Tuesday, January 03, 2012

Best Buy: Another example of the "self-inflicted wounds" rule

Forbes.com has an op-ed post about Best Buy. It centers around a case of horrible customer service that the writer and his friend experienced a few days ago at a store in the San Francisco Bay area. They wanted to buy a copy of the Blu-Ray version of "How to Train Your Dragon", which is a Best Buy exclusive (when will the movie studios stop giving exclusives on hot titles to retailers and consumer electronics companies?). Best Buy's website said that the movie was back-ordered online but was in stock at a local store. They went to the store, only to find that the movie was out-of-stock. They weren't offered a rain check or even an apology. When the men shopped for another Blu-Ray disc at the store, an unkempt salesperson came over and tried to sell them a television service (they never found out exactly what he was selling). They finally found a movie to buy, only to realize when they got home that, with all the irritation, they'd picked up the wrong one. When they came back to return the unopened disc, they were told that all software sales are final and were refused a refund.

Just about everyone I know who shops at Best Buy has a customer service horror story. Last year, I went there to buy a point-and-shoot camera. They had the model I wanted on display, but when I told a salesperson that I wanted to buy one, he told me that it was out of stock. He said that another store had it, and that they would ship it to his store, and I could come back in a day or two and pick it up. I told him that if I had to drive back to his store in a day or two, I could just as easily drive to the store that had it and buy it that day, or go online and have Best Buy ship it directly to my home. The salesperson insisted that I have the camera shipped to his store for pickup, most likely so that he could get credit for the sale, and I left without buying anything.

Shortly before Christmas, Best Buy told an unknown number of customers that it couldn't fulfill their online orders for products, some of which had been placed as early as Thanksgiving. Best Buy refuses to reveal the number of customers affected, or which products were involved. After Christmas, the company sent an email to its regular customers with a video from company CEO Brian Dunn. In the video, he thanked customers for their business and said that things would be "even better" in 2012. He didn't apologize for the holiday order snafu. Just a single sentence, such as "We're committed to improving customer service online and in our stores" would have indicated that top management is willing to admit that the company has customer service problems. Instead, the impression left was that Dunn and his team are in denial.

Most businesses that fail do so because of self-inflicted wounds, rather than competitors or the economy. Circuit City brought on its own failure, through a combination of poor locations, confusing store layouts, skimpy product selection and lousy customer service. Best Buy has a perfect example of what not to do from Circuit City's example, but it's going down the same path.

The best thing that the company could do is to close the stores that it plans to close in 2012 quickly, and then focus 100% on improving customer service:

  • Improve employee training.
  • Encourage good employees to stay with pay and benefits; don't repeat the mistakes that the company made in 2007, when it fired 3,400 of its most experienced (and highest paid) salespeople, replacing them with cheaper new hires, and in 2009, when it demoted as many as 8,000 senior sales associates to regular sales positions, with 25% to 50% pay cuts.
  • Get rid of the third-party salespeople, or at least force them to stay at their stations (I was shopping for a laptop at Best Buy a couple of months ago, and a third-party Comcast salesperson came over and tried to sell me a Comcast subscription. I suspect that the person who interrupted the writer of the Forbes.com article was a third-party salesperson.)
  • Implement whatever systems are necessary to avoid a repetition of the pre-Christmas order cancellations.
  • Improve the accuracy of inventory counts on the Best Buy website, so that customers aren't told that products are in stock in stores when they're actually sold out.

The good news is that Best Buy has time to turn itself around, but it first has to acknowledge that it has a real customer service problem.

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