. I will make this prediction, the OS that gets the biggest support from established video game producers will win this war. (Lets see what happens, if that PSP phone ever gets released).
The last thing that is holding people back on jumping into a smart phone is the carrier data plans. After large 4g pentration I predict that carriers will start bundling their hotspot and data package to a price that is competitive with home internet providers. Once this happens the true smart phone explosion will happen.
Monday, December 6, 2010
Wednesday, November 17, 2010
The Future of Gaming
Let's talk about two of my favorite subjects gaming and the future. In this post I will talk about Motion based gaming, Mobile Gaming, and 3D gaming.
Motion based gaming
So, Microsoft has launched the Kinect and Sony with the Move. Although I am happy to see motion gaming getting some attention from these companies I think they are about 2 years too late. Nintendo already did this and dominated the market doing it by exploiting a time where social gaming was on the rise with Guitar Hero and it's clones. Nintendo was actually pretty content to be number 3 in the industry making a gaming system instead of an entertainment system.
I want to go on record and say that these two copies of the Wii are very likely to fail. Let me explain why, and hopefully someone makes the right moves to correct some of these missteps.
First and likely most important, the content. I have been a gamer since the Intellivision and I haven't seen a single console/accessory that was successful without having amazing games. Check the end of this post for an appendix of those failures. If Microsoft and Sony want their add-ons to be successful they will need to get a strong game that their core audience wants. My Fix: Court a franchise like Call of Duty, Madden, or Street Fighter to build a motion version of one of their games; the most important thing about getting one of these is to avoid gimmicks and to build something that is native to the system and flows well - gimmicks get old quickly as I am sure many dusty Wii owners can tell you.
Second, they should have waited until their next generation of consoles. As stated before it is an accessory - which means that each company has several million consoles out there already. Even if 60% of the customers who own a system were to upgrade to this accessory that means you have a much smaller market to sell games meaning less developers want to make a game for it - which leads back to the first point. It is for the same reason that the Apple operating system has a lack of viruses. My fix #1: Give the accessory away - make sure everyone that has a system gets one. Not a great option because these things are expensive. My Fix #2: Come up with something that makes people want to have it, perhaps an awesome new game...
Third, its been done. The Wii has been out for four years (as of 11/19). That is 4 years of motion based gaming. Nintendo has been very successful with 100s of non-essential accessories for the Wii. Nintendo took the market by storm by going where the gaming business was headed. Sony and Microsoft are playing catch up to something that happened 4 years ago, which ever company can see what is coming next is going to have the upper hand for the future. My Fix: Obviously this is done, but make sure you are focused on what is coming next.
Mobile Gaming
Two words make me excited about the future viability of Mobile Gaming, "Angry Birds". This has quickly become one of the most downloaded games on a smart phone. Mobile gaming helps bridge the gap between hardcore gamers and the mainstream audience, this is important for keeping gaming alive and to keep thriving it gaming has to have mainstream appeal.
Let's not forget about the gamers though. Touch screen gaming is fun, but it is more of a vacation from gaming than a fulfillment for a hardcore gamer. Most gamers want to have the control that you will currently only find in a hardware based peripheral (i.e. a controller). If someone wants to dominate the market right now someone would develop a universal controller for smartphones. (I hope those involved with Rocketfish/Insignia are reading this part) The idea is simple, it would connect to Android/iOS based phones via either a data cable or Bluetooth. It would have a universal mount on the top so that you could place your phone inside, and it would have an extra battery inside (like the Zagg Sparq) so that you could charge your phone while playing. It would be awesome if there was some sort of phone storage on the device as well, so that it could all fold up and turn into a hip pouch.
The other big thing that is missing from smartphone gaming is the social element. The iOS based phones have some games that allow for this, but what I am looking for is a first person shooter (e.g. Doom, Call of Duty, CounterStike) that is able to be played on a smart phone against other people playing the game. Eventually as these phones become more powerful - why not allow them on existing gaming networks like Xbox Live (like Shadowrun for the where PC and Xbox 360 users played against each other).
When these things happen I would imagine we will have to look at combining Best Buy Mobile with our gaming department. Look at the rumors on the PSP - a reminder of the NGage; which is a device that was unfortunately ahead of its time.
When the big console gaming companies start releasing their content on smartphones we will see an explosion and a game changer. I hope we are modeling our business for these eventual future when games are no longer purchased in a physical form (will it be the death of GameStop?)
3D gaming
When I first sat down in front of a current version of a 3D Tv, I was excited by the possibilities that are offered for gaming. Immersion is the quality of a good game, if the game is good enough the outside world melts away and you become a part of the game. 3D is a tool, like anything else, and if used properly I feel that there are going to be a slew of amazing games using this technology. Kudos to Nintendo for bringing a 3D experience without glasses to E3, and hopefully soon to the general public. As more and more people experience the medium the greater the likelihood for good games to be generated in the future.
I personally believe that we will see a huge push for first person shooters and sports games done in 3D coupled with motion gaming. Not only are you performing the action, shooting, passing, running, dodging, etc, but it is happening in 3D - which should be doing a pretty good job of tricking your brain into thinking you are in the game - which leads me back to the immersion that I was talking about earlier.
My advice is to watch people play a games they are really in to. Whether it is Madden, Call of Duty, World of Warcraft. If they get really into the zone, sometimes they reach a Zen state where they can find their calm center and the rest of the world doesn't matter. Immersion is an awesome thing to experience, it is the thing that many gamers are chasing out there.
A brief Appendix of failed accessories:
The Multitap - This device was created to allow for additional players on various consoles, in fact it was tried several times for systems like: Nintendo Entertainment System, Sega Mega Drive, Sega Genesis, Atari Jaguar, Sega Saturn, Sony PlayStation, and Sony PlayStation 2. Eventually console manufacturers created consoles that were capable of 4 players, making a Multitap unneeded and increasing the percentage of games that allow for 4 players.
Light guns - These guns were able to be pointed at the screen and register where they were shooting. An amazing idea, but with the exception of the Zapper these were not bundled with the original system. The shooting games requiring light guns flopped, most of the games were terrible for one reason or another, the guns weren't as accurate as people wanted them to be either. Other notable mentions in the light gun category: The Menacer and the Super Scope.
The Powerglove - This alternative controller for the NES was an amazing piece of technology, but a huge failure. One of the biggest reasons for the failure was that it release in the US with two games (only 1 game in Japan). It was so technically advanced that it wasn't matched in ability until the Wii controller 15 year later. This device helps prove the point that no matter how awesome an accessory - without games it will fail.
XBand and Sega Channel - These services were ahead of their time as well but likely paved the way for a better Xbox Live and Playstation network. These were early attempts at online gaming and providing online content, the problems were that the technology was too slow to support gaming and that there weren't enough people interested in adding to their existing console.
The Sega Activator - This was an amazing idea based off of the light harp. It was an octagon that was laid on the floor, players would break the plane above the octagon to do different in game moves. One of the problems were that it was too expensive $80 (which close to the cost of the Sega Genesis console which was either $99 or $149 when the activator came out). Another problem was that it was inaccurate, being thrown off by all sorts of things, like the ceiling/floor not being 100% parallel.
Others that I am not going to describe are: The Atari Mindlink, R.O.B., Playstaion Eye, Xbox Vision, the Game Cube(not an accessory, but a failure just the same), Nintendo Powerpad, Trance Vibrator, Roll&Rocker, 32x, SegaCd, and lets do our best to forget the Virtual Boy.
Motion based gaming
So, Microsoft has launched the Kinect and Sony with the Move. Although I am happy to see motion gaming getting some attention from these companies I think they are about 2 years too late. Nintendo already did this and dominated the market doing it by exploiting a time where social gaming was on the rise with Guitar Hero and it's clones. Nintendo was actually pretty content to be number 3 in the industry making a gaming system instead of an entertainment system.
I want to go on record and say that these two copies of the Wii are very likely to fail. Let me explain why, and hopefully someone makes the right moves to correct some of these missteps.
First and likely most important, the content. I have been a gamer since the Intellivision and I haven't seen a single console/accessory that was successful without having amazing games. Check the end of this post for an appendix of those failures. If Microsoft and Sony want their add-ons to be successful they will need to get a strong game that their core audience wants. My Fix: Court a franchise like Call of Duty, Madden, or Street Fighter to build a motion version of one of their games; the most important thing about getting one of these is to avoid gimmicks and to build something that is native to the system and flows well - gimmicks get old quickly as I am sure many dusty Wii owners can tell you.
Second, they should have waited until their next generation of consoles. As stated before it is an accessory - which means that each company has several million consoles out there already. Even if 60% of the customers who own a system were to upgrade to this accessory that means you have a much smaller market to sell games meaning less developers want to make a game for it - which leads back to the first point. It is for the same reason that the Apple operating system has a lack of viruses. My fix #1: Give the accessory away - make sure everyone that has a system gets one. Not a great option because these things are expensive. My Fix #2: Come up with something that makes people want to have it, perhaps an awesome new game...
Third, its been done. The Wii has been out for four years (as of 11/19). That is 4 years of motion based gaming. Nintendo has been very successful with 100s of non-essential accessories for the Wii. Nintendo took the market by storm by going where the gaming business was headed. Sony and Microsoft are playing catch up to something that happened 4 years ago, which ever company can see what is coming next is going to have the upper hand for the future. My Fix: Obviously this is done, but make sure you are focused on what is coming next.
Mobile Gaming
Two words make me excited about the future viability of Mobile Gaming, "Angry Birds". This has quickly become one of the most downloaded games on a smart phone. Mobile gaming helps bridge the gap between hardcore gamers and the mainstream audience, this is important for keeping gaming alive and to keep thriving it gaming has to have mainstream appeal.
Let's not forget about the gamers though. Touch screen gaming is fun, but it is more of a vacation from gaming than a fulfillment for a hardcore gamer. Most gamers want to have the control that you will currently only find in a hardware based peripheral (i.e. a controller). If someone wants to dominate the market right now someone would develop a universal controller for smartphones. (I hope those involved with Rocketfish/Insignia are reading this part) The idea is simple, it would connect to Android/iOS based phones via either a data cable or Bluetooth. It would have a universal mount on the top so that you could place your phone inside, and it would have an extra battery inside (like the Zagg Sparq) so that you could charge your phone while playing. It would be awesome if there was some sort of phone storage on the device as well, so that it could all fold up and turn into a hip pouch.
