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Best Buy: 20% Of Customers Are Wrong
Mr Show writes "Ars Technica has an article up discussing Best Buy's strategies to drive off the deal hunters. It's a good follow up to the Slashdot story from back in July, and offers some details on what they're actually trying to do."
What they are basically saying is that 20% of customers are wrong "for Best Buy." In essence, they are trying to rid themselves of intelligent shoppers who look around for the best deal and are usually more knowledgeable about what they buy and instead cater to the sheep and the unwashed masses that will buy anything regardless of features and price simply because a Best Buy salesman tells them too.
This is yet another attempt to dumb down consumers to make the more receptive to truly weak sales pitches. Best Buy won't be getting any more of my business if they value this philosophy.
cLive ;-)
-- Trinity in high heels carrying a whip: The donimatrix - there is no spoonerism
Best Buy's rebate scams are among the worst in the industry. I've been told that something would be free after rebate, only to find out the rebate expired a week before I purchased the item.
BUT we still hate BB for calling the cops on customers who ordered stuff on their website.
Religion is a gateway psychosis. -- Dave Foley
Having worked retail as a profession for 9 years, most sales staff do not have the ability to help me. They're not skilled enough. Therefore I have an easier time if they don't bother me. Luckily most of them do look at you and make decisions, so I usually use my "annoyed and disinterested" face to ward them off.
Most of the time I find consumers know more than the sales staff because the sales staff at most places are not paid high enough to have high quality sales staff.
Not since Marie-Antoinette played milkmaid has looking simple and honest been so fake and complicated.
This is the biggest "scam" of all: selling "extended warranties". I nver buy them and use the rationale of self-insurance.
These "extended warranties" are an insurance policy. The buyer is buying insurance, not a warranty.
Question: why buy insurance if you can insure yourself. Think of it this way: most people could afford the loss that the insurance covers, so, if you really want to be anal about it, instead of buying the insurance, put the money into an account. Pretty soon, that account will have sufficient funds in it to cover any losses that you could possibly imagine an extended warranty covering. The difference is that it now YOUR MONEY, not the insurance companies'.
You will be in effect, your own insurance company.
There is a small, but finite chance that over the long term you will be worse off if you self insure, but I think most people would acknowledge that the risk is small in comparison to the gain.
Since, for many sales by Best Buy and others, there is no profit on the sale of the item itself and only the extended warranty provides all of the profit, that's why I will never be the sort of buyer Best Buy are looking for. Of course, I can always let a sales assistant THINK I'm going to buy the warranty, right up to the time comes to actually pay!
The real "Libtards" are the Libertarians!
People are abusing those benefits Best Buy provides. Now, I think the Mail in Rebates are bogus. I really wish it was required that they put the price I have to pay when I get to the counter on the price tag (I know CompUSA is notorious for this, not sure about Best Buy).
Now, forcing people to honor their advertising about price matching. That I've got no problems with the customer doing. If Best Buy doesn't want to have to lower the price, they shouldn't have advertised it as part of their pricing. I don't know if Best Buy does this, but I know that I've heard some places have branded models that are only sold by a particular chain. They sell identical systems to 3-4 chains, but each chain has it's own model number. Thus they can claim that a competitor with a lower pice isn't exactly the same model, so the guarantee doesn't apply. That's crappy, but I'm not sure if that has any bearing on this article.
I know I don't like them discussion that people "buying up all the loss leaders" are a problem. Especially when they are discussing that people are re-selling the items on e-bay. That is capitalism at it's finest. The market is being highly efficient there, they just need to realize that communication and on-line auctioning have forced retailers to be more price competitive. The world has moved on, and this is a point at which Best Buy is just being left behind (the fact that people will buy it for cost plus shipping, means either people are stupid, or Best Buy is taking a serious beating on the pricing). If Best Buy corporate had any brains, they'd setup small retailers to just sell them directly over eBay and move lots of items that way to see if they can benefit from the insanity of the purchasers.
Retail is generally a very inefficient way to sell things. There's only a single price for everyone. They'd be much better off with auction style pricing (the optimal price is found in a good market). People pay what they believe something is worth, and the store gets the maximal amount of money the market will bear. As long as there are plenty of buyers for any given item, they'd probably get a better price then they do with the shelf price. Plus it wouldn't have to be trucked around the country, and they wouldn't need as much retail space.
I don't like what they are talking about in terms of profiling. Part of my problem, is well, I don't dress my income. I had the same problem when purchasing a vehicle. Fortuantely when I went to get a house, I did the loan info over the phone. Sometimes it is nice to just be a number.
Now, Best Buy's claim that 20% of their customers are doing this sort of thing is just silly. I'm highly doubtful that it is that rampant (it might be 20% of their transactions, but not 20% of their customers).
Kirby
This unfortunately is not surprising. One thing I have noticed about modern corporation customer relations is that when the customer is clearly going to be screwed, they always try to spin it as some sort of benefit. Comcast does it when they have their annual 20% rate hike.
Example:
Dear Comcast Customer, you can now pick from an exciting new cable package with more home shopping channels plus the Hallmark channel! Try not to notice that it's $10 more expensive than you are used to paying.
