Best Buy seeks to boost revenue without hard sales tactics

Hod Irvine recently visited the Best Buy store in Richfield to look for a new camera. The first employee Irvine spoke to referred him to another Blue Shirt, who expertly answered all of Irvine's questions.

"He was very friendly, very helpful, and, most importantly, very knowledgable," said Irvine, a 53-year-old Stillwater resident who sells advanced electronics like semiconductors. "People say 'Best Buy is going away.' If it goes away, what do you have left? God, I don't want to shop at Wal-Mart."

Despite Irvine's glowing review, he didn't actually buy a camera, preferring to do more research at other retailers.

Here lies a paradoxical problem for the consumer electronics giant: How can the retailer provide customers with information and a pleasant shopping experience to boost sales while not laying on the aggressive sales pitch that has long been a part of Best Buy's culture?

In other words, how do you get customers to buy something without pushing them to buy something?

Since joining Best Buy last fall, CEO Hubert Joly has invested considerable cash and time to improving customer service in an effort to boost sluggish sales. Under his tenure, Best Buy has retrained its Blue Shirt workforce and instituted a new system to both measure customer opinion and evaluate and compensate employees. Beyond the store, Best Buy has added resources to its vaunted social media team, which monitors and responds quickly to customers who complain about something on Facebook and Twitter.

By focusing on customer service, the company hopes that knowledge and some tender loving care will produce enough goodwill to convince a customer to eventually pull the trigger. The key word is "eventually."

Yet Best Buy needs to generate more sales now. In recent years, the company's cash flow has shrunk as fewer people visit Best Buy stores and many of the ones that do, like Irvine, leave without buying anything. Some analysts have even questioned whether Best Buy has a long-term future.

Back in the day, the retailer could count on a loyal group of customers who would always buy their electronics at a Best Buy, said Carol Spieckerman, president of the retail consulting firm Newmarketbuilders. But given the plethora of competition today, Best Buy is taking a calculated risk by going with a more passive approach, based on friendly service and information, to get customers to make a purchase, Spieckerman said.

"The role of the store is to get the sale before shoppers leave the store," she said.

A recent survey by Prosper Insights & Analytics asked shoppers whether they would buy something on BestBuy.com after seeing that product in a Best Buy store. Over half of the consumers said they were "neutral" or not likely to do so.

And yet, other signs point to the need for Best Buy to flex its expertise. In 2012, nearly 20 percent of shoppers who visited a Best Buy store wanted to buy something but didn't, according to the company. Many said they needed more product information, wanted to do more research or had a bad experience with an employee.

Hilary Le Bon, a Minneapolis resident, said she would love to shop and support a local retailer.

"But I find every interaction in-store and on the phone with the company to be frustrating and disconnected," she said. "There's so much room for improvement."

Some analysts wonder whether Best Buy has outsourced its customer service to outside parties, citing Best Buy's recent partnership with Samsung. The retailer agreed to host Samsung Experience store-within-a-store concept at all 1,000 Best Buy stores in the United States. The shops, however, are staffed by Samsung employees, not Blue Shirts.

"Samsung is essentially saying, 'We'll get it done ourselves,' " Kennedy said.

However, Best Buy thinks improving the in-store experience, including customer service, could yield immediate results. Two years ago, 40 percent of the 600 million annual visits to stores resulted in a sale. Just adding one percentage point to that figure could generate an extra $200 million in operating income, the company estimates.

One of Joly's first priorities as CEO was to advocate a back to retail basics approach that would stress customer service not just in stores but throughout the corporate culture. To set an example, Joly even donned a Blue Shirt and worked at a store his first week on the job.

Since then, Best Buy has implemented a Retail Immersion Program in which even corporate officers receive customer service training, interact with store general managers, and listen to customer calls. Lisa Smith, Best Buy's vice president of enterprise customer care, said the effort is a "cultural shift" for the company.

"We are all stepping it up in terms of our level of engagement," she said. "To make sure that foundation is good, the role of customer service has been elevated over the past 10 months substantially."

Last fall, Best Buy started to retrain its Blue Shirt employees, using the same techniques developed by executives behind the company's highly successful Best Buy Mobile format. Perhaps more important, Best Buy adopted the Net Promoter Score (NPS) as a way to measure customer satisfaction and employee performance. First developed by Bain & Co. consulting in 2003, the system, based on customer surveys, seeks to determine which customers are likely to recommend a retailer to other people.

The company is using NPS to evaluate its employees. In the past, Best Buy paid commissions to Blue Shirts, which resulted in employees aggressively pushing products on customers regardless of whether they needed them or not. Today, Best Buy compensates employees based on NPS scores assigned to their individual departments and the entire store.

"[NPS] gives us guidance on where we need to get better," he said. "Maybe they walked out of the store and didn't realize we had our low-price guarantee. Maybe they were looking for a certain product and couldn't find it. Maybe the person who helped them wasn't knowledgeable enough, they needed more info and we can get them more info."

Best Buy's stores may be a work in progress but behind the scenes, the company is already an industry leader, particularly its social media efforts. Using sophisticated software that can monitor more than 200 million sites a day, Best Buy can detect and respond to customer questions or complaints 24 hours a day, seven days a week.

"The pace of retail and pace of society have accelerated," Smith said. "It's a new world. We need to address things in the moment."

A recent study by Conversocial consulting firm of the top 100 retailers determined Best Buy's average response time to social media queries was 14 minutes compared to an average industry time of 11 hours and 15 minutes. In fact, Conversocial rated Best Buy No. 1 in social customer service, the only retailer to receive its highest rank of five stars.

Smith said the company has built an internal Google-like search engine in which employees can quickly access information and answer customer questions. Best Buy is also collecting customer questions and the company's answers so that it can develop content to share with consumers online in the form of videos and blog posts.

"We're making progress," Score said. "Everything you hope for in a turnaround situation is really coming together."

Thomas Lee • 612-673-4113