Trust Lost – Round 2

best_buy_logo_svg.pngOn the heels of their problems in Connecticut, Best Buy is now facing another scandal that could cost them tens of millions of dollars, and more importantly, further damage their credibility in the eyes of the consumer.  The problem stems from a lawsuit, filed in 2003, which accused Best Buy of signing up at least 100,000 customers for trial subscriptions to Microsoft Corp.’s MSN Internet service from 1999 to 2003, in many cases without their knowledge. Once the trial period ended, the customers began incurring credit card charges they had not approved.

Today, it was reported that a lawyer for Best Buy Co. has acknowledged that he falsified e-mails and a memo before turning them over to plaintiffs in the nationwide class-action lawsuit.

Trust is a key ingredient in Loyalty.  If you act against the best interest of your customer for you own internal gain, you run the risk of losing both.

The Little Stuff Redux

Earlier this week, I wrote about the opportunities in addressing the sources of customer dissatisfaction. On Friday, APs Technology Writer, May Wong, published a report citing difference in the service levels between Circuit City and Best Buy. The report was insightful and absolutely reinforced the points I was making earlier in the week. I’m including some quotes and commentary below.

This customer’s past experiences have let him to solid opinions of the two retailers. Who do you think he recommends to his friends and family?

Ralph Devoe’s hunt for a new computer monitor didn’t include a stop at Circuit City, even though one of its stores was only a few doors down from the Best Buy where he went shopping this week. “They often don’t have what I want,” the retired physicist said. “And Best Buy just seems a little better. The salespeople actually know what they’re doing.”

Having a large inventory selection and “knowledgeable associates” are really important, but they are big and potentially costly things from an operational stand point. In my earlier post, I focused on the smaller sources of dissatisfaction, like how the customer is treated in the store. The following really drives that point home:

For sure, bargains and good rebates could be found at the stores of either chain — an important draw for the price-conscious American public.

But other times, it’s as basic as how a store feels, how the products and aisles are laid out, how the workers there treat you.

A friendly greeter is stationed just inside Best Buy’s front door.

“How’s it going? Welcome to Best Buy,” he repeats.

Within a minute of browsing in a section, a Best Buy associate swings by to offer assistance. The staffer casually dispenses product info or comparisons, and just as quickly lays back if you decline the help.

A visit to Palo Alto’s Best Buy and Circuit City to pick up a component-video cable illustrates the differences.

At the Circuit City, it took some effort to find a store employee to ask where to find the cables — and the red-shirted employee who was tracked down misdirected this shopper to cables for TVs.

At Best Buy, the greeter at the door quickly responded with a more specific question, “What kind of component video?” By asking, he learned the cable’s purpose was for a game console and pointed to the video game section.

The desired Sony-branded cables were sold out, but the Best Buy associate did double check the store inventory.

That kind of attention to detail goes a long way in a shopper’s experience.

I also talked about ensuring that your interactive displays are always functioning. Ms. Wong points out this difference between the two retailers:

At another Best Buy in Sunnyvale, for instance, the music MP3 players on display were in good working order, and a patron could test the controls and use headphones to listen to them. By contrast, the Palo Alto Circuit City’s portable players — with the exception of a separate display for Microsoft Corp.’s Zune player — were not powered and lacked headphones so a shopper couldn’t get a good test run of the devices. Product information placards were also missing from some models.

The bad news for Circuit City is that this “little stuff” is rampant throughout its stores and it all adds up to a pretty crappy experience for customers. Both companies recently reported results for the previous year and the differences were like night and day. I am not an analyst and I can’t tell you to what degree Circuit City’s continued lagging performance is attributable to the sources of dissatisfaction in their stores, but my gut tells me that it is a significant cause.

The good news is that these problems can be overcome and for the most part, the solution doesn’t involve a big capital investment. What it does require is much more valuable, and perhaps more scarce, than money. It requires people that care. Store associates that take the time to look for things that aren’t right with their store and fix them. Support associates that are not only responsive to the needs of the people in the store, but are proactively looking for ways to improve the operation so that the store associates can focus on the customer and not the infrastucture.

Remove the Sources of Dissatisfaction. That’s the fourth item in my Prescription for Building Loyalty but after Listening to your Customers, it’s the next most important thing that retailers must do.