Don't act shocked by Best Buy's policies. They've deliberately made an effort to make their pricing confusing in order to cull an extra few dollars out of the "unwashed masses" that come through their doors. You are exactly right that they (BB) are attempting to rid themselves of the smart consumers. Their policy seems to be more about differential pricing and impulse purchases than about offering a fair deal to everyone. That's just the way they operate, they've picked their target/strategy and they'll try to milk it for everything they can take. Get over it, spread the word, and shop somewhere else! I'm not saying that you (writer) have any problem with it, I've just seen some of the other "OUTRAGED" responses and feel they're misguided.
We all know that rebates will most likely NOT get sent in, extra money for them... Most people will buy the service policy AND throw the unit away when it breaks 6mos. later. Don't fall for these stunts... That's the best way to transmit the message to the Best Buy management. Punish them on the bottom line. That's all they've thought of, so it must be important to them. Show them that you are watching too. Say "NO" to the service plan, no matter how many times they ask, then walk out without purchasing anything when they try again (for the 4th time).
Secondly, there must be a supplier SOMEWHERE that treats the customer like they're smart and offers a fair deal without the tricks. Seems like that merchant should be looked to as the "place where cool & tech. savy people" shop. That would help boost their sales as almost EVERYONE would want to be flattered by being thought of as "hip" and "tech. savy" just for shopping there. You get the idea, it spirals up... Help those places to succeed!
Changing this works a little like the election strategy, when you get another customer to switch, you actually hurt Best Buy TWICE! Once when they lose the customer, and again when they vote with their dollars for the competition, making them relativly weaker in the marketspace.
Anyone reading this, start the change by putting down some places where you've felt like you got an AWESOME deal without any tricks, from a sales guy that you trusted and who didn't try to sell you with a bunch of technobabble (that you know is false). The list of Cool places to shop starts here --> (you reply)
For four years ending in early 2000, I owned a computer store.
The name of the store was "Computers Cheap!" which was a great draw for audience. We were the only guys in town who'd sell a used computer with warrantee.
But, with a name like "Computers Cheap!" you can be sure that we got plenty of people we called "bug people". Named after the nerdy entymologists on "Silence of the Lambs", they were people who had lots of time, and very little money. They were VERY good at wasting time and demanding refunds on used, "AS-IS" hardware that turned out not to work.
We built our own customer-filter - the $1 box. A box set in the corner, with a bright orange sign that said something like: "Wow! $1.00, no warrantee". It was filled with MFM hard drives, ancient motherboards, ISA video cards (when AGP had long since come out) and stuff that was generally worthless.
It was out of the way enough that you had to get down on your knees to get to it. It was also nearly 100% effective at identifying the "bug people".
It was incredible... over months and years we found that it was simply never wrong.
If you were caught kneeling in front of that box, you were immediately put on my "ignore" list. I'd be nice, but wouldn't give anything but a monosyllabic response from anyone.
On a side note, that $1 box came in real handy selling OEM copies of Windows legally. See, the contract requires that it be sold with a hard drive or motherboard. No mention of new/used, nor was there any requirement for a warrantee. So, we sold lots of copies of Windows with a used motherboard for $1....
I have no problem with your religion until you decide it's reason to deprive others of the truth.
The main point of any discussion is that it's your money. If you don't like their practices, vote with your money and go somewhere else.
That said, something similar was posted on Fark a couple of hours ago, so I've already read it (given, at work.) Looks like it was a different article on the same topic.
From what I can tell, they're pissed off at people buying items, getting the rebates, then returning the items, and more. Basically, they're mad that people are turning a profit on stuff bought from a Best Buy store.
I've heard complaints and gripes about Best Buy all over. However, you get horror stories from every store, regardless of big name or how crappy it is.
Perhaps I'm biased, but I've never had a bad experience at a Best Buy. The one near where I live has gotten good recommendations from people, while the one near my college tries to skate around the extended warenties at all costs, among other things. But that's what I've heard from others, never experienced myself.
I worked at a Best Buy (the one near my home) for about three months (occasional/seasonal, in Computers.) I felt I was lucky in the fact the people I worked with actually knew a good amount about Computers, whereas other places have had general sales people. The atmosphere I worked in was nice one, everyone was helpful, and I can't remember having a bad day (not even Black Friday, but I was just a gopher then.)
Was I told to push the replacement plans/extended warrantees as often as possible? Try and get people to buy accessories? Try and sell services with computers? Yes on all accounts. But you know what, it's a business, they turn a profit with that, and they need the profit to counter the low profit they make off, say, video game consoles.
If you have that much of a beef with Best Buy, stop whining and just got shop NewEgg. I'll be browsing around Best Buy, using the sales and rebates as I like, and still getting a good experience. If I ever get a bad experience from a Best Buy, I'll just stop going to that one, but not the entire chain.
What Best Buy and other corporations haven't figured out is that we, the buying public, don't have any sympathy for them. They've set the rules, and we will take them for everything we can get.
