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Best Buy: The customer is always right? Not anymore

Discussion in 'BBS Hangout' started by Rockets34Legend, Jul 6, 2004.

  1. Rockets34Legend

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    http://www.chron.com/cs/CDA/ssistory.mpl/front/2663381

    MINNEAPOLIS -- So much for the customer always being right.

    Some retailers are deciding that the customer can be very, very wrong -- as in unprofitable. And some, including Best Buy Co. Inc., are discriminating between profitable customers and shoppers they lose money on.

    Like a customer who ties up a salesworker but never buys anything, or who buys only during big sales. Or one who files for a rebate, then returns the item.

    "That would be directly equivalent to somebody going to an ATM and getting money out without putting any in," Brad Anderson, Best Buy's chief executive, said in a recent interview. "Those customers, they're smart, and they're costing us money."

    Anderson said Best Buy was tightening its rebate policies in the case of customers who abuse the privilege, but declined to say what else his company was doing to discourage its most costly customers.

    "What we're trying to do is not eliminate those customers, but just diminish the number of offers we make to them," Anderson said.

    Larry Selden calls them "demon customers."

    Selden, a consultant who works for Best Buy, co-wrote "Angel Customers & Demon Customers." In his book, he said that while retailers "probably can't hire a bouncer to stand at the door and identify the value destroyer," they're not powerless.

    Selden, a business professor emeritus at Columbia University, said an investment firm found that one customer with a portfolio of $500,000 was tying up three financial advisers almost full-time with requests for help and information. "Eventually, reluctantly, and very politely, in this one case the company asked him to go elsewhere," Selden said.

    Selden worked as a consultant for Royal Bank of Canada, which at one time traced checks faster for its most profitable customers, while other customers waited up to five days, he wrote. While that's a bit out of date, the bank now has other ways of prioritizing customers.

    Laura Gainey, vice president of client segment strategies, said the bank's phone system sends certain customers to the front of the line, where they get the most experienced customer service representatives, depending on criteria that includes their account size.

    "I don't really believe that any customer at Royal Bank is a demon customer," she said, "but there's no doubt that there are different ways of approaching different customers, which will allow us to better serve their needs, and allow us to serve the bank and our shareholder's needs."

    Sometimes it's the retailer's fault that a customer is unprofitable, Selden said. He cited an upscale retailer in New York that lost sales because its changing rooms were dirty and in bad repair. Women who had probably taken up a salesperson's time were declining to change in those rooms, and declining to buy, he said.

    "Then there are those customers that are just evil customers ... fundamentally they're out to cheat us," Selden said in a telephone interview. "It's not a large number of customers, but they can have a material impact on a business."

    Once in a while, stores need to "fire" their worst customers, Selden said. Filene's banned two sisters from all 21 of its stores last year after the clothing chain's corporate parent decided they had returned too many items and complained too often about service.

    The sisters claimed they had been loyal customers for years.

    Best Buy executive vice president Philip Schoonover said the idea of "firing" some customers is one place where Best Buy disagrees with Selden. The company will try to find ways to make money-losing customers profitable, he said.

    Retail consultant Karl Bjornson of Kurt Salmon Associates said the idea of discouraging bad customers can work if a company is careful about it. He said it generally works better to, say, offer fewer sales rather than discouraging individual customers who shop aggressively on price.

    Every store has customers it doesn't like, he said.

    "The question is, how public do you go with it, and how big a deal do you make out of it? There are ways of discouraging people from shopping in your store without point-blank telling them you don't want them in your store."

    Best Buy customer Steve McCuskey pondered the company's efforts with a set of computer speakers in his hand. McCuskey, an industrial chemical salesman, said he shares Best Buy's frustration with "extreme price shoppers" who are so low-cost oriented that it's tough to make money off of them. He said he recently paid extra to buy a better portable compact disc player for his son after the first one lasted just four months.

    "I'm definitely looking for the best price, but I'm also tired of cheap stuff that's going to break right away," he said.
     
  2. mrpaige

    mrpaige Member

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    Well, first off, I think the whole "customer is always right" thing was never the norm at places like Best Buy.

    There are scammers and the like who need to be held in check. The trick is having rules that will catch such people without alienating good customers.