Storytelling – Geeksquad vs firedog


I have several official and unofficial jobs at Circuit City.  One of the “official” ones is that I am heading up our entry into the virtual world of SecondLife.  Partnering with IBM, we have a “demonstration store” on one of IBM’s islands.  It’ was in no way designed to be a compelling SecondLife experience, but was intended to be an interesting device to show the “art of the possible” to our executives.  The “store” has been up for a little over 3 months and we are starting the process of envisioning the second generation experience.

Our IBM partners told us that our competitors from Minneapolis were inquiring about SecondLife at January’s CES.  Today, I saw that Geeksquad island has opened in SecondLife.   That’s a fast implementation and points out the strength of BestBuy’s Sense & Respond capability, but the big story here is something else entirely. 

Looking at the Geek Squad SecondLife announcement page, I came to a realization about the different marketing approaches for Geek Squad and firedog.  For months, I’ve been trying to figure out why I didn’t feel comfortable with the firedog brand.  Today it hit me. 

In today’s “experience economy”, it’s not enough to simply make your products and services available.  To win in this market, you need to be able to tell compelling stories.   Lots of promiment Marketing types like Hugh and Seth, have discussed this concept recently.  I think Geek Squad has that ability.  They have created this “geek mystique” that resonates with the masses of people who know they are not as technically savvy as some folks (like the geeks).  With their SecondLife marketing, they carry this “story” forward:

“While this announcement is expected to help Geek Squad’s customers by offering an extension of Geek Squad’s 24-hour service, it is also expected to cut further into its Agents’ already meager social lives.”

“I’m constantly asked about what it is that Geek Squad Agents do in their free time,” said Robert Stephens, founder and Chief Inspector of Geek Squad. “While it used to be a pretty clean mix — divided between poring over computer manuals and sleep — we’ve seen the balance shift in recent years to poring over computer manuals and immersion in digital worlds like multiplayer online games and environments like Second Life.”

Sure, most Geeks have probably never even been to SecondLife, but the story that has been build around the “Geek” makes it easily believable.  It makes sense that “geeks” would be out on the technology edge.  Contrast that with firedog which uses the metaphor of man’s best friend to represent the brand.  The big word here is “Loyal”, but there are a whole series of other words that are used to describe what “what makes a firedog a “firedog” including “Tidy”, “Real”, “Grounded”, and “Fresh”.   firedog.JPG

The problem is that these are just words.  They don’t really tell a story.  They don’t say “these guys live for the technology problems that drive you crazy”.  There is no “mystique”, no story about who these guys are and why you should use them.  It’s simply not as engaging as the “Geek Mystique”.

I’ll probably get some serious grief from my Circuit City family for this post, but I have to call it as I see it.

What do you think?

Another Man’s Voice…

In the interest of providing equal time, and to point out that other CE retailers struggle with delivering a great customer experience, I offer another customer video.  While the filmaker’s work is not as impactful as the Circuit City example, you get to ride along and have the experience first-hand. 

In the end, the same point is made:  Customers are rising up and telling their stories and companies should be listening.  This video, which was made a year ago, has been viewed over 3300 times on Google Video.


Trust Lost

best_buy_logo_svg.pngBest Buy, the nation’s biggest consumer electronics retailer, Best Buy has a big problem.  They appear to have been caught with their hands in the cookie jar.  Like many retailers (including my employer, Circuit City), BestBuy provides access to their website from within their physical stores.  The problem is that the prices shown in-store are higher than the prices shown on their website when accessed from outside the store. 

The vast majority of CE customers research their purchased on the web before buying.  They often decide on what and where to buy based on features and price, and then go to the selected store for a final look and to complete the transaction.   For many Best Buy customers, the price went up when they walked in the door.  In some cases, they may not have even realized it.   Now, at least one state government is conducting investigations and you can count on more to follow.   I expect proposals for a Class Action suit have already been put together by some eager legal team.

Best Buy has invested millions on programs designed to drive customer loyalty, especially among preferred customer groups.   I don’t know whether their success can be attributed to those programs, but I do know this:

Loyalty is a customer’s response to advocacy and earned trust. 

It doesn’t matter whether BestBuy’s “problem” is the result of planned deception or simply a bad design, the appearance of impropriety is going to cost them some of that trust and loyalty.

Has your organization reviewed its customer touchpoints to ensure that you don’t have systems or procedures that could damage the trust your customers have in you?

