Why Best Buy is Going Out of Business is an interesting article I read in Forbes.com. The reason Best Buy is in a death spiral is not so much from the competition from online retailers such as Amazon.com, but because of a basic failure in customer service. As the article’s writer, Larry Downs, puts it.
But the numbers only scratch the surface. To discover the real reasons behind the company’s decline, just take this simple test. Walk into one of the company’s retail locations or shop online. And try, really try, not to lose your temper.
I admit. I can’t do it. A few days ago, I visited a Best Buy store in Pinole, CA with a friend. He’s a devoted consumer electronics and media shopper, and wanted to buy the 3D blu ray of “How to Train Your Dragon,” which Best Buy sells exclusively. According to the company’s website, it’s backordered but available for pickup at the store we visited. The item wasn’t there, however, and the sales staff had no information.
But my friend decided to buy some other blu-ray discs. Or at least he tried to, until we were “assisted” by a young, poorly groomed sales clerk from the TV department, who wandered over to interrogate us. What kind of TV do you have? Do you have a cable service, or a satellite service? Do you have a triple play service plan?
He was clearly—and clumsily–trying to sell some alternative. (My guess is CinemaNow, Best Buy’s private label on-demand content service.) My friend politely but firmly told him he was not interested in switching his service from Comcast. I tried to change the subject by asking if there was a separate bin for 3D blu rays; he didn’t know.
The used car style questions continued. “I have just one last question for you,” he finally said to my friend. “How much do you pay Comcast every month?”
My friend is too polite. “How is that any of your business?” I asked him. “All right then,” he said, the fake smile unaffected, “You folks have a nice day.” He slinked back to his pit.
As a sometime business school professor, I could just imagine the conversation with the TV department manager the day before. “Corporate says we have to work on what’s called up-selling and cross-selling,” the clerk was informed in lieu of actual training on either the products or effective sales. “Whenever you aren’t with a customer, you need to be roaming the floor pushing our deal with CinemaNow. At the end of the day, I want to know how many people you’ve approached.”
But this is hardly customer service. It’s actually getting in the way of a customer who’s trying to self-service because there’s no one around who can answer a basic question about the store’s confusing layout. It’s anti-service.
Downs goes into a lot more detail about what Best Buy is doing wrong and Amazon.com is doing right.
Amazon lives and breathes the customer’s point-of-view. It completely engineers its business practices, its systems, and its people to support it. When they make a mistake, they admit it and they fix it. Immediately. Once, when I had a problem with a new TV that turned out to be a manufacturing flaw, the company begged me to let them pick up the unit, send something else, and install it for me. That was more solution than I needed, let alone asked for.
It’s not just Amazon’s prices that are better, in other words. Its customer service is superior in every way. And unlike traditional retailers, it recognizes its own potential disadvantages and innovates ways to overcome them. The company has no retail locations to pick up merchandise, but it ships instantly, often for free. It has no on-site sales experts to answer questions, but the pages of its products are filled with videos, FAQs, and customer reviews and answers.
The company keeps track of all previous orders, and uses its database to make helpful recommendations of other purchases. Phone support is instant, responsive, and knowledgeable. Returns are simple and unburdened by restocking fees and other gotchas. Inventory is precisely managed in a single system that spans all distribution points and third party partners.
Amazon always gets my business precisely because they go the extra mile to give me what I want. I can honestly say that I have never had any customer service issues with them. There is nothing inevitable about the decline of any business. Even with changing circumstances and advancing technology, any business can still profit, as long as they stick to the basics of keeping the customer happy.