The other big thing that is missing from smartphone gaming is the social element. The iOS based phones have some games that allow for this, but what I am looking for is a first person shooter (e.g. Doom, Call of Duty, CounterStike) that is able to be played on a smart phone against other people playing the game. Eventually as these phones become more powerful - why not allow them on existing gaming networks like Xbox Live (like Shadowrun for the where PC and Xbox 360 users played against each other).
When these things happen I would imagine we will have to look at combining Best Buy Mobile with our gaming department. Look at the rumors on the PSP - a reminder of the NGage; which is a device that was unfortunately ahead of its time.
When the big console gaming companies start releasing their content on smartphones we will see an explosion and a game changer. I hope we are modeling our business for these eventual future when games are no longer purchased in a physical form (will it be the death of GameStop?)
3D gaming
When I first sat down in front of a current version of a 3D Tv, I was excited by the possibilities that are offered for gaming. Immersion is the quality of a good game, if the game is good enough the outside world melts away and you become a part of the game. 3D is a tool, like anything else, and if used properly I feel that there are going to be a slew of amazing games using this technology. Kudos to Nintendo for bringing a 3D experience without glasses to E3, and hopefully soon to the general public. As more and more people experience the medium the greater the likelihood for good games to be generated in the future.
I personally believe that we will see a huge push for first person shooters and sports games done in 3D coupled with motion gaming. Not only are you performing the action, shooting, passing, running, dodging, etc, but it is happening in 3D - which should be doing a pretty good job of tricking your brain into thinking you are in the game - which leads me back to the immersion that I was talking about earlier.
My advice is to watch people play a games they are really in to. Whether it is Madden, Call of Duty, World of Warcraft. If they get really into the zone, sometimes they reach a Zen state where they can find their calm center and the rest of the world doesn't matter. Immersion is an awesome thing to experience, it is the thing that many gamers are chasing out there.
A brief Appendix of failed accessories:
The Multitap - This device was created to allow for additional players on various consoles, in fact it was tried several times for systems like: Nintendo Entertainment System, Sega Mega Drive, Sega Genesis, Atari Jaguar, Sega Saturn, Sony PlayStation, and Sony PlayStation 2. Eventually console manufacturers created consoles that were capable of 4 players, making a Multitap unneeded and increasing the percentage of games that allow for 4 players.
Light guns - These guns were able to be pointed at the screen and register where they were shooting. An amazing idea, but with the exception of the Zapper these were not bundled with the original system. The shooting games requiring light guns flopped, most of the games were terrible for one reason or another, the guns weren't as accurate as people wanted them to be either. Other notable mentions in the light gun category: The Menacer and the Super Scope.
The Powerglove - This alternative controller for the NES was an amazing piece of technology, but a huge failure. One of the biggest reasons for the failure was that it release in the US with two games (only 1 game in Japan). It was so technically advanced that it wasn't matched in ability until the Wii controller 15 year later. This device helps prove the point that no matter how awesome an accessory - without games it will fail.
XBand and Sega Channel - These services were ahead of their time as well but likely paved the way for a better Xbox Live and Playstation network. These were early attempts at online gaming and providing online content, the problems were that the technology was too slow to support gaming and that there weren't enough people interested in adding to their existing console.
The Sega Activator - This was an amazing idea based off of the light harp. It was an octagon that was laid on the floor, players would break the plane above the octagon to do different in game moves. One of the problems were that it was too expensive $80 (which close to the cost of the Sega Genesis console which was either $99 or $149 when the activator came out). Another problem was that it was inaccurate, being thrown off by all sorts of things, like the ceiling/floor not being 100% parallel.
Others that I am not going to describe are: The Atari Mindlink, R.O.B., Playstaion Eye, Xbox Vision, the Game Cube(not an accessory, but a failure just the same), Nintendo Powerpad, Trance Vibrator, Roll&Rocker, 32x, SegaCd, and lets do our best to forget the Virtual Boy.
Best Buy Digital Magazine
Today I read an interesting post by Barry Judge, "We should launch a ipad style magazine with editorial content focused on the connected world. New avenue for Best Buy On as well?"
I thought it was an amazing idea, and I think 140 characters to be too limiting for my honest response so I will post it here.
The idea is great, but to expand on it iPad's and other tablets are going to have a small penetration this year, sure there could be anywhere from 13-30 million sold over the next 12 months, but I think that we should expand the idea to cover all iOS and Android platform devices. This would give Best Buy a huge number of devices that will support our effort.
Beyond that I think that it would provide a great opportunity to educate our customers around the connected world by writing how to guides with links to videos, pointing out new and emerging technologies, and also a platform for explaining some of the value propositions of our brand that will help customers use technology to improve their lives.
As Timothy Young asked about the @Gamer magazine, which brings me to my next point. We have various printed materials all around the store, ranging from @Gamer which is an amazing gaming magazine to First Glimpse to the department guides (Digital Imaging Gaming, Movies, and Home Theater). These are all things that could be rolled into the same magazine or better yet maintained as separate entities that have the ability to link to one another - or at least make mention of the other pieces that are out there.
I thought it was an amazing idea, and I think 140 characters to be too limiting for my honest response so I will post it here.
The idea is great, but to expand on it iPad's and other tablets are going to have a small penetration this year, sure there could be anywhere from 13-30 million sold over the next 12 months, but I think that we should expand the idea to cover all iOS and Android platform devices. This would give Best Buy a huge number of devices that will support our effort.
Beyond that I think that it would provide a great opportunity to educate our customers around the connected world by writing how to guides with links to videos, pointing out new and emerging technologies, and also a platform for explaining some of the value propositions of our brand that will help customers use technology to improve their lives.
As Timothy Young asked about the @Gamer magazine, which brings me to my next point. We have various printed materials all around the store, ranging from @Gamer which is an amazing gaming magazine to First Glimpse to the department guides (Digital Imaging Gaming, Movies, and Home Theater). These are all things that could be rolled into the same magazine or better yet maintained as separate entities that have the ability to link to one another - or at least make mention of the other pieces that are out there.
Friday, May 14, 2010
Social Media Specialist
For those who are interested this update is a presentation of an idea for a new role:
CASE FOR CHANGE
Currently the world is more connected than it ever was in the past. People are using social networks to connect to businesses, talk about their experiences, and to research new product. Best Buy has been pushing into the social sphere with initiatives like Twelpforce and developing relationships with different companies including Google, Foursquare, Facebook, and Twitter. Our customers continue to use the telephone to communicate, but they have shown that they are willing to have the conversations with or without us in social media. Our corporate office has given guidelines, but has been very clear that they are looking for the field to develop and innovate in the social space.
THE ROLE
The Social Media Specialist would be responsible for driving growth in our stores through a combination of utilizing social networks along with participation in community and in-store events. Each participating store in the district would select an associate to become a Social Media Specialist. The initial structure will require 20-30 hours a week. The initial test will run for 6 months, while we evaluate the impact of the role.
RESPONSIBILITIES
Twelpforce/BBYFeed.com
Twelpforce is currently a large part of the Best Buy social media strategy. Anyone in this role should be an active member of Twelpforce due to the unique nature of the program. There are many best practices that can be learned from participation in this program. More than 25,000 questions have been answered by the 2,600 associates working with Twelpforce. Now with the new BBYFeed tool, currently in beta testing, there is increased visibility of customer questions.
Twitter/Facebook
By using Twitter and Facebook page at the local level gives us an ability that very few retailers have started utilize, which is an advantage that where can capitalize. These are two of the fastest growing mediums in the world of social networking. We can use both forms for the purpose of marketing, customer contact, and around general awareness. Awareness works in both directions, making our customers more aware of our offers and making us more aware of the needs of our customers.
Other Social Media (YouTube, Flickr, FourSquare, etc...)
Although Facebook and Twitter are among the largest social media networks in existence, they don’t always provide the same opportunities as other tools that are available. The social media specialists need to be cognoscente of all of the tools they have at their disposal. This could include providing demonstrations of cameras through Flickr, PodCasts presented through YouTube, or promotions for checking in through FourSquare.
Blogging
Blogging exists in so many different forms, making this is a very general term. In this context we would leverage a weekly/bi-weekly editorial around various technologies in our store. These could range from “Why should I own a compact camera and a D-SLR?” to “What’s and E-Reader?” These articles would be handed out to customers as a stacking tool in stores, along with being posted the store’s Twitter feed and Facebook page.
Local Marketing and Event Planning
This includes coupon creation, local website management and maintenance, and event planning. This person will be responsible for utilizing RMT for approval. Social media specialists will also be responsible for communicating upcoming events and recaps of those events through the social media networks. Communication around donations and store participation in events also fall into the marketing category as well, the good acts that we do in our communities should be communicated in the name of transparency.
Leadership Meetings
These individuals should present weekly at the leadership meetings to keep the store leadership informed around news in the social media side of the business. This will also give the opportunity for the leadership team to be able to inform around upcoming events or other areas where they may have increased visability.
SELECTING INDIVIDUALS
The ideal individuals will be those who are familiar with and have a passion for social media. A person who can manage multiple tasks at once, is able to establish rapport, and able to speak to the Best Buy brands. If demand warrants more associates may be put in this role, with each taking different portions as a focus, such as dividing social media and community events.
BEGINNING THE EXPERIMENT
After all stores are given the opportunity to select individuals, a meeting at the district office would be organized to explain best practices, exchange contact information, and clearly land the expectations of the role. This meeting will also give the opportunity to discuss any questions the individuals may have. After this meeting the social media specialists would be able to begin their rhythms, with a bi-weekly conference call to ensure that best practices are being exchanged and to establish a rapport between these individuals. Eventually the conference call would move to one a month as these individuals become more comfortable with their roles.
Social Media Specialist
Position Summary
During a test period of 6 months one representative from each participating store will focus on achieving growth through connecting with our local community with social media. This position will utilize various methods of reaching out to our community in order to acquire new customers, retain existing customers, and to emphasize our role in the community.