    Personally, though, I don't understand the problem. They talk in the article about customers who take too much time from the sales associates and don't buy anything, yet every time I go to Best Buy, the sales associates are just standing around not doing anything. And there are people who explore their options and then come back and buy later. If I talk to a salesperson one day and then buy the next day without talking to the associate again, am I a bad customer? Possibly, according to this philosophy. (Of course, it may take so much of an associate's time to answer questions because the sales associate often doesn't know the products he's selling)

    I don't understand the hate toward customers who just buy during big sales. Perhaps they only do that because Best Buy prices are higher than others on the things they otherwise would buy.

    I'm not sure how Best Buy knows when I shop there anyway. When I'm buying DVDs and the like, I pay cash. If I'm buying a bigger ticket item, I'm more likely to use a card.

    I refuse to accept the idea that I'm a bad customer because I refuse to pay more for something than I can get it elsewhere.

    I think one of the big problems with retail is this idea that you must maximize every customer. I don't think that takes into account a lot of powerful marketing. The customers Best Buy attempts to turn away talk to people who might well be better customers. I know I don't shop some places because of bad experiences other people have had.
     
  3. deepellumrocket

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    And Best Buy is asking me for my phone number when I buy CDs there now. When did they turn into Radio Shack?
     
  4. mrpaige

    mrpaige Member

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    Really? Are you sure the clerk wasn't just hitting on you?

    I hadn't that happen to me yet, but I'm not giving my phone number out to Best Buy. I understand it would be used to track their customers, but it's an invasion of privacy to me.

    If they want my phone number, they can offer me something in return. I might be persuaded with a 15% additional discount on each sale I had to give my phone number for.
     
  5. PhiSlammaJamma

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    If it's an expensive item, I usually try to deal with the sales team and get it at cost. Usually works. But now I'm a devil customer. Geez.
     
  6. deepellumrocket

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    Well it happened last week at the store in Frisco and again yesterday at the Woodlands store. And both times I was rung up by gawky teen-age boys, so I kinda doubt they would be that forward.
     
  7. rrj_gamz

    rrj_gamz Member

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    Practically everything in my house is from Best Buy...They've gotten crappy on their return policy the past couple of years (i.e. w/in 30 days of purchase, need a reciept, etc.)...

    The payment plan and service plans rule, but I would suspect in a low margin business they're in, every little bit helps...
     
  8. Rockets34Legend

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    I just do my research on the bargain sites, then find out which item I want to buy, and if they have the better price than other retail stores, then I just avoid the salesperson and pick out what I like and go straight to the cashier. Best Buy usually has great prices, but their customer service bites. :mad:
     
  9. kpsta

    kpsta Member

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    About 8 years ago, I worked part-time in a backpacking/climbing store... we had this one customer who would come in and buy a gore-tex jacket... he'd keep it for a few weeks or even months... and return it at our other location. I can't imagine how he was actually getting any value out of it (since it really wasn't raining enough to make it worth his trouble). In general, I didn't really mind it that much... it became a bit of a joke at the stores. At the end of 2 years, I think they'd figured out that he had owned about 18 different jackets, and returned all of them. Over time, we'd end up losing sale opportunities to other people because of that guy...

    Seems like many people tend to just take advantage of stores that have a really customer-friendly attitude. No more retail for me... :)
     
  10. mrpaige

    mrpaige Member

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    I guess it will eventually get to the point where any customer who simply comes in and spends all the money they have in their wallet without asking a single salesperson a question, buys an extended warranty but never exercises it and will never return anything even if that thing doesn't work is the only customers Best Buy will want to have.
     
  11. Joe Joe

    Joe Joe Go Stros!
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    I think Best Buy's position is that it doesn't want to lose customers, but their position is to not lose money on a customer.
     
  12. mrpaige

    mrpaige Member

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    Yeah, but they're talking about customers they don't necesarily know for sure are unprofitable customers.

    When you've not been tracking all your customers, how do you even know you have any of these customers they describe? Yet, they seem sure they exist to the point that they need to change the way they do business.

    It's just a step down the road toward only wanting those customers who are willing to overpay (they're on record as not liking customers who only respond to sale prices), spend a lot and not ask any questions or return anything.

    It's a risky thing to deal with. The more difficult you make it for people to buy, the less likely they are to buy. They may talk about turning these customers into profitable customers, but it's extremely difficult to change people's behavior, especially when the person who will be charged with changing said behavior is a Best Buy clerk who often has enough trouble keeping up with the products alone.

