Report on the Loss of Sales Related to Best Buy Customer Satisfaction Problems

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Memo

Enclosed is “Report on the Loss of Sales Related to Customer Satisfaction Problems.” This report examines the customer service problems for Best Buy’s brick-and-mortar stores as well as problems with online sales.

The report examines customer reactions from several sources: Forbes articles with customer reactions to Best Buy’s customer service problem, customer responses on ConsumerAffairs.com and statements made by dissatisfied customers in various forums. The report also examines the potential courses of action relating to employee relations with customers, training of sales floor members, issues in locating products in store, and the practice of up-selling services and products to customers and suggestions relating to these issues.

It is the goal of this report to provide the upper management team with the customer’s concerns and frustrations while shopping at Best Buy in order to evaluate or re-evaluate the steps taken by the company to train, re-train and support sales floor representatives; examine up-selling and research ways to better track inventory in stores and online. The purpose of this report is to find out why Best Buy customers are not frequenting the company as often and what the company can do to ameliorate the dissatisfied customers. Please let me know if you have questions or would like further explanations about his report. I may be reached at PHONE NUMBER and EMAIL ADDRESS.

Executive Summary

Customer service is the vital link between the customer and the company that sells the products consumers are looking to purchase. While customers have more options to shop online and many stores are carrying electronics, Best Buy must find a way to gain an edge over other stores by providing a positive customer experience through customer service in order to remain a competitor in their field.

When customer service is poor at a retail store some factors may include: rude or unhelpful employees, lack of desired items and little knowledge about the products and problems that plague the online aspect of shopping. For Best Buy, there have been problems with all of these factors and sales numbers have suffered.

The solution is to approach each issue and work with employees to ensure that they understand how to sell an item in a “customer centric” way that makes the customer feel positive about shopping in the store (Steinkircher, 2012). Organization and tracking items needs to be redesigned so customers can be sure the item they are looking for is available for customer pick up. While any store can sell a product, it is the customer service that ensures that customers return, and suggest to others to return, to a specific store.

Introduction

A few years ago, Best Buy was in a situation that should have ensured the success of the company; the biggest competitor, Circuit City, declared bankruptcy and closed their stores. Requests for electronic equipment was at an all-time high as new Blu-Ray players and video game consoles were released. Even though brick-and-mortar stores had to compete with electronic stores, impulse buying (where customers prefer to pick up the item rather than wait for shipment) was still an effective way of getting customers in the store. However, in 2011, Best Buy reported huge losses and the company’s stock had plummeted 40% (Downes, 2012, Why Best Buy is Going Out of Business…Gradually). What is causing this huge gap between consumers and Best Buy? Customer service- or, more specifically- poor customer service was plaguing the stores and the customers.

Purpose, Scope and Topic Development

The purpose of this report is to examine the problems that Best Buy faces as a large electronics store with the issue of maintaining excellent customer service and a positive buying experience for customers. If customers are able to locate the item they are looking for but do not receive helpful and courteous sales floor employees, friendly cashiers and item return associates they are likely to take their shopping experience online or at another store that sells similar products.

The specific customer service problems will first be identified and examined as to why these particular issues are detrimental to the success of Best Buy as a large electronics retailer. After these problems have been examined, the potential courses of action will be outlined to show the ways that Best Buy can improve the issues that customers face when shopping in the store. The solutions will consider how Best Buy can take advantage of customer service and turn the negative shopping experiences that customers have reported and turning them into a more positive outcome with a competitive advantage.

Section One: Analyzing the Problem

In an article by Larry Downes (2012) of Forbes he writes a detailed article about the range of customer service issues he faced while shopping at a California Best Buy. He mentions that simply going to the store was a frustrating and aggravating journey and that the main focus of the irritation was the employees. Downes describes the sales clerk as he tries to sell the shoppers a product that they are not looking for; they are looking for a copy of the 3D BluRay How to Train Your Dragon. Instead, the sales clerk tries to convince the shoppers to join a movie service and change their cable provider. The author says that it felt more like the “anti-service” and has become the norm when shopping about Best Buy. Other publications have noted the same problem, saying that employees are “rarely helpful” when asked item specific questions (Downes, 2012, Best Buy vs. Customers: Part 2).

However, the issues are not just in the sales clerks; in another article published in USA Today reported the 2012 issue of Best Buy struggling to fulfill and cancelling customer’s online orders right before the Christmas holiday season. DealNews.com, a website that alerts customers of sales and specials even posted a warning that Best Buy was struggling so much to process and deliver orders than customers should avoid the retailer completely (O’Donnell, 2012).