Key responsibilities (with % of time)
1. Updating and creating social media profiles on a daily/weekly basis, along with communicating with our customers. These sites include Facebook, Twitter, blog sites, local store pages, and email. Utilizing these tools the Social Media Specialist will inform around in store events, community events with store participation, and to answer questions and concerns from customers in our local area. (30%)
2. Coach and train store associates around the use of social networks, Twelpforce, communicating community events, and explaining best practices and proper usage of social media. (20%)
3. Using RMT to maintain the local store page to represent in store events, community events, and provide a contact path for the store. (20%)
4. Attend local events with a goal of creating ongoing relationships with members of the community and to represent and promote the brand in a physical capacity. Develop partnerships with local groups that match the store’s growth plan, targeting various groups such as schools, military, law enforcement, and fire departments. Work with store leadership to create in-store events. (15%)
5. Partner with the various internal groups such as the Viewpoint committee, Local Wolf Pack, and BBFB to work with all aspects of the community. Attend meetings and host conference calls to review growth and impact in each area. Spearhead tag awards, @15, teach awards and assist with local acquisition by utilizing zip code analysis. (15%)
Position Impact
This position will report directly to the GM and DM. It will directly impact and be evaluated by the following key business metrics:
1. True Blue CSI
2. Customer Acquisition and Retention
3. Number of Fans/Followers Facebook/Twitter
4. Hits to local web pages
5. Marketing coupon redemption
6. Number of events scheduled and attendance
7. Comp results
8. Twelpforce questions answered
9. Review of blogs and social media content created
CLOSING STATEMENT
This role will serve as a cog in our social media network. This is a space that changes constantly and to stay relevant we must press ourselves into it. One of the greatest things about Best Buy is the strength of our people and their ability to innovate around the business. Our people perhaps are our greatest asset, and this role is just another example of our company utilizing our people to do things that our customers expect. In some cases our associates are already doing fulfilling parts of this role, through Twelpforce our associates are already making personal connections to our customers. We already seek to educate customers through our Geek Squad blog, which is written primarily by field agents. There are hundreds of stores with Facebook pages, along with hundreds of stores that are using Twitter. This role creates a single person who is responsible for managing this content along with promoting growth in this area. These individuals will help to create a social culture in their store along with connecting the store more deeply to the local community. Furthermore, by creating this position tell the community that we are interested in connecting with them beyond just trying to sell them something, this transparency has been one of the pieces in the success story that Twelpforce has been writing for nearly a year.
CASE FOR CHANGE
Currently the world is more connected than it ever was in the past. People are using social networks to connect to businesses, talk about their experiences, and to research new product. Best Buy has been pushing into the social sphere with initiatives like Twelpforce and developing relationships with different companies including Google, Foursquare, Facebook, and Twitter. Our customers continue to use the telephone to communicate, but they have shown that they are willing to have the conversations with or without us in social media. Our corporate office has given guidelines, but has been very clear that they are looking for the field to develop and innovate in the social space.
THE ROLE
The Social Media Specialist would be responsible for driving growth in our stores through a combination of utilizing social networks along with participation in community and in-store events. Each participating store in the district would select an associate to become a Social Media Specialist. The initial structure will require 20-30 hours a week. The initial test will run for 6 months, while we evaluate the impact of the role.
RESPONSIBILITIES
Twelpforce/BBYFeed.com
Twelpforce is currently a large part of the Best Buy social media strategy. Anyone in this role should be an active member of Twelpforce due to the unique nature of the program. There are many best practices that can be learned from participation in this program. More than 25,000 questions have been answered by the 2,600 associates working with Twelpforce. Now with the new BBYFeed tool, currently in beta testing, there is increased visibility of customer questions.
Twitter/Facebook
By using Twitter and Facebook page at the local level gives us an ability that very few retailers have started utilize, which is an advantage that where can capitalize. These are two of the fastest growing mediums in the world of social networking. We can use both forms for the purpose of marketing, customer contact, and around general awareness. Awareness works in both directions, making our customers more aware of our offers and making us more aware of the needs of our customers.
Other Social Media (YouTube, Flickr, FourSquare, etc...)
Although Facebook and Twitter are among the largest social media networks in existence, they don’t always provide the same opportunities as other tools that are available. The social media specialists need to be cognoscente of all of the tools they have at their disposal. This could include providing demonstrations of cameras through Flickr, PodCasts presented through YouTube, or promotions for checking in through FourSquare.
Blogging
Blogging exists in so many different forms, making this is a very general term. In this context we would leverage a weekly/bi-weekly editorial around various technologies in our store. These could range from “Why should I own a compact camera and a D-SLR?” to “What’s and E-Reader?” These articles would be handed out to customers as a stacking tool in stores, along with being posted the store’s Twitter feed and Facebook page.
Local Marketing and Event Planning
This includes coupon creation, local website management and maintenance, and event planning. This person will be responsible for utilizing RMT for approval. Social media specialists will also be responsible for communicating upcoming events and recaps of those events through the social media networks. Communication around donations and store participation in events also fall into the marketing category as well, the good acts that we do in our communities should be communicated in the name of transparency.
Leadership Meetings
These individuals should present weekly at the leadership meetings to keep the store leadership informed around news in the social media side of the business. This will also give the opportunity for the leadership team to be able to inform around upcoming events or other areas where they may have increased visability.
SELECTING INDIVIDUALS
The ideal individuals will be those who are familiar with and have a passion for social media. A person who can manage multiple tasks at once, is able to establish rapport, and able to speak to the Best Buy brands. If demand warrants more associates may be put in this role, with each taking different portions as a focus, such as dividing social media and community events.
BEGINNING THE EXPERIMENT
After all stores are given the opportunity to select individuals, a meeting at the district office would be organized to explain best practices, exchange contact information, and clearly land the expectations of the role. This meeting will also give the opportunity to discuss any questions the individuals may have. After this meeting the social media specialists would be able to begin their rhythms, with a bi-weekly conference call to ensure that best practices are being exchanged and to establish a rapport between these individuals. Eventually the conference call would move to one a month as these individuals become more comfortable with their roles.
Social Media Specialist
Position Summary
During a test period of 6 months one representative from each participating store will focus on achieving growth through connecting with our local community with social media. This position will utilize various methods of reaching out to our community in order to acquire new customers, retain existing customers, and to emphasize our role in the community.
Key responsibilities (with % of time)
1. Updating and creating social media profiles on a daily/weekly basis, along with communicating with our customers. These sites include Facebook, Twitter, blog sites, local store pages, and email. Utilizing these tools the Social Media Specialist will inform around in store events, community events with store participation, and to answer questions and concerns from customers in our local area. (30%)
2. Coach and train store associates around the use of social networks, Twelpforce, communicating community events, and explaining best practices and proper usage of social media. (20%)
3. Using RMT to maintain the local store page to represent in store events, community events, and provide a contact path for the store. (20%)
4. Attend local events with a goal of creating ongoing relationships with members of the community and to represent and promote the brand in a physical capacity. Develop partnerships with local groups that match the store’s growth plan, targeting various groups such as schools, military, law enforcement, and fire departments. Work with store leadership to create in-store events. (15%)
5. Partner with the various internal groups such as the Viewpoint committee, Local Wolf Pack, and BBFB to work with all aspects of the community. Attend meetings and host conference calls to review growth and impact in each area. Spearhead tag awards, @15, teach awards and assist with local acquisition by utilizing zip code analysis. (15%)
Position Impact
This position will report directly to the GM and DM. It will directly impact and be evaluated by the following key business metrics:
1. True Blue CSI
2. Customer Acquisition and Retention
3. Number of Fans/Followers Facebook/Twitter
4. Hits to local web pages
5. Marketing coupon redemption
6. Number of events scheduled and attendance
7. Comp results
8. Twelpforce questions answered
9. Review of blogs and social media content created
CLOSING STATEMENT
This role will serve as a cog in our social media network. This is a space that changes constantly and to stay relevant we must press ourselves into it. One of the greatest things about Best Buy is the strength of our people and their ability to innovate around the business. Our people perhaps are our greatest asset, and this role is just another example of our company utilizing our people to do things that our customers expect. In some cases our associates are already doing fulfilling parts of this role, through Twelpforce our associates are already making personal connections to our customers. We already seek to educate customers through our Geek Squad blog, which is written primarily by field agents. There are hundreds of stores with Facebook pages, along with hundreds of stores that are using Twitter. This role creates a single person who is responsible for managing this content along with promoting growth in this area. These individuals will help to create a social culture in their store along with connecting the store more deeply to the local community. Furthermore, by creating this position tell the community that we are interested in connecting with them beyond just trying to sell them something, this transparency has been one of the pieces in the success story that Twelpforce has been writing for nearly a year.
Wednesday, May 5, 2010
Salaried (non-exempt) Supervisors and Full Time associates
I have been kicking this idea around for a while and thought it was time to put it on the blog. Essentially when talking about SG&A labor is brought up as the biggest or only controllable expense. Although, I completely disagree with this thought process I will embrace it and see what we can do to make the business more efficient and more profitable.
The Model
Supervisors and Full-Time associates would be moved from hourly to salaried. During most of the year (January 31st– October 1st) these associates would work 32 hours a week. During the holiday rush these associates would work around 50-55 hours a week. Each week associates would be scheduled as normal (based in traffic and other metrics), with a certain number of associates scheduled as on-call. The on-call associates would be expected to report to the store within 1 hour of a call. During the larger part of the year associates would typically be scheduled for 4 – 8 hour shifts and one day of on-call; with the on-call portion being scheduled as well. Associates would typically also have 2 weeks with on-call shifts, and then 2 weeks without, rotating through the months. During the holidays associates would either be scheduled for 5 – 8 hour shifts, with the possibility of being asked to stay up to 4 hours later each shift, or be scheduled for 4 – 10 hour shifts, with 1 on call day. These would alternate every two weeks in a similar manner to the on-call rotation mentioned earlier.
Why?
The customer benefit is that our stores would be constantly staffed, and in the event that the store was understaffed for a large rush we would be able to call in more associates.
The company benefits are that we will be better able to forecast our labor (the full-time associates’ hours would have already been calculated – leaving only the part-time associates’ hours to fluctuate), gives the ability for associates to participate in projects like Twelpforce 24 hours a day, and allows for Supervisors and High potential associates to work on more projects from home in their spare time (this is something that currently happens, but usually with employees off the clock, by making these associates salaried I would assume the company would have less liability around that work.)
The employee benefits are that during most of the year you are getting paid whether you work or not. If everything works the way it should, even these associates could be sent home early if traffic permits – putting them on an on-call status until their normal shift would be over. This could give more associates a better work/life balance.
Notes and cautions:
During the test portion Supervisors and Full-Time associates would have a chance to opt into the program. Also, we can’t abuse the labor, during the holidays, when the highest number of customers are coming in is where the company benefits the most from this plan, during the rest of the year if we take it easy on the associates everyone will be happy. This is partially inspired by the way managers work now, where they give up 90% of their life for 4 months to have a pretty easy scheduling during the rest of the year.
I would also add that currently only a small percentage of the store staff is full-time; this plan still gives the ability to use labor to control SG&A.
