Hubert Joly, Chairman and CEO of Best Buy, took to the stage with Adobe Chairman and CEO Shantanu Narayen during the opening keynote at the Adobe Summit in Las Vegas to discuss the retailer's business transformation, and the role that organizing and leveraging customer data has played in it.
Dubbed "renew blue," the initial plan was put into place back in 2012 as Amazon began to dominate and showrooming - the act of customers visiting physical stores then going online elsewhere to buy - was becoming a major problem for the bricks-and-mortar retail sector. "Seven years ago," said Joly, "people thought we were going to die."
In 2015, Best buy dissolved all Future Shop locations, which it had purchased back in 2001 to operate alongside the Best Buy Canada expansion. Many of the stores were converted to Best Buy locations, and Best Buy stores remained a force north of the border, offering tech products in stores as well as an expanded offering online. Once faced with dwindling sales and increasing online pressures, Joly joined the team and began the Renew Blue strategy, which he continues to work on through the "building the new blue" transformation.
The first step was to eliminate the biggest factor that was pulling customers to Amazon: price. Best Buy ensured that its pricing fell in line with Amazon's to eliminate that roadblock. Then came a greater investment in the customer experience, including the website, search, product information, and reviews. Shipping was also a big draw for Amazon, as customers could sign up for Prime and receive free shipping, as well as free shipping on many items even without a Prime subscription. So Best Buy offered free and fast shipping to address that issue of convenience.
The retailer invested in its staff as well, decreasing turnover to 30%, says Joly. They also invested in the bricks-and-mortar presence through partnering with top vendors like Samsung, Apple, and Google to offer store-in-store brand concepts. It requires significant retail space to house products from single brands, but has proven to be a successful model. Best Buy continued with a focus on corporate responsibility, working to reduce its carbon footprint. The Geek Squad team of in-store techs, meanwhile, once viewed as a group who could do simple computer fixes and mount TVs, was enhanced to offer in-home set-up services. Our in-home advisors, says Joly, are now the answer to "honey, can you do this?
"We're not in the business of selling products and doing transactions," he continued. "Our purpose is to enrich lives with the help of technology."
Joly believes that Best Buy's online experience is now "on par" with Amazon, but the advantage of the in-person experience to complement it, including not only physical stores where customers can touch and feel products, but also the ability to go into peoples' home via the in-home Geek Squad advisors, puts the retailer in a strong position.
But there needed to be more, and that's where technologies from companies like Adobe and its Customer Experience Management (CXM) suite came in, with the focus on helping Best Buy gain a better understanding of its customers on a more personal level. Customer data is analyzed and shared throughout all aspects of the retailer's model. Digital marketing now accounts for 90% of the company's media spend and includes personalizing marketing messages based on customer behaviours and past purchases. Compare that to seven years ago when 80% of the spend was on mass marketing - throwing one thing to the wall and hoping it sticks. Today, rather than sending one marketing e-mail to 40 million customers, a slightly tweaked version of a message can be sent to each one, targeting items they are more likely to buy, categories they are most interested in, and perhaps products they have searched for online, and abandoned at the checkout. Best Buy uses thousands of attributes within a customer database, all pulled together to create detailed customer profiles, and based on information customers have provided to the company. This allows for a higher level of targeted marketing than was previously possible. And it also affords a higher level of customer service since customers receive more relevant offers and information.
That data is used to enhance the experience in stores, too. If a customer orders a TV online, for example, he can advise the store that he's on the way so staff can bring it up to the front, ready for pick up when he arrives. That purchase is followed up with an e-mail with unboxing and installation instructions; or the customer can opt to have an in-home advisor come help. That advisor is armed with details about the specific customer, including what other gear he might have in his home, to further personalize the experience. With the new Total Tech Support Geek Squad option, customers can pay an annual or monthly to get support for whatever they need, when they need it, either for a small additional fee, or included in the price.
The important thing to note is that customer data is integrated and accessible throughout the pipeline, whether the customer is searching or buying online, picking up items in store, or calling for service. And Best Buy can use that data to enhance the experience across all channels.
"We don't see ourselves as a bricks-and-mortar retailer," says Joly. "We look to serve the customer in a way that truly solves their unique problems."
Best Buy's playbook to success was in embracing this business transformation to not just sell products but to offer customers something more. And it seems to be working. Last year, CEOWorld Magazine named Joly one of the best CEOs in the world, (Adobe's Narayen, it should be noted, also made the list) and GlassDoor ranked him one of the highest rated CEOs of 2018. (yet another list that Narayen also made.) And just last month, Best Buy reported "better-than-expected" fourth quarter earnings, with Corrie Barry, CFO and Strategic Transformation Officer, noting that the priority for fiscal 2020 is to "continue to transform the company by bringing to market solution that solve real customer needs and by building customer relationships."
While using technologies to harness a wealth of customer data had a part in Best Buy's turnaround, it involved more than just big data. But the story is a great example that having lots of customers and data isn't enough without a system that allows you to truly leverage that information. "To win in today's world," said Narayen when he opened the keynote, "every business must transform itself to become maniacally focused on the customer experience. You might have hundreds of thousands of customers, but the trick is to get to know each one. Know what they did in the past so you can predict what they will do in the future. And get a comprehensive view of what's happening in store and online."
Best Buy, of course, is a mega big box retailer. How can this information relate to smaller fries? Those same principles can be adopted by independent retailers and custom integrators as well. Personal relationships are already the backbone of those businesses. They have much smaller client lists than a Best Buy, Amazon, or Walmart might. But they might still be missing opportunities to target both existing and potential clients more effectively. Customer relationships can always be enhanced, nurtured, and catered to in new and exciting ways. "Retention," said Narayen, "is the new growth."
There were plenty more examples at the conference of companies that have leveraged their customer data, and make use of new features from Adobe, including Sensei artificial intelligence (AI), to simplify business processes and make the experience more relevant for the customer. Stay tuned.
Hubert Joly, Chairman and CEO of Best Buy, talks with Adobe Chairman and CEO Shantanu Narayen, about the retailer's "renew blue" transformation, and how harnessing customer data was a part of the equation.