ConsumerAffairs.com Customer Service Rating of Best Buy

Angry and frustrated customers have also gone online to vent their complaints. Many sites, including the Better Business Bureau, Consumer Reports, and Consumer Affairs have ratings that show just how low customers rate their shopping experience at Best Buy. The chart above shows the Consumer Affairs data that an astounding 83% of shoppers gave the retailer a one star review. Their reasons included: sales floor employees were not knowledgeable, employee up-selling products and problems with item tracking and shipping, either from the store or the website (Consumer Affairs, 2007-2013).

While Best Buy employees are screened based on knowledge of areas of the store such as home appliances, photography, computers, etc., they are also offered training in the products the stores carry. When new products are released, employees are also offered training on the new products that are being released so they can offer them to customers. The problem seems to consistently be that employees are not familiar with the location of items and may not offer customers the assistance they may need. One comment from a customer from ConsumerAffairs.com said that he was looking for a video card for his computer and the associate was unsure of which one was the most appropriate for what the customer was looking for. Instead of offering to find another employee to assist the customer, the sales floor associate suggested that the customer go online and perform the research himself.

Difficulty locating items on the sales floor was also mentioned, customers often use the Best Buy app or website to see if an item was available at a location before going to purchase it. While the customers were successful in locating an item online, when they arrived at the store the sales floor associate was unable to find the requested item. If the item could not be found, the customer was likely to leave the Best Buy unsatisfied and may instead shop at a competing retailer or order the item from a non-Best Buy online retailer.

Upselling also seems to be a point of contention among customers, as they voice their frustration in being offered magazine subscriptions at checkout, being offered streaming movie services without prompting and being upsold cell phone plans that they have already denied. There is considerable profit to be made selling services and subscriptions to customers as Best Buy receives a percentage of every completed application. However, if a customer is already frustrated from a shopping experience that does not go as smoothly as hoped, being upsold a product may cause the company to lose a customer rather than make extra income from a service sale.

If a customer decides to purchase an item online for convenience or because the item is not offered in the stores, the online shopping experience should be one that is fast and easy. The process of finding, selecting, purchasing, shipping and arrival of the item should be seamless. Instead, there have been several public problems with the website; the first being that the website did not show the proper number of items in stock. When customers placed the item in their online shopping basket and completed their order, the orders were then backordered. However, in 2012 the backorder lead to the Best Buy cancelling many customers orders right before the holiday season. The cancellation made news websites suggest that customers shop elsewhere; further damaging the Best Buy brand. The chart below shows the serious dip in sales over the past 12 years.

(Chart omitted for preview. Available via download)

Section Two: Potential Courses of Action

Since several of Best Buy’s issues relate to sales floor employees, there are several steps that can be taken to ensure that customers are able to get the assistance they need on the sales floor. Re-training current employees and ensuring that employees are following policies related to “customer-centric” behavior and sales is a step that will help customers feel comfortable shopping at Best Buy. Using employee training techniques that focus on active listening, locating items on the sales floor and ensuring that the customer receives their item are of the forefront of the training. Ensuring that sales floor team members are also familiar with their department is also a component of the training so employees can better assist customers. While it is not feasible to train employees to be experts in their fields, employees should kept current about the new products that arrive. Short technology briefs could also be shared to provide short overviews of items that customers may shop for.

Another potential course of action is to limit or eliminate up-selling. While up-selling can be financially positive for Best Buy, if used out of context or inappropriately, then it is an irritant for customers. Case in point is the Forbes shopper who was looking for a BluRay and instead was upsold a new cable provider. The conclusion of this story was that the shopper ended up leaving the Best Buy without the item he was looking for and his friend wrote the article about the dissatisfaction he and his friend felt. While Best Buy may make some money selling services, it is questionable if this is a successful strategy if it is driving customers away from the store. A cost analysis should be done to examine the amount of money that Best Buy currently makes up-selling the products and services and decide if it is a major part of the income of the company. If it is discovered that the up-selling promotions do not mean large gains for Best Buy then they should be temporarily ceased. Offers of the Best Buy credit card will still be offered at the cash register, however, as there are significant financial gains for the company. To reduce the possibility of frustrating the customer, however, new protocols will be put into place; such as asking customers once without further insisting that they apply for a card.