As always, if you have any feedback I am willing to listen, post them here, tweet me, or if you know me outside of this blog contact me in any way you see fit.
Have a great day!
The Model
Supervisors and Full-Time associates would be moved from hourly to salaried. During most of the year (January 31st– October 1st) these associates would work 32 hours a week. During the holiday rush these associates would work around 50-55 hours a week. Each week associates would be scheduled as normal (based in traffic and other metrics), with a certain number of associates scheduled as on-call. The on-call associates would be expected to report to the store within 1 hour of a call. During the larger part of the year associates would typically be scheduled for 4 – 8 hour shifts and one day of on-call; with the on-call portion being scheduled as well. Associates would typically also have 2 weeks with on-call shifts, and then 2 weeks without, rotating through the months. During the holidays associates would either be scheduled for 5 – 8 hour shifts, with the possibility of being asked to stay up to 4 hours later each shift, or be scheduled for 4 – 10 hour shifts, with 1 on call day. These would alternate every two weeks in a similar manner to the on-call rotation mentioned earlier.
Why?
The customer benefit is that our stores would be constantly staffed, and in the event that the store was understaffed for a large rush we would be able to call in more associates.
The company benefits are that we will be better able to forecast our labor (the full-time associates’ hours would have already been calculated – leaving only the part-time associates’ hours to fluctuate), gives the ability for associates to participate in projects like Twelpforce 24 hours a day, and allows for Supervisors and High potential associates to work on more projects from home in their spare time (this is something that currently happens, but usually with employees off the clock, by making these associates salaried I would assume the company would have less liability around that work.)
The employee benefits are that during most of the year you are getting paid whether you work or not. If everything works the way it should, even these associates could be sent home early if traffic permits – putting them on an on-call status until their normal shift would be over. This could give more associates a better work/life balance.
Notes and cautions:
During the test portion Supervisors and Full-Time associates would have a chance to opt into the program. Also, we can’t abuse the labor, during the holidays, when the highest number of customers are coming in is where the company benefits the most from this plan, during the rest of the year if we take it easy on the associates everyone will be happy. This is partially inspired by the way managers work now, where they give up 90% of their life for 4 months to have a pretty easy scheduling during the rest of the year.
I would also add that currently only a small percentage of the store staff is full-time; this plan still gives the ability to use labor to control SG&A.
As always, if you have any feedback I am willing to listen, post them here, tweet me, or if you know me outside of this blog contact me in any way you see fit.
Have a great day!
Wednesday, March 31, 2010
RUMOR! Best Buy buys Radio Shack
RUMOR RUMOR RUMOR
Because this is still in rumor status I have moved this to an internal page.
If you are a Best Buy employee You can view it on Watercooler through this path: Home » My Company » Best Buy - Innovation, Generating Value and Saving Money » Innovation and Growth Ideas » Best Buy acquires Radio Shack (rumor)
I would like to say again that this is just a rumor and that I am a line-level employee with no knowledge of what Best Buy corporate is doing in this matter.
This update was just an exercise for my brain and a way to express my thoughts to a company that I love. Because it could be taken the wrong way I have moved these thoughts to a place that can still fulfill my goals without any of the negatives that are possible.
Have fun,
-Mike
Because this is still in rumor status I have moved this to an internal page.
If you are a Best Buy employee You can view it on Watercooler through this path: Home » My Company » Best Buy - Innovation, Generating Value and Saving Money » Innovation and Growth Ideas » Best Buy acquires Radio Shack (rumor)
I would like to say again that this is just a rumor and that I am a line-level employee with no knowledge of what Best Buy corporate is doing in this matter.
This update was just an exercise for my brain and a way to express my thoughts to a company that I love. Because it could be taken the wrong way I have moved these thoughts to a place that can still fulfill my goals without any of the negatives that are possible.
Have fun,
-Mike
Friday, March 5, 2010
Talent Development + Validation
Lets try something new:
As always let me know what you think, please keep in mind that this one is off the cuff and I only prepared a very limited set of notes, (4 sentence fragments to remind myself of the inspiration) it was very different for me to do it this way and I am sure that i didn't go into as much detail or depth that I do when I write it out. I am very interested to know what others think about this video (not attempting to do this in a vacuum.) Regardless, I am going to try this out a few more times (I have to get more comfortable in front of a camera), hope you enjoyed.
As always let me know what you think, please keep in mind that this one is off the cuff and I only prepared a very limited set of notes, (4 sentence fragments to remind myself of the inspiration) it was very different for me to do it this way and I am sure that i didn't go into as much detail or depth that I do when I write it out. I am very interested to know what others think about this video (not attempting to do this in a vacuum.) Regardless, I am going to try this out a few more times (I have to get more comfortable in front of a camera), hope you enjoyed.
Tuesday, February 23, 2010
Reduce Velocity – Increase Margin (slow down and do it right)
What if we are going after our objectives the wrong way? What if during this past holiday season we pursued the wrong path by embracing the high velocity strategy? The answer to becoming a more customer centered company that is also more profitable cannot be found by increasing velocity. Conventional retail and Best Buy are not congruent. Wal-mart is the king of conventional retail; let’s let them keep that smoldering battlefield and move on to something that actually serves the customer.
Shrinking Product Margin – (the land of diminishing returns)
I will start off with a bit of math, the point of this exercise should become clear, but I will explain below.
If the average selling price (ASP) of an item is $1000 this year with 30% product margin ($300). The next year its ASP has dropped to $800, but the cost remains the same, the margin drops to 12.5% ($100). The next year its ASP drops to $600, but the cost has dropped a bit as well, and the margin only falls to 6% ($36).
If we sell $100,000 worth of this item the first year, $110,000 the second year, and $121,000 the third year, we have shown a 10% comp year over year which is a great gain in revenue. The problem with this gain in revenue is that the first year we make $30,000 in margin, the second year we make $13,875, and the third year we make $7260.
In this example we would have to sell nearly $250,000 the second year to actually grow, and the third year this number moves over $500,000.
The point is that there are products in our stores that are following a trend similar to this, and if we don’t find a way to stem the tide of margin erosion we will not be able to keep our doors open. Keep reading I will try to find a way out of this.
Competition (Wal-Mart, Target, Lowes, Sears, HHGreg, ABT, Amazon, the list goes on and on and on)
When you ask anyone who are competitors are it typically turns to other retailers, whether they are brick and mortar or online. The list is too long to accurately recreate here, but it suffices to say there are a ton of other businesses fighting for the same customers.
Do we want to compete? Ask yourself if a Wal-mart experience is the type that we even want to compete with. Wander around a vacuous space, hoping to find whatever it is that you came in for (try to remember after trekking for miles throughout the store), asking someone for help (if you can find someone) only to ask yourself if the answer they gave was really correct or just something they made up (depending on the training they have received around the products/services they offer and what that person’s idea of helping is.)
The easy answer is that hopefully we don’t compete with these retailers; we offer customers a better experience that doesn’t even come close to paralleling the scenario outlined above. The unfortunate truth however is that we do offer this experience for a great deal of our customers, especially during the holidays, especially when we increase the velocity.
The logic being that if an associate sells 20 of any given item in an hour vs. selling 2 of that same item in an hour, which is going to be the better customer experience? Which interactions are more likely to leave a customer in a position to take advantage of all of our competitive differentiators? It isn’t very likely going to happen in any one of those 3 minute back to back to back rapid fire interactions that leave the employee racing to the next customer and each customer getting either a canned presentation or just a few basic needs taken care of instead of the complete solution.
The other downside to this activity is that many of our associates are starting their path with our company during the holidays. Those who we train this way as a starting point with the company then retain many of these habits when we move onto the rest of the year. This means that we have to try to train out bad habit that we have instilled as we needed to speed up to handle the increased velocity.
Let other retailers handle the velocity, and let’s become something better
To simply state the case for change: If we continue down this path where we are competing against other retailers by selling product and relying on Home Theater and PC revenue streams to provide an outlet for growth we will not be able to continue being in business.
Here is my view on how we not only survive as a company, but drive growth and expansion through the foreseeable future just by refocusing our efforts and utilizing what we already have working for us.
Products & Services
There are products in our stores that still carry large product margins typically found in Appliances, Car Fi, and Best Buy Mobile. The issue we have now is that we use most of our marketing towards drawing traffic in Computers, Home Theater, and Media (cd/dvds). The question I ask here, would you rather have a customer spend $500 on a transaction and generate $50 in or $500 to generate $100 or better yet $0-250 spent by the customer generating $100s in profit? Yes this is just hypothetical, and an easy choice when it is put this way, but the point remains that put simply we are picking the first option, and $50 may be setting the bar to high.
If we put a focus on departments that sell profitable product instead of ones that sell profitable attachments we could increase margin growth regardless of the revenue lost. I realize that we are a public company and that revenue seems to be one of the biggest indicators of success, but I beg the question, isn’t profit a better measure of success than the total dollar amount that you bring in?
If attaching Geek Squad services is a profitable venture, wouldn’t it be more profitable to sell services on products purchased elsewhere? In this vein, we don’t have to warehouse it, sell it, etc. We just take care of it after the fact. If we advertised services instead of the product, sending the message that no matter where you buy your products Geek Squad will be here for you to Mount it, Optimize it, or protect it. If the product is in our system, why can’t we offer Geek Squad Black Tie Protection, even if it was purchased somewhere else (perhaps a functionality check is necessary first, but there should be a system for this).
NPV/DSUB
NPV and DSUBs, Best Buy Mobile comes to mind again, but so does Home Theater, Gaming, Digital Imaging, Computers, MP3s, Car Fi, and even Appliances in terms of the departments that can offer a D-Sub to a customer and sell products that we don’t have to warehouse or even deliver. There are so many products in the store that we can give to a customer and ring out in our store, that take up very little space in the logistics system. These include service from Smilebox, Napster, iTunes, CinemaNow, DirecTv, Comcast, AT&T, MediaCoMM, HughesNet… The list goes on and on.
These are all items that are essentially free (by comparison to other products) for us, and may have a great impact on our bottom line. The issue is that we have a very low offer rate around these services. If we focused on these parts of our business, if we change our culture in a way that we are actively attaching these services to our customers solutions, we can increase productivity, margin, and make the customers’ experience better all at the same time.
