Best Buy’s problem isn’t shopper traffic, it’s buyer traffic.
Beginning on March 3, the big box will take yet another step to remedy this [very big] problem, when it beings a permanent price matching policy aimed squarely at low-price competitors like Amazon.com and Walmart. For those “showroomers” keeping tabs on prices with smartphones or tablets while testing out Best Buy’s wares in store, this announcement goes a long way to satiating that need for instant gratification that an online retailer like Amazon cannot fulfill – a potential “win” for Best Buy.
However, a big question remains: Will this new price matching policy be enough to restore shoppers’ trust in Best Buy? The economic downturn and increasing digital connectivity led the big box’s once solid flock astray, seeking out the lowest prices and better equipping themselves to make educated purchase decisions in the high-ticket electronics category. During these years, Amazon went from the little-etailer-that-could to the world’s largest website, building a base of loyal shoppers with its competitive pricing, convenience, and reliability. Let’s not forget the discounters; Walmart and Target ramped up their electronics selections and brand offerings – at those all-important low price points. Costco has reached out to lucrative upper-income shoppers with tantalizing prices while providing members with free technical support, gratis warranty extensions, and a flexible return policy.
So will price be enough to bring convert shoppers into Best Buy buyers? It’s a start, but in order to keep up with its competition, Best Buy will also need to focus on these three key areas:
1. Customer Service
Among electronics shoppers specifically seeking out customer service, the majority heads to Best Buy most often. Surprised? Consider this: with the shortage of brick-and-mortar specialty electronics retailers today, Best Buy isn’t facing too much competition in this area. And, shopper traffic doesn’t guarantee a sale, which is the crux of its showrooming dilemma – Best Buy shoppers would be better termed intelligence collectors or researchers. Not only does Best Buy need to focus on providing an excellent service experience for the customer when in-store, but the big box should also be focused on interacting with shoppers once they’ve left – and before they purchase at a competitor.
Best Buy’s Reward Zone loyalty program currently only incentivizes buyers, but perhaps it’s time to recognize its many shoppers. If the retailer scanned shoppers’ cards (or signed them up) before they headed to the checkout (or simply out of the door), it could do some intelligence gathering of its own – finding out who went home empty handed, what they were looking for, brands/models they were interested in, etc. Reaching out to these shoppers post-visit – perhaps with an incentive, additional product information, or even just a simple “thanks” – may help tip the ultimate purchase decision in Best Buy’s favor over a competitor.
This would require additional efforts from Best Buy’s sales associates, but isn’t that what providing excellent customer service is all about?
2. Online Presence
Where Amazon has excelled in the online arena, Best Buy has woefully lagged. For the last two critical holiday seasons, BestBuy.com site and shipping problems have plagued customers. So will it be three strikes and BestBuy.com’s out? More like fool me once, shame on you; fool me twice, I’ll head to Amazon.
A quick look at the shoppers headed to BestBuy.com for non-apparel items illustrates how far the website has not come in over the past five years, especially when evaluated against Amazon (see chart). Over time, Amazon has become a destination site [perhaps even a de facto search engine?] for many consumers, with more than a third headed to this website most often for non-apparel items, a figure rising 150% from five years ago. In contrast, BestBuy.com has flatlined.
Sure, Amazon competes in a wider assortment of product categories, so one wouldn’t assume that BestBuy.com could keep up with this triple digit pace. However, BestBuy.com competes in two of the top three most researched categories online – electronics and appliances – so while the retailer is fortunate to have maintained this level of non-apparel shoppers, it’s evident that there is room to gain a little loyalty, particularly as the digital world increasingly becomes a function of our everyday lives.
With holiday 2013 still a little far on horizon, now is the time for CEO Hubert Joly to invest in website improvements, functionality, mobile optimization, and ordering/shipping logistics to avoid the gaffes of holiday 2011 and 2012. Driving and incentivizing shoppers to experience a re-tooled or “new and improved” BestBuy.com wouldn’t hurt, either.
3. Post-Purchase Experience
According to the Net Promoter Score* (NPS®) metric of customer loyalty and satisfaction, Best Buy maintains NPS® that is 40% higher than overall average for electronics shoppers in general – which doesn’t sound too bad and might be a bit better than expected. However, when comparing Best Buy’s NPS® to those who shop most often at Amazon and Costco for electronics, yet again the Best Buy “lag” becomes apparent (see chart). Electronics shoppers of these two competitors feel much more compelled to recommend these retailers to their family, friends, and others, implying stronger bonds of loyalty compared to Best Buy – the electronics specialist.
In this economy, consumers want to feel that their business is valued, they made the right purchase decision, and they spent their hard-earned dollars wisely. How can a retailer optimize the level of reassurance and perhaps earn a little customer loyalty? Engage the customer beyond the sale.
Where electronics and appliance purchases are concerned, not only are the stakes particularly high because of sticker prices, but consumers can face quite the technical conundrum once the purchase is home. A thank you note or email, follow-up phone call, or perhaps complimentary trial access to Geek Squad technical support may signal to the customer that not only did they make the best purchase decision, but that Best Buy appreciated their business – now and in the future.
If Best Buy can prove to its shoppers that it cares about and values their business, perhaps shoppers can once again become buyers.
This article originally appeared on Forbes.com.
* Net Promoter, NPS and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld