Experience Manifesto: Yamamoto Moss Brand Experience Newsletter

Dave Norton, from Yamamoto Moss, has an excellent interview with Barry Judge from Best Buy. As you know, they've been changing their stores to a consumer centric format. And, it does seem to be working. Here's something from ICSC newswire:

Best Buy said same-store sales at its 67 “consumer-centric” stores — a reconceptualization of certain existing stores that the chain launched in early October — grew twice as fast as those at other domestic Best Buy units. During the third quarter the retailer converted each of these stores from its traditional layout and merchandise mix to one of four new formats targeting certain specific customer groups.

Be interesting to see how successful this will continue to be for Best Buy and whenther or not other retail brands will try to copy them.

Ask the Expert: Barry Judge, Senior Vice President, Consumer and Brand Marketing, Best Buy
In the highly competitive consumer retail space, forward-thinking marketing strategy helps keep retailers such as Minnesota-based Best Buy at the top of its industry. Barry Judge, Best Buy's senior vice president of consumer and brand marketing, shared with the April Brand Matters audience how he and his team guide the company's brand strategy, drive the development of new marketing capabilities, and empower marketing innovation as the company puts the customer at the center of its business model. Brand Matters is a regular forum discussing brand and brand management sponsored by Yamamoto Moss, Twin Cities Business Monthly, and the Carlson School of Management.

Q: What were the factors that caused Best Buy to consider a new marketing strategy?
A: There were several factors that helped us realize we needed to change our approach to marketing and get to know our customers better. We were seeing other retailers die--Sears, Kmart, and even Circuit City. Once you start dying in retail, you're done. It's very difficult to recover. We needed to change to survive.

We also discovered through research that we were losing some of our best customers. The marketplace was changing quickly--consumers had more choices in products, which were increasingly complex and technical, and they had a greater range of retailers from which to buy those products. In some respects, eBay and Amazon.com had become our biggest competitors rather than traditional bricks-and-mortar retailers.

We also didn't have a killer value proposition. We weren't more convenient than Amazon.com. Wal-Mart owned the price position. Dell offered better sales assistance. Best Buy had to own the sales experience and the position of authority on new technology. We had to sharpen our focus on the people who love our stuff and the people who love to shop for that stuff. Customers and their motivations for buying had to become the center of our universe.

Q: Best Buy set out to know its customers better than any other retailer. What did you learn about your customers and how did you ultimately segment them for marketing purposes?
A: We realized that customers have different behaviors that we could map back to the sales experience and product preferences. We first segmented our customers by demographics and attitudes, and then overlaid behavioral data on top of each demographic segment. That led to the definition of customer segments such as "Jill," customers who put their kids first, and "Buzz," active, social, younger persons.

With these vivid customer segments, we could more easily define what aspects of the buying experience and product attributes would thrill each group and create specific messages to motivate them.

We further broke down these customer groups by looking at the "Customer Lifetime Value," which identified the customers who spent the most at Best Buy in the past and the customers we most wanted to retain.

Q: You're now using "customer-centric marketing" versus what is generally considered traditional marketing. What is the difference?
A: Traditional marketing compares to customer-centric marketing like hunting compares to gardening. Hunters set their eye on a target and fire repeatedly until bringing down the target. Gardeners nurture and care for their plants by fertilizing, weeding, and pruning to get them to grow bigger and fuller. Best Buy is taking the gardening approach. Traditional marketing is a monologue; customer-centric marketing is a dialogue. It's about engaging and empowering the store teams to accommodate and collaborate with customers to get their needs met in a fulfilling way.

This shift brought us from our traditional mass marketing approach through television ads and newspaper inserts, to network marketing through our bestbuy.com users and 5 million Reward Zone program members, and local marketing via tailored inserts, events, and the empowerment of the local sales teams.

Q: Customer-centric marketing involves what you call "co-creation." What exactly does that entail?
A: Joe Trippi, former campaign manager for the Howard Dean campaign, said to us, "The 5,000 smartest people don't work at [Best Buy's corporate office]." He's right. It's the old adage that the whole is greater than the sum of its parts. We have approximately 90,000 sales employees, millions of users at bestbuy.com and 5 million people enrolled in the Reward Zone program. We need to tap into this community to help us sell products.

Marketers are good at telling their story. Sometimes they're good at listening to customers--from a distance--in focus groups or quantitative research. But they don't generally interact or collaborate closely with consumers.

Co-creation is the idea that we can work collaboratively with this "community" to develop desired ideas, products, and services that are not yet available. In the end, we have richer ideas that help us keep up with the rapidly changing marketplace and help solve customers' problems.

Q: What impact has customer-centric marketing had on Best Buy's business, operations, and sales process?
A: Customer-centric marketing currently is only in approximately 70 of our 700 stores. While those stores are showing increased sales, we need to introduce the concept to additional stores in order to increase company-wide comparable store sales.

With the sales team at the center of our marketing approach, training and retaining those employees is important to our success. We need an engaged workforce that is passionate about pleasing customers. Getting those employees to care is critical to our success. In the customer-centric stores, we're seeing turnover rates lower than the company average. Beyond empowering the sales team, we're also looking at new incentives for them to help further increase our retention rate.

And in this new approach, creating a community around Best Buy is key. We're using more extreme marketing messages and approaches on bestbuy.com and creating more interaction and reasons for coming back. We're using the Web community and network marketing to drive people to our stores where our sales people build and nurture relationships with customers.