Vendor Show
Perhaps one replacement for our media department that could give us a huge potential to WOW customers along with driving the business, would be to host a vendor show in the front of the store. This would change out once a month (to keep it fresh), different vendors would have interactive displays that would show customers the latest and greatest of everything they have to offer through their technology. During different times in the week we could have our employees or vendor reps actually staff these stations and give presentations and demonstrations of the newest technology (like going to a CES). We could use these to show people how all of the products we offer in the store can work together, and use it as a starting point to talk about having Geek Squad come to their house to either give a consultation or to come out and make it work for them.
Shrinking Product Margin – (the land of diminishing returns)
I will start off with a bit of math, the point of this exercise should become clear, but I will explain below.
If the average selling price (ASP) of an item is $1000 this year with 30% product margin ($300). The next year its ASP has dropped to $800, but the cost remains the same, the margin drops to 12.5% ($100). The next year its ASP drops to $600, but the cost has dropped a bit as well, and the margin only falls to 6% ($36).
If we sell $100,000 worth of this item the first year, $110,000 the second year, and $121,000 the third year, we have shown a 10% comp year over year which is a great gain in revenue. The problem with this gain in revenue is that the first year we make $30,000 in margin, the second year we make $13,875, and the third year we make $7260.
In this example we would have to sell nearly $250,000 the second year to actually grow, and the third year this number moves over $500,000.
The point is that there are products in our stores that are following a trend similar to this, and if we don’t find a way to stem the tide of margin erosion we will not be able to keep our doors open. Keep reading I will try to find a way out of this.
Competition (Wal-Mart, Target, Lowes, Sears, HHGreg, ABT, Amazon, the list goes on and on and on)
When you ask anyone who are competitors are it typically turns to other retailers, whether they are brick and mortar or online. The list is too long to accurately recreate here, but it suffices to say there are a ton of other businesses fighting for the same customers.
Do we want to compete? Ask yourself if a Wal-mart experience is the type that we even want to compete with. Wander around a vacuous space, hoping to find whatever it is that you came in for (try to remember after trekking for miles throughout the store), asking someone for help (if you can find someone) only to ask yourself if the answer they gave was really correct or just something they made up (depending on the training they have received around the products/services they offer and what that person’s idea of helping is.)
The easy answer is that hopefully we don’t compete with these retailers; we offer customers a better experience that doesn’t even come close to paralleling the scenario outlined above. The unfortunate truth however is that we do offer this experience for a great deal of our customers, especially during the holidays, especially when we increase the velocity.
The logic being that if an associate sells 20 of any given item in an hour vs. selling 2 of that same item in an hour, which is going to be the better customer experience? Which interactions are more likely to leave a customer in a position to take advantage of all of our competitive differentiators? It isn’t very likely going to happen in any one of those 3 minute back to back to back rapid fire interactions that leave the employee racing to the next customer and each customer getting either a canned presentation or just a few basic needs taken care of instead of the complete solution.
The other downside to this activity is that many of our associates are starting their path with our company during the holidays. Those who we train this way as a starting point with the company then retain many of these habits when we move onto the rest of the year. This means that we have to try to train out bad habit that we have instilled as we needed to speed up to handle the increased velocity.
Let other retailers handle the velocity, and let’s become something better
To simply state the case for change: If we continue down this path where we are competing against other retailers by selling product and relying on Home Theater and PC revenue streams to provide an outlet for growth we will not be able to continue being in business.
Here is my view on how we not only survive as a company, but drive growth and expansion through the foreseeable future just by refocusing our efforts and utilizing what we already have working for us.
Products & Services
There are products in our stores that still carry large product margins typically found in Appliances, Car Fi, and Best Buy Mobile. The issue we have now is that we use most of our marketing towards drawing traffic in Computers, Home Theater, and Media (cd/dvds). The question I ask here, would you rather have a customer spend $500 on a transaction and generate $50 in or $500 to generate $100 or better yet $0-250 spent by the customer generating $100s in profit? Yes this is just hypothetical, and an easy choice when it is put this way, but the point remains that put simply we are picking the first option, and $50 may be setting the bar to high.
If we put a focus on departments that sell profitable product instead of ones that sell profitable attachments we could increase margin growth regardless of the revenue lost. I realize that we are a public company and that revenue seems to be one of the biggest indicators of success, but I beg the question, isn’t profit a better measure of success than the total dollar amount that you bring in?
If attaching Geek Squad services is a profitable venture, wouldn’t it be more profitable to sell services on products purchased elsewhere? In this vein, we don’t have to warehouse it, sell it, etc. We just take care of it after the fact. If we advertised services instead of the product, sending the message that no matter where you buy your products Geek Squad will be here for you to Mount it, Optimize it, or protect it. If the product is in our system, why can’t we offer Geek Squad Black Tie Protection, even if it was purchased somewhere else (perhaps a functionality check is necessary first, but there should be a system for this).
NPV/DSUB
NPV and DSUBs, Best Buy Mobile comes to mind again, but so does Home Theater, Gaming, Digital Imaging, Computers, MP3s, Car Fi, and even Appliances in terms of the departments that can offer a D-Sub to a customer and sell products that we don’t have to warehouse or even deliver. There are so many products in the store that we can give to a customer and ring out in our store, that take up very little space in the logistics system. These include service from Smilebox, Napster, iTunes, CinemaNow, DirecTv, Comcast, AT&T, MediaCoMM, HughesNet… The list goes on and on.
These are all items that are essentially free (by comparison to other products) for us, and may have a great impact on our bottom line. The issue is that we have a very low offer rate around these services. If we focused on these parts of our business, if we change our culture in a way that we are actively attaching these services to our customers solutions, we can increase productivity, margin, and make the customers’ experience better all at the same time.
Vendor Show
Perhaps one replacement for our media department that could give us a huge potential to WOW customers along with driving the business, would be to host a vendor show in the front of the store. This would change out once a month (to keep it fresh), different vendors would have interactive displays that would show customers the latest and greatest of everything they have to offer through their technology. During different times in the week we could have our employees or vendor reps actually staff these stations and give presentations and demonstrations of the newest technology (like going to a CES). We could use these to show people how all of the products we offer in the store can work together, and use it as a starting point to talk about having Geek Squad come to their house to either give a consultation or to come out and make it work for them.
Thursday, January 21, 2010
BBY Warehouse
Today’s update is going to dive into my ideas for a new concept of a Best Buy store. This concept would change the floor plan around to expand the warehouse portion to cover about 80-90% of the building. Customers would still have access to Blue Shirts, a Geek Squad precinct, and customer kiosks. The point of this design is to lower costs, maximize customer experience, and prepare for the digital content laden future.
Let’s look at the lowered costs first. One of the reasons that online retailers Amazon.com are able to offer very low prices is because of their lack of overhead (i.e. retail locations). This concept allows for fewer employees working in the building by putting a large focus on BestBuy.com pickup and via kiosk sales. We would also configure the warehouse portion of this concept to mimic our current DC/DDC facilities, to ensure that we can pull product quickly. By doing this we better utilize the floor space we are provided thus reducing the impact of rent/mortgage on the price of the individual product.
Next, let’s examine the customer experience. In the customer accessible portion of the store we would have displays like in a normal store, but these would be 10% of the normal number. The biggest change in merchandising would be the use of 3D displays on our kiosks to demonstrate the products that are not on display. Another change would be a consultation area where customers sit down with an expert to discuss what they want to be able to do and then we build the solution they will need to accomplish that goal.
In the future where downloaded content is a more consistent means for customers acquiring media products, there will be several products that we will either no longer sell, or will be sold in a very diminished quantity (i.e. CDs, DVDs, Video Games). This concept prepares for that eventuality by creating a store with a low dependence on “browseable” media for customer traffic.
Keep in mind that this concept isn’t meant as a direct replacement of our current store, but as a modular add-on to the other stores in a district. It’s position in a district should be near as many stores as possible, but at the same time as far from the current DC/DDC as well. This concept will allow for more inventory on-hand, along with supplementing our supply chain as a warehouse hub. Depending on its placement this concept store would be able to bolster other stores’ inventories by using systems like OMS for customer pick-ups.
This concept store would also be a delivery hub, doing deliveries of large TVs, appliances, and BestBuy.com orders depending on the size of the location. For instance, if we test this concept with an existing DDC, it would continue to perform all of its current roles and add customer service. Which based on customer feedback could help the DDC quite considerably with the way they handle customer calls, but that is for a different blog update.
In closing this concept would allow for a brick and mortar store to compete more directly with the pricing of an online retailer. We could offer a discount for products purchased in this store as a direct reflection of the money we have saved by moving to this model, without creating an actual business plan I wouldn’t be able to speak to the actual number of that discount, but it would be in the range of 10-20% off of the normal price. This could be a huge motivator for our customers to shop in this store.
As normal I would like to hear some feedback on this, please let me know what you think in the comments section.
Let’s look at the lowered costs first. One of the reasons that online retailers Amazon.com are able to offer very low prices is because of their lack of overhead (i.e. retail locations). This concept allows for fewer employees working in the building by putting a large focus on BestBuy.com pickup and via kiosk sales. We would also configure the warehouse portion of this concept to mimic our current DC/DDC facilities, to ensure that we can pull product quickly. By doing this we better utilize the floor space we are provided thus reducing the impact of rent/mortgage on the price of the individual product.
Next, let’s examine the customer experience. In the customer accessible portion of the store we would have displays like in a normal store, but these would be 10% of the normal number. The biggest change in merchandising would be the use of 3D displays on our kiosks to demonstrate the products that are not on display. Another change would be a consultation area where customers sit down with an expert to discuss what they want to be able to do and then we build the solution they will need to accomplish that goal.
In the future where downloaded content is a more consistent means for customers acquiring media products, there will be several products that we will either no longer sell, or will be sold in a very diminished quantity (i.e. CDs, DVDs, Video Games). This concept prepares for that eventuality by creating a store with a low dependence on “browseable” media for customer traffic.
Keep in mind that this concept isn’t meant as a direct replacement of our current store, but as a modular add-on to the other stores in a district. It’s position in a district should be near as many stores as possible, but at the same time as far from the current DC/DDC as well. This concept will allow for more inventory on-hand, along with supplementing our supply chain as a warehouse hub. Depending on its placement this concept store would be able to bolster other stores’ inventories by using systems like OMS for customer pick-ups.
This concept store would also be a delivery hub, doing deliveries of large TVs, appliances, and BestBuy.com orders depending on the size of the location. For instance, if we test this concept with an existing DDC, it would continue to perform all of its current roles and add customer service. Which based on customer feedback could help the DDC quite considerably with the way they handle customer calls, but that is for a different blog update.