    I mean, how do you change a person who wants to do research before buying into a customer who buys immediately? Other than becomming more like car salesmen (and nearly everyone hates buying cars) and locking folks in the office, taking their keys and applying the hard pressure tactics, I don't know how you do it. Yet, Best Buy thinks these people are potentially bad customers and apparently plans to try to get them to change their ways.

    Here's my prediction. Change the way they do business enough to affect the shopping experience in a negative way (i.e. adding the hard sell or limiting sales or making people buy higher priced merchandise just to take advantage of a sale, etc.) and they WILL lose customers whether they want to or not.
     
  13. Toast

    Toast Member

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    Wow!

    I give 'em a fake zip code, so they can rest assured they won't be getting a legit phone # off of me.

    Nice try, Best Buy.
     
  14. Surfguy

    Surfguy Member

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    "Why does Radio Shack ask for your phone number when you buy batteries? I don't know." - Kramer on Seinfeld

    By the way, Radio Shack does not ask for this info anymore.
     
  15. Joe Joe

    Joe Joe Go Stros!
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    Mrpaige,

    You're making a mountain out of a molehill. There are many ways BB can be customer friendly and prevent demon customers from costing them money. One is to reward repeat customers with discount points that work like comps at casinos. Another would be to do away with sales and lower prices accordingly to attact the good customers who know than can get a good (may not be the best, but they don't have to waste time shopping for it) deal anytime. As far as returns go, require a receipt or the person's fake phone number so they can bring up transaction.

    As far as abusing sales associates, I don't see an immediate solution. Sales associates are there to answer questions and assist. Sales associates are not there to walk people down the aisle and do their shopping for them. Not talking about BB here, but I have seen customers enter other stores go straight to the help desk so the customer service rep can take them right to the DVD they want.

    Personally, I don't want to pay a surplus on a product because of demon customers and shoplifters.
     
  16. mrpaige

    mrpaige Member

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    Wouldn't mind seeing some of that, though the point still is that they're sure they have these demon customers, yet there's no way to know whether they do or not since they've not been tracking their customers prior to now.

    I don't want to see the Albertson's way of tracking customers, either, where they raise the prices on everything in the store and then offer a discount card to give the perception of better deals when, in fact, things are generally more expensive (I know several of the things I buy are more expensive now even with the discount card than they were before they introduced the discount card).

    You just have to consider how they do business now. Their sales associates are almost always useless. If you can find one at all, they quite often don't know the product well enough to answer any questions and, quite often, they end up being real nasty about the extended warranty (I've had several openly berate me for not wanting an extended warranty).

    When you hear the people who make these decisions for the chain say they want to get rid of customers who shop around, that's a cause for concern. He may not mean it, but it's a 'used car salesman' type notion. And if Best Buy wants to become more like car lots, they're going to end up losing customers.

    You'll probably end up paying a surplus on products anyway. I don't know for a fact, but the recent raising of prices on DVDs at Best Buy may well be related to their desire to get rid of those 'lowest price' shoppers who are supposedly costing the chain money.

    It's interesting to me, though, that there's no mention from Best Buy about maybe training their sales staff better. I mean, having them actually help you might increase sales. Having them know something about their products might help sales. But no, judging by this article, it's the customer's fault, not the sales associate who doesn't know anything and who's too busy standing around to help.

    And since this drive to get rid of bad customers is also potentially going to include slowing down my ability to buy things and invade my privacy, I don't know how I'm winning here.

    Of course, I'm a bad customer because I sometimes go into their stores and look around without buying anything. I don't bother with the sales associates (I don't want to interrupt their standing around time), but I am breathing the store's air.

    Perhaps Best Buy should start charging a cover charge. Five bucks to get in the door, which will be deducted from whatever you're buying. That would get rid of the bad customers without a proper shopping agenda, I'm sure.
     
  17. Refman

    Refman Member

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    They have all the info they need on anybody who uses a Reward Zone card.
     
  18. VesceySux

    VesceySux World Champion Lurker
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    One of my favorite pastimes is getting into heated hi-fi arguments with the Best Buy Bose salespeople. Poor, deluded, clueless employees. They never know what hit 'em. Ah... good times, noodle salad.

    Yep. I most definitely AM a demon customer. :)
     
  19. mrpaige

    mrpaige Member

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    Never used one. Never been offered one. Don't even know what it is.
     
  20. HAYJON02

    HAYJON02 Member

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    Eh, if they're the same people who go out to eat and tip horribly, then good riddance to them.
     

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