You Can’t Buy Loyalty

Customers Rock! blogger Becky Carroll always has great insights on customer experience. She points to a piece from blogger Chris Baggott, and his poston Best Buy’s Rewards Zone loyalty program. Chris’s position is that Best Buy’s “rewards” amount to no more that junk mail. As Chris shares:

I get paper based junk. My reward for spending around $10,000.00 since joining the program…..and the most recent offer following the holiday season?

A Credit Card Offer!!

Man do I feel special.

This is a campaign, nothing more. Marketing 1.0 just like the airlines. Monetize your list, not build better relationships with your “special” customers.

Chris is not alone in his feelings if the comments are any indication. Companies spend lots of money on loyalty programs. Often the approach is credit card based, primarily because the business model is a little more sellable to the CFO, but in the end, credit-based rewards only benefit the credit card company. Plans that offer incentives and perks don’t fare much better as they simply attempt to “buy” your customer’s loyalty.

So what is a winning formula for growing loyal customers? Here’s my simple list (not necessarily easy to do):

  • Understand what your customers want. This requires you to actually talk with them and listen! Engage them in an ongoing conversation.
  • Provide products and services that support the things they are passionate about. People’s passions drive where their disposable income gets spent. If you can tap into that, you become a destination.
  • Help them to get the most out of the products and services you offer, both before and after the sale.
  • Consistenly deliver great experiences that exceed expectations. Start by eliminating sources of dissatisfaction. Then act as an advocate for your customer at every touchpoint.

Advocacy is the key. You can’t buy loyal customers, but you can be their advocate and advocacy is contagious. A customer who is loyal to your brand because they see you as their advocate, will return the favor by advocating for you. That’s how you build loyalty!

Best Buy’s Home Automation Innovation

connectedhome.JPGBest Buy is going to sell a packaged solution of Media Center plus home automation. Literally, it’s a package — a box. A customer walks into a Best Buy store, delights in the demo, buys the package, and waits for its arrival in a big box about four-foot cubed.  The package costs $15,000.  For that you get a Media Center PC, Lifeware automation software from Exceptional Innovation, an Xbox 360, IP surveillance cameras, automated light switches, a thermostat and installation.  It’s a complicated business model, called ConnectedLife.Home, and it’s bound to pit the new group against other Best Buy factions like Geek Squad.

Click here to read the very long and detailed article on this new innovation.

<via Slashdot>

Customer’s Rock Blog: Costco’s Response to a Customer Need

Customers Rock is a new WordPress blog which is getting quite a boost due to being referenced on a number of popular marketing blogs.  The latest post on Customers Rock is about Costco and their new free technical support. 

Costco has been listening to the frustrations of their members and has entered the realm of providing technical support to help ease their pain.  According to a store supervisor that I spoke with, Costco will provide free technical support for televisions, cameras and camcorders, as well as desktop and notebook computers.  The service has been available for about one week now in the Southern California area.  It is part of their existing Concierge Services, which Costco started testing for high-tech TV installs this past summer.

The real reason that Costco is doing this is that the returns are killing them.  Costco has an amazingly liberal return policy.  They have expanded their Home Entertainment offering and a pretty good computer business, and all that new technology is difficult for customers to manage.  As a result, they have seen returns skyrocket and profits erode. 

Offering free support is a brilliant strategy, assuming that they can deliver a great experience.  They are well on the way to that by assuring members that when they call tech support, they will speak with someone in the US.  There is nothing more frustrating to me that to hear a thick accented CSR introduce themselves to me as “Bob” or “Mary” and then not be able to communicate with me.

In addition, Costco is offering the free tech support for the life of the product.  Now that’s an added value that’s easy to understand.

Costco intends to take on Circuit City and Best Buy for the Home Entertainment and Computer customers and they are coming out swinging by turning what was a problem for them into differentiated offering for their members.

Sony Delivers Even Less PS3’s Than Planned

Not good news for Sony (and lots of hungry young gamers with $600 in their pockets for that matter), but I doubt Nintendo or Microsoft is feeling bad.  Rumor has it, that Sony shipped less than the already reduced 400,000 PS3 consoles it said it would have in stores last week.  By now you’ve all seen or read about the craziness that surrounded the release of the PS3 last week…that craziness ranged from gun shots being fired at one store in Connecticut to near riot conditions in front of several Best Buys and Circuit City’s around the country.  In one word, pathetic.  On the other hand, the mainstream media and bloggers alike were quick to pick up on the “civility” of the Nintendo Wii release…no gunshots, no riots, just a chock full of courtesy and a side of friendliness.  It probably doesn’t hurt that Nintendo shipped about five to ten times the amount Wii’s compared to what Sony shipped for the PS3. Supply and demand at its finest.