In closing this concept would allow for a brick and mortar store to compete more directly with the pricing of an online retailer. We could offer a discount for products purchased in this store as a direct reflection of the money we have saved by moving to this model, without creating an actual business plan I wouldn’t be able to speak to the actual number of that discount, but it would be in the range of 10-20% off of the normal price. This could be a huge motivator for our customers to shop in this store.
As normal I would like to hear some feedback on this, please let me know what you think in the comments section.
Wednesday, January 13, 2010
Twelpforce Episode 2: Attack of the clones
Twelpforce has been a great test so far, and in the future it will be an even greater tool Best Buy can use to help its customers realize happiness. This is my take on what Twelpforce 1.0 could look like, more of a prediction than a true suggestion. I am sure that many of these ideas have already been discussed, but I have been thinking about it for the past couple of days and wanted to write about it, so here we go.
Customer service tools
Many tools are already in the average Blue Shirt’s hands to take care of common to advanced customer issues. The future twelper will use more of these tools to hand customer issues in the same way that any rep 2 or a 1-888-Best-Buy call center employee currently does. This will provide a faster way to handle customer issues, along with increasing productivity for the call center load. Imagine an army of call center employees all taking phone calls and at the same time being able to take care of 1-10 customers through the web. This takes place in a world that merges Twelpforce with the remote support Geek Squad agent idea, and provides a very quick and easy experience for our customer.
More ways to send/receive messages
Another big change that I see happening is moving outward from Twitter. We will take advantage of over ways to communicate with our customers; this includes communicating with customers through SMS, Google talk, Google wave, Facebook, Xbox Live, and BestBuy.com. In the future this will be one way that we can eliminate the barriers like distance, time, and service that have between us and taking care of our customers.
Process Sales
Another patch that I could see following is one where twelpers are able to process sales through whichever method they have established contact with the customer. Of course there are a great many pieces of security we would have to put into place first to ensure that we are not setting up an easy way for customers to be duped and defrauded. Other than that this could be an easy transition from just educating customers around products they may enjoy to actually facilitating the sale of that product. This way the customer can get exactly what they had talked about without any chance for them to accidently bring home the wrong product.
Testimonials from satisfied customers
One of the best ideas I have received from a fellow twelper was to favorite all of the “Thank You” responses that I receive. It is a great morale booster and can be used to demonstrate our impact to other associates while explaining what Twelpforce is and how it impacts our customers. Having a public facing version of this would allow for potential customers and critics what kind of service they can expect from us. There are always going to be critics that we can’t win over to our side, but one negative voice can be overwhelmed by a sea of positive. I could see an area for this on the official Twelpforce website, along with mentions from real customers in future advertising of Twelpforce, we are already using real employees, why not use real customers as well.
Archives
One of the things I have noticed as I twelp is that some questions come up over and over again. We have solved this problem for now by linking to a forum, but in the future I believe that there will be a fully functional archive of answers that the public will be able to search. These searches will find relevant answers to questions that are commonly asked. If a customer doesn’t want to wait for a twelper to help them out, they could simply look at the answers we have already provided, along with longer more detailed answers than 140 characters are able to provide.
Articles
Another change I see in the future is the addition of articles or columns written by twelpers on a daily, weekly, or monthly cycle based on the twelper and the content on which they are writing. Essentially like a Mashable, CNET, Gizmodo, etc type of news source written by Best Buy employees. With over 2,200 twelpers currently finding a handful of them willing and able to write Tech/Best Buy related articles will be an easy task. These articles would be based on the writers’ prowess and interests detailing things like new technology coming out, possibilities from current tech, benefits of services we offer, etc. In this way we will drive extra traffic from people who may not have questions or issues for us to resolve, but my just be interested in what one of our writers has to say.
Videos
One really amazing thing I witnessed recently was a question being answered in a video. This was a really fantastic thing for many reasons. First, it allow for a longer than 140 character answer, but it was more than that. It was a personal connection that words can’t always convey. I can see this as a big part of the future as it seems like an even more positive version of what we are doing currently. Also, archiving these videos would be very simple through TouTube and TwitVid.
Alright, this week was a short update. As always feel free to leave comments below.
Customer service tools
Many tools are already in the average Blue Shirt’s hands to take care of common to advanced customer issues. The future twelper will use more of these tools to hand customer issues in the same way that any rep 2 or a 1-888-Best-Buy call center employee currently does. This will provide a faster way to handle customer issues, along with increasing productivity for the call center load. Imagine an army of call center employees all taking phone calls and at the same time being able to take care of 1-10 customers through the web. This takes place in a world that merges Twelpforce with the remote support Geek Squad agent idea, and provides a very quick and easy experience for our customer.
More ways to send/receive messages
Another big change that I see happening is moving outward from Twitter. We will take advantage of over ways to communicate with our customers; this includes communicating with customers through SMS, Google talk, Google wave, Facebook, Xbox Live, and BestBuy.com. In the future this will be one way that we can eliminate the barriers like distance, time, and service that have between us and taking care of our customers.
Process Sales
Another patch that I could see following is one where twelpers are able to process sales through whichever method they have established contact with the customer. Of course there are a great many pieces of security we would have to put into place first to ensure that we are not setting up an easy way for customers to be duped and defrauded. Other than that this could be an easy transition from just educating customers around products they may enjoy to actually facilitating the sale of that product. This way the customer can get exactly what they had talked about without any chance for them to accidently bring home the wrong product.
Testimonials from satisfied customers
One of the best ideas I have received from a fellow twelper was to favorite all of the “Thank You” responses that I receive. It is a great morale booster and can be used to demonstrate our impact to other associates while explaining what Twelpforce is and how it impacts our customers. Having a public facing version of this would allow for potential customers and critics what kind of service they can expect from us. There are always going to be critics that we can’t win over to our side, but one negative voice can be overwhelmed by a sea of positive. I could see an area for this on the official Twelpforce website, along with mentions from real customers in future advertising of Twelpforce, we are already using real employees, why not use real customers as well.
Archives
One of the things I have noticed as I twelp is that some questions come up over and over again. We have solved this problem for now by linking to a forum, but in the future I believe that there will be a fully functional archive of answers that the public will be able to search. These searches will find relevant answers to questions that are commonly asked. If a customer doesn’t want to wait for a twelper to help them out, they could simply look at the answers we have already provided, along with longer more detailed answers than 140 characters are able to provide.
Articles
Another change I see in the future is the addition of articles or columns written by twelpers on a daily, weekly, or monthly cycle based on the twelper and the content on which they are writing. Essentially like a Mashable, CNET, Gizmodo, etc type of news source written by Best Buy employees. With over 2,200 twelpers currently finding a handful of them willing and able to write Tech/Best Buy related articles will be an easy task. These articles would be based on the writers’ prowess and interests detailing things like new technology coming out, possibilities from current tech, benefits of services we offer, etc. In this way we will drive extra traffic from people who may not have questions or issues for us to resolve, but my just be interested in what one of our writers has to say.
Videos
One really amazing thing I witnessed recently was a question being answered in a video. This was a really fantastic thing for many reasons. First, it allow for a longer than 140 character answer, but it was more than that. It was a personal connection that words can’t always convey. I can see this as a big part of the future as it seems like an even more positive version of what we are doing currently. Also, archiving these videos would be very simple through TouTube and TwitVid.
Alright, this week was a short update. As always feel free to leave comments below.
Saturday, January 2, 2010
How to build Best Buy’s Service culture
This is a topic that I am probably not nearly done with, but if I don't upload it now, I will likely continue to add to it forever.
This is what Reuters has to say about Best Buy:
Best Buy Co., Inc. (Best Buy) is a specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services. The Company operates retail stores and Web sites under the brand names Best Buy (BestBuy.com, BestBuy.ca, BestBuy.com.cn, espanol.BestBuy.com and BestBuyMobile.com), The Carphone Warehouse (Carphone Warehouse.com), Five Star (Five-Star.cn), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com and GeekSquad.ca), Magnolia Audio Video (MagnoliaAV.com). It operates through two business segments: Domestic and International. The Domestic segment consists of the store, call center and online operations in all states, districts and territories of the United States operating under the brand names Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video and Speakeasy. The International segment is comprised all Canada store, call center and online operations, under the brand names Best Buy, Best Buy Mobile, Future Shop and Geek Squad.
A specialty retailer is the first part of the definition, with services seemingly an afterthought. They view Best Buy as a retail store. If we want to build a true culture of service we have to shake the perception that we are retail. Because Wal-Mart is the king of retail grossing hundreds of billions of dollars a year and we all know that there is no logical person that will mistake them for a service company. The question moving forward is this: “Are we a retail company that offers services or are we a Service company that offers product?” If we allow Wall Street or our customers to answer this question today, we would likely see that we are the former, but how do we shift the perception to the latter? This blog update will cover a few ideas on how that can happen.
Rebranding Best Buy to Geek Squad
Rebranding the Best Buy store to Geek Squad is one possible solution, but with the cost of giving up the Best Buy brand this may be a hard sell to most powers that be, so instead of rebranding every store in the company we could have true Geek Squad stand alone stores instead of the stand alone precincts we have tried in the past. These Geek Squad stand alone stores would essentially be rebranded Best Buy stores with Geek Squad agents/autotechs/installers working on the sales floor; these members of Geek Squad would be able to provide the sales advice for customers along with being able to perform the services required. The plan would be to one of these Geek Squad service stores in each district, that way they would be close to the other stores and be able to use Geek Squad members from these other stores in a rotation. The Geek Squad stand alone store should drive more services than any other store as it would be those most qualified to talk about the services that we offer on the front lines offering them to our customers. This would also be a great place for other stores in the district to send their employees for training around the services that we offer.
Change the Signage
One easy way to allow customers to know that we offer services is to change the price tag. Instead of the largest most visible price being that of the product, it should be that of the product combined with the most applicable service that we offer. The product price should still appear on the price tag, but should be a reduced size. This will give customers who aren’t speaking to a Blue shirt the knowledge that we do offer services as a company. This also gives breaks the illusion that we are simply adding services on to the product. This also helps the customer understand that it is our mission to make their lives better through a complete solution. To select which services to add to the price tag, I would suggest looking at the most common services sold on whichever product we are talking about (e.g. Netbooks would have optimization). Another great thing about having the prices on the tag is that associates covering from another area in the store would have an easier time offering services.
