The geeks in Best Buy’s Geek Squad have long taken on one-time tasks for customers, such as fixing a broken laptop or installing a new TV.
But as consumers fill their homes with more connected gadgets — and as the Richfield-based retailer looks to develop revenue beyond transactions — Best Buy is expanding Geek Squad services to all tech products and appliances.
The company piloted various pricing and selling strategies for “Total Tech Support” in the last year and decided to make a subscription-type option available nationwide starting this week.
The service, which costs $200 a year, gives customers unlimited phone, online and in-store support on certain services such as removing viruses or troubleshooting setting up a new home network. In-home visits cost $50, a discounted rate in many cases, to do things such as setting up smart home devices or mounting a TV. It also includes discounts for repairs and extended warranty plans.
“This is a big transition for Best Buy and Geek Squad,” said Matt Bonin, the retailer’s vice president of services. “We’re transitioning from a transactional business to having more of a support relationship — supporting all of the technology in a customer’s home.”
The challenge for the company will be to maintain the profitability of the broadened service offering. Executives told investors earlier this year that the service expansion will create some high costs initially, likely pressuring the company’s gross profit margin. They aim to reap financial benefits over time.
Best Buy came up with “Total Tech Support” after it began seeing a shift in surveys a couple of years ago of consumers expressing an interest in having a broader array of support, especially as they add more smart gadgets in their homes, he said.
As it looks to be become more full-service tech experts, Best Buy has also been expanding an in-home adviser program in which consumers can sign up for a free in-home consultation with a Best Buy expert to get advice on how to better utilize technology in their homes.
Best Buy, which offers a monthly version of Total Tech Support in Canada, began piloting the service in the U.S. about a year ago in about 60 stores. In September, it expanded it to about 200 stores, or about 20 percent of the U.S. population in more than a dozen states. After testing a monthly and an annual subscription model, Best Buy decided to go with the latter version as it now rolls it out nationwide.
In the last year, about 230,000 people have signed up for the service and have used it more than 400,000 times, the company says.
While some customers may decide to get this service instead of extended warranties, Bonin said most still feel a need to get warranties, too. He added that Total Tech Support hasn’t taken away from Best Buy’s warranty sales, which have been growing.
Service-related sales at Best Buy had been sliding until last year, when they rose 4 percent because of growth in warranties, installation and delivery services.
While services only account for about 4 percent of Best Buy’s overall revenue, the segment is seen by many analysts as an important differentiator for Best Buy since many of its competitors sell gadgets often without providing additional support. However, Amazon has been dabbling in this space, too, and now offers in-home consultation and smart home installation services in select markets.
As more consumers sign up for Total Tech Support, Bonin said Best Buy will likely hire more people. The company already employs more than 20,000 people in its Geek Squad nationwide.
Best Buy will report results for its fiscal first quarter on Thursday.