The third potential course of action is to investigate and implement updated warehouse tagging and item tracking. One of the major complaints of customers was that items were not always in stock as they were listed online. A better system of tracking would help alleviate this problem and customers could be sure that they would find the item if they drove to the store. Finding solutions to assist Best Buy in keeping track of items and being able to locate an item for customers at another store location is the best way to keep this problem from happening. While this may be implementing an RFID tag system similar to what Sears is already using (Seita, Vankatesh, Joglekar, 2013) or an alternate, many of the customer complaints were related to item location in the store and on the website. Re-focusing the attention on the items of the brick-and-mortar stores will allow Best Buy to do what it originally intended; sell electronics at a physical location so customers can be assured that the store has the item they want and the help they need to get it.

Section Three: Recommendations for Best Buy

Competing against large online retailers may not be the solution to regaining Best Buy’s customers. Online retail stores have a considerable advantage in this market since they have been developing their inventory and shipping solutions for years. Instead, the focus should largely be placed on getting customers to return to the brick and mortar Best Buy stores. Letting customers know that the store has changed may encourage them to experience a Best Buy that has refocused its sights on keeping customers satisfied and loyal.

Best Buy would benefit from re-working their employee expectations and removing the constant upselling of items from their sales floor associates. Instead of having employees memorize additional service packages to up-sell, the time would be better used to gain knowledge regarding the products in their sales area. This would decrease customer irritation in being sold a product they have not asked for and also adds the missing knowledge component that some customers reported was missing. Research and use of a new product tagging and location system to help customers and employees locate items and ensure that items are not oversold on the website (which results in customers placing orders on items that are already sold out). With these three essential pieces, Best Buy will have an edge over other electronics retailers because they will have improved the customers’ experience in shopping for a product.

Conclusion

In an era where the internet allows angry customers to blog and post reviews about companies, offering excellent customer service is more important than ever. While past business models have promoted up-selling, customers may shop more at Best Buy if the customer can enter the store, locate the product, talk to a knowledgeable employee about any questions they may have, pay for the item and exit the store efficiently (Sichtman, Selasnisky & Diamantopoulos, 2011). When this chain of events is disrupted, customers are upset at the time and effort that they have wasted (DeVine, Lal, Zea, 2012) and may decide that Best Buy is no longer their chosen store for buying electronics. By making it easier for customers to find items before visiting the store they remove the frustration of arriving at the store to find the shelf empty, the employees focused on getting the customer what they need while avoiding the “used car salesman” technique. If Best Buy makes these changes and publicizes that the changes have been made, it is likely that customers will visit Best Buy stores once again.

References

Consumer affairs- Best Buy. (n.d.). Top 616 Complaints and Reviews about Best Buy. Retrieved from http://www.consumeraffairs.com/retail/best_buy.htm

DeVine, J., Lal, S., & Zea, M. (2012). The human factor in service design. Mckinsey Quarterly, (1), 118-123.

Downes, L. (2012, January 2). Why Best Buy is going out of business...gradually. Forbes. Retrieved from http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/2/

Downes, L. (2012, January 9). The people vs. best buy, round two. Forbes. Retrieved from http://www.forbes.com/sites/larrydownes/2012/01/09/the-people-vs-best-buy-round-two/2/

O'Donnell, J. (2012, January 12). Best Buy still faces customer service problems, experts say.USATODAY.COM. Retrieved from http://usatoday30.usatoday.com/money/industries/retail/story/2012-01-11/best-buy-cancelled-orders/52521568/1

Platt, E. (2011). "The Collapse of Best Buy in Two Simple Charts." Business Insider. http://www.businessinsider.com/the-collapse-of-best-buy-in-two-simple-charts-2011-12.

Rosenblum, P. (2013, August 12). Can Best Buy survive? Yes, if it doesn't forget to fix its stores, not just its site. Forbes. Retrieved from http://www.forbes.com/sites/paularosenblum/2013/08/12/can-best-buy-survive-and-are-its-problems-really-all-about-amazon/

Setia, P., Venkatesh, V., & Joglekar, S. (2013). Leveraging digital technologies: how information quality leads to localized capabilities and customer service performance. MIS Quarterly, 37(2), 565-A4.

Sichtmann, C., Selasinsky, M., & Diamantopoulos, A. (2011). Service quality and export performance of business-to-business service providers: The role of service employee- and customer-oriented quality control initiatives. Journal of International Marketing, 19(1), 1-22. doi:10.1509/jimk.19.1.1

Steinkirchner, S. (2012, August 22). 5 ways to improve your customer service. Forbes. Retrieved from http://www.forbes.com/sites/sundaysteinkirchner/2012/08/22/5-ways-to-improve-your-customer-service/