Leverage Speakeasy, Napster, and D-Subs(Digital Subscription)
It isn’t a large stretch to think of a content provider offering services (e.g. DirecTv setting up a new TV or AT&T setting up your network). One thing we to need leverage now more than ever is the fact that we offer content, as the margins on consumer electronics plunge lower and lower every year, one constant remains that we have to turn a profit to stay in business. We are heading towards a future where televisions are a loss leader to bring customers in (where computers are today), customer traffic drivers like CDs and DVDs are obsolete (replaced by digital download), and online retailers can sell products far below costs of big box retailers and turn a profit (Amazon is already consistently doing this). In this crazy future we will need to find products and services that provide the margin our business needs to stay healthy.
If our business routinely matched customers up to content that we either provide or are a conduit to, they will think of us when it is time to do any of the service work to make it work. This hypothesis is based on the current culture where customers have a tendency to hold Best Buy responsible for products that don’t work properly because they know we have a service center and fix things, where they don’t typically hold other retailers responsible in the same way (e.g. Wal-mart/Target). Essentially by strengthening this part of our business we will grow the services aspect and add margin while we do it.
One way to do this is to have bigger more interactive displays for the content and D-subs we offer currently: Napster, Netflix, CinemaNow/Blockbuster, AT&T, Comcast, etc. Make it a simple process for a customer to sign up, with or without an associate present. By making this a process that the customer can do by themselves we also save on SG&A and potentially making it a faster experience for the customer during very busy times where associates may be helping other customers.
One innovation that comes to mind is having a D-sub display that is zoned by an employee of Best Buy, or even allow the third party to use their own labor. For example, Netflix is a great D-sub that we are offering right now. We could have a 4 foot section devoted to Netflix (or even use the one of the FEZ in Home Theater), this section would have a TV, a computer, and an Xbox/PS3. A Netflix account would be created for each one of these displays. We could use a MiFi to provide internet to all of the devices, and truly show customers how easy it is to stream Netflix. If we assume that all of the product would be on planogram anyway and nearly any mobile vendor would jump at the chance of having their MIFI associated with this type of display, the only real extra cost to us would be in the labor. If the average d-sub has a $35 dollar vendor credit behind it, and we assume the average line level employee makes $10 per hour, the goal would be for the associate to sell one per hour. This would give a margin of $25 per hour.
Now if these assumptions are correct lets add it all up. Assuming that this display sells an average of 10 per day, and we have half our stores that meet this goal and the rest did nothing, we would do an extra $125,000 per day in margin. If we assume that type of performance for 360 days out of the year we would gross and extra $45 Million a year in margin. Now I understand this is only an increase of about .001% in a $40 billion dollar company, but it is a move in the right direction and it assumes a very small investment with a very small impact. If we move those goals up a bit, to have 70% of the stores participating, 2 an hour, still 360 days a year we move up to $126 Million which is .003% of that $40 billion dollar business.
Obviously these assumptions are not all completely accurate, as the $35 amount is just one created for the sake of creating an equation that may be solved. Depending on the D-Sub that is chosen the number sold and the vendor credit could be completely different, but the point remains if there is an amount of margin that exceeds the employees’ salaries a small section in each store that changes periodically would be a boon for Best Buy along with whichever company we were selling in that vignette. This would be doubleplusgood if we used Napster as one of these manned vignettes, as we can leverage our business to compete with Apple, although right now we aren’t going to go into depth around how we sell gift cards for our competition.
Change Free Delivery Offer
The issue that is caused by Free Delivery is the “hook up” where delivery will connect a single source, usually for the purpose of making sure the TV works before they leave. Customers have a hard time separating from an installation (Geek Squad employees performing the service) and delivery and hookup (Third party connecting one device). This leads to problems when trying to match the customer to the proper services, as they feel that those services are going to be free before they come into the store. Free delivery works very well VS. Wal-Mart/Target & other retailers, but is hurting our installation business.
The question I would pose is this, “What do we want to do?” Are we trying to win a war with Wal-Mart in TVs or are we trying to build our business into one that we want to run and our customers want to shop?
If we are trying to win a price/VPE war with Wal-Mart in TVs we might as well give up now, the reason I say that is because of the results so far – TV margins are very slim, Wal-Mart and Best Buy have similar prices, and Wal-Mart attempts to copy every innovation made by Best Buy. The problem with all of this is that Wal-Mart is 5 times larger and sells groceries meaning they can sell more product and they can use their entire electronics department (a Best Buy clone without the Blue-Shirts) to drive traffic and still make margin off of the odds and ins that other retailers can’t/don’t carry.
Home Theater Changes
If the answer instead is that we want to build the business into one that we enjoy and that our customers want to shop at we have to change some of our thinking and strategy to work for the long term result.
One way we can drive installations is to work with our vendors for backend support, offering discounts on the installation prices with the purchase of certain brands each week. This would be a promotion that we would run every week with alternating brands for 6 months to a year. The goal is to drive word of mouth advertisement to friends and family of those having the work done, along with putting our agents in more homes which gives us the chance to inspire and demonstrate the art of the possible, and with backend support from our partners it gives us the margin that we would normally have. If we go with this strategy I would caution that the services should never be free at first it should be around 30-50% off and by the end it should be reflecting a 20-40% discount, this will keep the HT(HE) associates offering. The issue with giving it away for free can make the associates a little more apathetic in their offering when it is no longer free.
Another way to drive installation is to take pictures of our completed installations. We can then use these on GeekSquad.com, in local stores (“brag books”, on the TVs in the HT loop, as posters, etc), and in different forms of advertisement. Some stores already use pictures like this, but installers aren’t all taking pictures after every job (with customer permission of course). The more pictures of completed installations we can show our customers the more they will trust our work along with feeling confident with our ability to do a great job.
Advertise Repair
One of the areas that we don’t talk about often is the repair service that we offer. If we look at the smaller local businesses that sell appliances and offer repair we see a key difference between the vehicles we use and the ones they use. Theirs call out the products and services they offer along with contact information where ours typically are either plain (e.g. Delivery + appliance install/repair) or mysterious (Geek Squad), and while I agree that there is a certain appeal that is gained from the mystic that Geek Squad vehicles have, there is also an opportunity to advertise what we do, and that mystic can only last so long before customer get tired of trying to figure out what it is that we do. One big thing we can do with our vehicles is to put some information of what we offer somewhere on our vehicles. The type of information and location to print it will vary from vehicle to vehicle, but as an example on the back of a Geekmobile we could put 1-800-Geek-Squad and a reference to computer setup/repair. Perhaps as OLED screens become a little more common place we could use screens like these to display advertisements on our vehicles.
We should also use in-store signage to let customers know that we can repair old appliances, TVs, computers, etc. Along with putting this information in our weekly advertisements will allow us to drive our repair business. The goal here again is a long term one, where by educating customers that we can repair their products we also gain their trust and demonstrate our prowess which will lead to more installations sold in the future.
Low priced services – Ala Cart
Price shopping customers tend to balk at the price of our services, which is an issue when we are trying to drive a service culture. Even Wal-mart is starting to learn that there is a finite amount of boxes that you can sell to a customer, but one thing that we are both forgetting is that the lower income customer has a set budget for the TV when they come in and the reason they will do it themselves most of the time is not because of some joy of the manual labor, or even that the service doesn’t have enough value for the money, but more likely because it exceeds the amount of money in their wallet. To cater to these customers I would suggest having budget services, where we have a low opening price point to appeal to these customers, but with a very limited service offered. For the sake of example let’s take a look at the TV Mounting service that we currently offer and the low priced version of this service.
TV Mounting - $149/$249/$349 depending on the size of TV. This service has a huge value for the money, and provides a really great job, the downside is that with the price of TVs dropping a 32” TV may only cost $299-$399 which means that the service nearly doubles the price of the TV. The low price version could be $90/$180/$270 and the trade off would be that we no longer conceal the wires in the wall and we don’t do an educational demo – these being two of the more time consuming pieces of the wall mount.
Training
Another large piece that we are missing out on is the training around consumer electronics. This should be a category on every page on GeekSquad.com. It should be difficult for a customer to go without knowing that we offer training on nearly every product in the store. One big innovation that my store has been using for years with varying degree of success is an in store training at $29.99 on Camera’s and iPods. I would assume that if we had a large push companywide that we could drive a great deal of services. Very much like the example above with D-Subs, this training drives a margin of about $24.99 on average. This makes for a very profitable symbiotic relationship with our customers. Taken a step further, if we offered a class every weekend for $10 per person, and taught a classroom full of people, we could increase participation and margin quite a bit. If this were an hour long class held every Saturday with a minimum of 5 clients scheduled for each class, assuming that each store was able to hold 2 of these a month with the minimum number of clients we would drive an additional $1.2 million in revenue each year, which may be a very small amount of money in the big picture, but this would represent 10,000 customers each month that we are reaching out to in a very personal way.
These customers would be educated on product categories they own and/or intend to buy along with reasons why Best Buy. The other large thing to consider here is that normal people only use about 20% of the features of any piece of technology in their house. With that said, they typically will need a cable, or just one other piece to unlock a great deal of the potential of what they have. If we are able to supply the knowledge and the product, this becomes a win-win situation for us and the customer.
This is what Reuters has to say about Best Buy:
Best Buy Co., Inc. (Best Buy) is a specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services. The Company operates retail stores and Web sites under the brand names Best Buy (BestBuy.com, BestBuy.ca, BestBuy.com.cn, espanol.BestBuy.com and BestBuyMobile.com), The Carphone Warehouse (Carphone Warehouse.com), Five Star (Five-Star.cn), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com and GeekSquad.ca), Magnolia Audio Video (MagnoliaAV.com). It operates through two business segments: Domestic and International. The Domestic segment consists of the store, call center and online operations in all states, districts and territories of the United States operating under the brand names Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video and Speakeasy. The International segment is comprised all Canada store, call center and online operations, under the brand names Best Buy, Best Buy Mobile, Future Shop and Geek Squad.
A specialty retailer is the first part of the definition, with services seemingly an afterthought. They view Best Buy as a retail store. If we want to build a true culture of service we have to shake the perception that we are retail. Because Wal-Mart is the king of retail grossing hundreds of billions of dollars a year and we all know that there is no logical person that will mistake them for a service company. The question moving forward is this: “Are we a retail company that offers services or are we a Service company that offers product?” If we allow Wall Street or our customers to answer this question today, we would likely see that we are the former, but how do we shift the perception to the latter? This blog update will cover a few ideas on how that can happen.