<via GenDigital>

When Fewer Choices Mean Bigger Returns

One of my deeply held beliefs regarding Customer Experience and Loyalty is that if you act as an advocate for your customers, they will reward you, not only with their business, but by advocating for you to their network of friends and family.  There are many ways to be an advocate for your customers (and potential customers).  One of them is to find ways to keep them from becoming overwhelmed with choice. 

American society has become all about choice and most of us believe that all this choice is good.   After all, it seems reasonable that we live better lives than we did 20 or 50 years ago, when the American economy was less advanced.  Thanks to the ever-increasing pace of business, enabled by PCs and the internet; along with changes in business models, social values & government policies, choices now dominate the activity of our every day lives.  We should get satisfaction from all of this choice, but the fact is, it is making us unhappy.   It’s what the folks at Blackfriars Communications call “The Tyranny of Too Much“. 

Think about how it feels when you open a restaurant menu and see dozens or even hundreds of items from which to choose.  Almost makes you lose your appetite, doesn’t it? There’s a reason why all of the big fast-food chains now feature a handful of combo meals on their menu—they’re more profitable for them, to be sure, but they also make their customers’ lives just a little bit simpler.

This approach has been a part of Costco’s success for years.  They have a small but high quality selection of just about everything.  Their buyers do the work of selection a handful of high quality items across several pricepoints so I don’t have to decide between 18 different toasters (for example).

According to a story at BusinessWeekOnline, WalMart(WMT), which has not historically been known as a great customer advocate beyond offering low prices, is currently running a radio commercial in which boasts about how small its selection of HDTVs is.  The spot wasn’t apologizing for Wal-Mart’s lack of selection, nor was it saying the fact that Wal-Mart carried fewer options than the competition didn’t matter.  The commercial actually touted the fact that Wal-Mart had improved the HDTV buying process by limiting its selection to only the most popular models.   That perked the author’s attention:

“I have been pondering the purchase of an HDTV for some time now, but dreading the long hours of research I was going to have to put into the process. I’ve read a few articles that explain the differences between plasma screens and LCDs, between $3,000 starter models and $10,000 big dogs. And I’m more confused than ever.”

“What Wal-Mart did was counterintuitive, but like AOL’s strategy during the early days of the Internet, it’s right on the mark.  Conventional wisdom suggests that having more HDTV options under one roof is better for consumers.  After all, if a retailer carries all of the options, it’s more likely to be able to meet the needs of every customer who walks through the door.” 

“What Wal-Mart has recognized, however, is that most people’s purchasing needs aren’t merely tied to product features.  Early adopters aside, most people don’t need or want to not spend hour after hour sorting through product reviews and comparison charts to find out which model is best.  Most need to know that when they plunk down two, three, or four thousand dollars (or more), they’re going to be happy with their purchase.  And they need to know that in two years they won’t be stuck with obsolete technology. (Betamax, anyone?)  If they can go to Wal-Mart and choose from a handful models that will do the job just fine for the average person, they will be happier than if they are required to sort through 40 or 50 models at Best Buy (BBY) or Circuit City (CC).”

Wow, that’s powerful stuff and I think they may be on to something.   More isn’t always better.  Too many choices are often too confusing, and too much selection can become a burden, not a benefit.  Whatever industry you’re in, if you can avoid the Tyranny of Too Much, you are acting as an advocate for your customer.  That will drive loyalty, and simplify your own life as well.

Customer Experience at Best Buy

While Apple gets that whole Customer Experience thing, Best Buy apparently does not.  Engadget reported yesterday that Best Buy customers who signed up for a PS3 pre-order from Best Buy’s online store are getting the cold shoulder from the mega retailer.  Best Buy sent out a curt email to customers the other day saying,

“Your preorder for the PlayStation 3 gaming system will be canceled.”

Best Buy says that its online store system was not “intended to take preorders,” despite the fact that Best Buy availed its online store system to just such an purpose.   As a consolation,  pre-order customers are getting a $10 Digital Coupon towards a future purchase, but we’re not sure that’s going to do much to cheer up little Jimmy on Chrismahanukwanzakah morning.