Rebranding Best Buy to Geek Squad
Rebranding the Best Buy store to Geek Squad is one possible solution, but with the cost of giving up the Best Buy brand this may be a hard sell to most powers that be, so instead of rebranding every store in the company we could have true Geek Squad stand alone stores instead of the stand alone precincts we have tried in the past. These Geek Squad stand alone stores would essentially be rebranded Best Buy stores with Geek Squad agents/autotechs/installers working on the sales floor; these members of Geek Squad would be able to provide the sales advice for customers along with being able to perform the services required. The plan would be to one of these Geek Squad service stores in each district, that way they would be close to the other stores and be able to use Geek Squad members from these other stores in a rotation. The Geek Squad stand alone store should drive more services than any other store as it would be those most qualified to talk about the services that we offer on the front lines offering them to our customers. This would also be a great place for other stores in the district to send their employees for training around the services that we offer.
Change the Signage
One easy way to allow customers to know that we offer services is to change the price tag. Instead of the largest most visible price being that of the product, it should be that of the product combined with the most applicable service that we offer. The product price should still appear on the price tag, but should be a reduced size. This will give customers who aren’t speaking to a Blue shirt the knowledge that we do offer services as a company. This also gives breaks the illusion that we are simply adding services on to the product. This also helps the customer understand that it is our mission to make their lives better through a complete solution. To select which services to add to the price tag, I would suggest looking at the most common services sold on whichever product we are talking about (e.g. Netbooks would have optimization). Another great thing about having the prices on the tag is that associates covering from another area in the store would have an easier time offering services.
Leverage Speakeasy, Napster, and D-Subs(Digital Subscription)
It isn’t a large stretch to think of a content provider offering services (e.g. DirecTv setting up a new TV or AT&T setting up your network). One thing we to need leverage now more than ever is the fact that we offer content, as the margins on consumer electronics plunge lower and lower every year, one constant remains that we have to turn a profit to stay in business. We are heading towards a future where televisions are a loss leader to bring customers in (where computers are today), customer traffic drivers like CDs and DVDs are obsolete (replaced by digital download), and online retailers can sell products far below costs of big box retailers and turn a profit (Amazon is already consistently doing this). In this crazy future we will need to find products and services that provide the margin our business needs to stay healthy.
If our business routinely matched customers up to content that we either provide or are a conduit to, they will think of us when it is time to do any of the service work to make it work. This hypothesis is based on the current culture where customers have a tendency to hold Best Buy responsible for products that don’t work properly because they know we have a service center and fix things, where they don’t typically hold other retailers responsible in the same way (e.g. Wal-mart/Target). Essentially by strengthening this part of our business we will grow the services aspect and add margin while we do it.
One way to do this is to have bigger more interactive displays for the content and D-subs we offer currently: Napster, Netflix, CinemaNow/Blockbuster, AT&T, Comcast, etc. Make it a simple process for a customer to sign up, with or without an associate present. By making this a process that the customer can do by themselves we also save on SG&A and potentially making it a faster experience for the customer during very busy times where associates may be helping other customers.
One innovation that comes to mind is having a D-sub display that is zoned by an employee of Best Buy, or even allow the third party to use their own labor. For example, Netflix is a great D-sub that we are offering right now. We could have a 4 foot section devoted to Netflix (or even use the one of the FEZ in Home Theater), this section would have a TV, a computer, and an Xbox/PS3. A Netflix account would be created for each one of these displays. We could use a MiFi to provide internet to all of the devices, and truly show customers how easy it is to stream Netflix. If we assume that all of the product would be on planogram anyway and nearly any mobile vendor would jump at the chance of having their MIFI associated with this type of display, the only real extra cost to us would be in the labor. If the average d-sub has a $35 dollar vendor credit behind it, and we assume the average line level employee makes $10 per hour, the goal would be for the associate to sell one per hour. This would give a margin of $25 per hour.
Now if these assumptions are correct lets add it all up. Assuming that this display sells an average of 10 per day, and we have half our stores that meet this goal and the rest did nothing, we would do an extra $125,000 per day in margin. If we assume that type of performance for 360 days out of the year we would gross and extra $45 Million a year in margin. Now I understand this is only an increase of about .001% in a $40 billion dollar company, but it is a move in the right direction and it assumes a very small investment with a very small impact. If we move those goals up a bit, to have 70% of the stores participating, 2 an hour, still 360 days a year we move up to $126 Million which is .003% of that $40 billion dollar business.
Obviously these assumptions are not all completely accurate, as the $35 amount is just one created for the sake of creating an equation that may be solved. Depending on the D-Sub that is chosen the number sold and the vendor credit could be completely different, but the point remains if there is an amount of margin that exceeds the employees’ salaries a small section in each store that changes periodically would be a boon for Best Buy along with whichever company we were selling in that vignette. This would be doubleplusgood if we used Napster as one of these manned vignettes, as we can leverage our business to compete with Apple, although right now we aren’t going to go into depth around how we sell gift cards for our competition.
Change Free Delivery Offer
The issue that is caused by Free Delivery is the “hook up” where delivery will connect a single source, usually for the purpose of making sure the TV works before they leave. Customers have a hard time separating from an installation (Geek Squad employees performing the service) and delivery and hookup (Third party connecting one device). This leads to problems when trying to match the customer to the proper services, as they feel that those services are going to be free before they come into the store. Free delivery works very well VS. Wal-Mart/Target & other retailers, but is hurting our installation business.
The question I would pose is this, “What do we want to do?” Are we trying to win a war with Wal-Mart in TVs or are we trying to build our business into one that we want to run and our customers want to shop?
If we are trying to win a price/VPE war with Wal-Mart in TVs we might as well give up now, the reason I say that is because of the results so far – TV margins are very slim, Wal-Mart and Best Buy have similar prices, and Wal-Mart attempts to copy every innovation made by Best Buy. The problem with all of this is that Wal-Mart is 5 times larger and sells groceries meaning they can sell more product and they can use their entire electronics department (a Best Buy clone without the Blue-Shirts) to drive traffic and still make margin off of the odds and ins that other retailers can’t/don’t carry.
Home Theater Changes
If the answer instead is that we want to build the business into one that we enjoy and that our customers want to shop at we have to change some of our thinking and strategy to work for the long term result.
One way we can drive installations is to work with our vendors for backend support, offering discounts on the installation prices with the purchase of certain brands each week. This would be a promotion that we would run every week with alternating brands for 6 months to a year. The goal is to drive word of mouth advertisement to friends and family of those having the work done, along with putting our agents in more homes which gives us the chance to inspire and demonstrate the art of the possible, and with backend support from our partners it gives us the margin that we would normally have. If we go with this strategy I would caution that the services should never be free at first it should be around 30-50% off and by the end it should be reflecting a 20-40% discount, this will keep the HT(HE) associates offering. The issue with giving it away for free can make the associates a little more apathetic in their offering when it is no longer free.
Another way to drive installation is to take pictures of our completed installations. We can then use these on GeekSquad.com, in local stores (“brag books”, on the TVs in the HT loop, as posters, etc), and in different forms of advertisement. Some stores already use pictures like this, but installers aren’t all taking pictures after every job (with customer permission of course). The more pictures of completed installations we can show our customers the more they will trust our work along with feeling confident with our ability to do a great job.
Advertise Repair
One of the areas that we don’t talk about often is the repair service that we offer. If we look at the smaller local businesses that sell appliances and offer repair we see a key difference between the vehicles we use and the ones they use. Theirs call out the products and services they offer along with contact information where ours typically are either plain (e.g. Delivery + appliance install/repair) or mysterious (Geek Squad), and while I agree that there is a certain appeal that is gained from the mystic that Geek Squad vehicles have, there is also an opportunity to advertise what we do, and that mystic can only last so long before customer get tired of trying to figure out what it is that we do. One big thing we can do with our vehicles is to put some information of what we offer somewhere on our vehicles. The type of information and location to print it will vary from vehicle to vehicle, but as an example on the back of a Geekmobile we could put 1-800-Geek-Squad and a reference to computer setup/repair. Perhaps as OLED screens become a little more common place we could use screens like these to display advertisements on our vehicles.
We should also use in-store signage to let customers know that we can repair old appliances, TVs, computers, etc. Along with putting this information in our weekly advertisements will allow us to drive our repair business. The goal here again is a long term one, where by educating customers that we can repair their products we also gain their trust and demonstrate our prowess which will lead to more installations sold in the future.
Low priced services – Ala Cart
Price shopping customers tend to balk at the price of our services, which is an issue when we are trying to drive a service culture. Even Wal-mart is starting to learn that there is a finite amount of boxes that you can sell to a customer, but one thing that we are both forgetting is that the lower income customer has a set budget for the TV when they come in and the reason they will do it themselves most of the time is not because of some joy of the manual labor, or even that the service doesn’t have enough value for the money, but more likely because it exceeds the amount of money in their wallet. To cater to these customers I would suggest having budget services, where we have a low opening price point to appeal to these customers, but with a very limited service offered. For the sake of example let’s take a look at the TV Mounting service that we currently offer and the low priced version of this service.
TV Mounting - $149/$249/$349 depending on the size of TV. This service has a huge value for the money, and provides a really great job, the downside is that with the price of TVs dropping a 32” TV may only cost $299-$399 which means that the service nearly doubles the price of the TV. The low price version could be $90/$180/$270 and the trade off would be that we no longer conceal the wires in the wall and we don’t do an educational demo – these being two of the more time consuming pieces of the wall mount.
Training
Another large piece that we are missing out on is the training around consumer electronics. This should be a category on every page on GeekSquad.com. It should be difficult for a customer to go without knowing that we offer training on nearly every product in the store. One big innovation that my store has been using for years with varying degree of success is an in store training at $29.99 on Camera’s and iPods. I would assume that if we had a large push companywide that we could drive a great deal of services. Very much like the example above with D-Subs, this training drives a margin of about $24.99 on average. This makes for a very profitable symbiotic relationship with our customers. Taken a step further, if we offered a class every weekend for $10 per person, and taught a classroom full of people, we could increase participation and margin quite a bit. If this were an hour long class held every Saturday with a minimum of 5 clients scheduled for each class, assuming that each store was able to hold 2 of these a month with the minimum number of clients we would drive an additional $1.2 million in revenue each year, which may be a very small amount of money in the big picture, but this would represent 10,000 customers each month that we are reaching out to in a very personal way.
These customers would be educated on product categories they own and/or intend to buy along with reasons why Best Buy. The other large thing to consider here is that normal people only use about 20% of the features of any piece of technology in their house. With that said, they typically will need a cable, or just one other piece to unlock a great deal of the potential of what they have. If we are able to supply the knowledge and the product, this becomes a win-win situation for us and the customer.
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