It would be different if it was a single owner. When I buy from a family-owned business down the street, I'm not going to cheat him; I will even pay more than the going rate, because I like the person and I like how the business is run. But when I buy from a corporation, the gloves are off. If they offer a half-price deal and forget to specify a limit -- fill the shopping cart! About 5 years ago, I figured out that they are trying to TAKE EVERY PENNY THEY CAN GET FROM ME, so I don't feel the slightest pang of conscience when doing the same back.
I'm not talking about stealing. I'm only saying that, when dealing with Circuit City or Best Buy or Dell or WalMart or Safeway or ToysRUs or Home Depot or anyone else, the megastores have lost all pretense of actually caring about their customers. It isn't even slightly dishonest to gouge them if they let you do it -- because they're gouging you with every means at their disposal. Try it -- you'll find you enjoy the challenge of sticking it to them!
(And yes, I'm sure I'm the devil incarnate for some stores I shop in.)
It's quite a bit more devious than that. Low price pledges are signals to other competitors that you are ready to end a price war, or enforce a cartel decison. If you match low prices you can find out that one of your cartel partners is breaking their half of the bargain, and you didn't have to spend anything on cartel enforcement (your customers did it for you). That said, if you don't already have a cheap DVD player, a little birdy told me that they would have the cheapest ones on black friday.
Best Buy's CEO (or one of the chiefs) is a firm believer that one of the best ways to boost profitability is to reduce the customers that don't make you any money and provide excellent service to those who make you tons. It's a bit like the difference between a Nordstrom's and Wal-Mart (grew up in the NW so Nordy's was the only high end retailer for a long time). One has free coffee, and salesfolk who kiss your butt. The other is doing volume business. The former makes up the services they offer with a markup, the latter makes a smaller margin on each sale, but has much, much lower overhead so they each net about the same amount on each dollar spent. Best Buy's goal is to become more like Nordstrom's but without pricing themselves out of the latter market. This is a very tall order, and we won't know if they succeeded for about a decade.
If it wasn't over in the Ars article, the WSJ (free today) has an excellent article about the whole topic. It's available here.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Why have such a pledge if you don't intend to honor it? Because it allows you to rig the game so that you, in effect, collude with your competitors and all the players on the selling side can make more money!
It's all economics. Game theory, to be precise.
In a game where price is the only determining factor between two goods, and you have at least one competitor, you are forced to sell your good at rock-bottom prices, or they'll go to another store. Thus, the Nash equilibrium of this game is that you all have to sell the item for no profit (assuming you all get it for the same price--otherwise, you just undercut the next lowest bid by one cent or the least you can & steal all their customers).
Now then, when you introduce this pledge, it turns out that all the people selling the product can, in effect, collude and sell it for a higher price! Sadly, I forget all the details of how it works out in recalculating the Nash equilibrium, and my game theory textbook is probably propping something up just now (sorry, I took that class quite a while ago now--the textbook on it is nowhere to be found). However, I can tell you for sure that this was one of their examples on how "hyper-competetive" seeming strategies can actually be anti-competetive in effect.
The good news? They're not the only ones who can change the rules, as we saw from some of the ways people got back at them. In fact, the article mentioned one person doing this to buy things at a loss from them just because they wanted to hurt the store (this in the Wall Street Journal article I saw in a comment here).
It's funny, too, because one of the other quotes was from them worrying that culturally, they might be seen as consumer-hostile. A worry it would seem is well-founded, given how many people seem to hate that store.
Is this representative of a trend away from PDAs, perhaps as a result of more-capable cell phones? Or has Best Buy just decided there isn't enough money to be made in this market?
I left without buying anything. I used to go to Best Buy because, in a pinch, I could find just about anything I needed. If this is part of a trend away from that "we have everything" approach I'm willing to bet that they're going to lose a lot of traffic in their stores.
If all they're interested in is selling $10,000 home theaters I think you're going to see a lot of Best Buys closing down within a few years. Sure, there's a lot of margin on those big-tickets but the volume isn't there to support stores of the size that Best Buy runs.
I was shopping for a new laptop at the Best Buy in State College, PA. I got into a very nasty verbal fight with some highschool kid trying to push the extended warranty on me. I ended up leaving but not before demanding to see the manager. He wasn't there but called me when I got home. He agreed that the altercation took place. He agreed that it shouldn't have happened. He asked me what I wanted them to do about it. I said usually when a merchant is wrong they make it up in the form of some nominal gift certificate. Just to say "we're sorry we know we were wrong here's $20 (less then .2% of what I would have purchased) so you know we're sincere." He accused me of trying to rip off the store. I haven't been back to any Best Buy now for almost two years.
I've hit Karma 50 and gotten a Score:5, Troll... I win!
I work services too (computer services) and my motto is:
"If the customer was always right, he/she wouldn't need me."
I definitely tell my customers when I think that they are wrong about something, respectfully of course. Customers pay *me* to be right. Yes, my customer base is growing largely on the basis of customer referrals.
But Best Buy is doing something different and extremely counterproductive. The customer might not always be right about the technology, or other things where they pay an expert, but the customer is *always* the expert on the customer's needs. Best Buy is second-guessing the customer's intentions and integrity. If you are hostile towards your customers (like the ??AA) your revenues will shrink, and you will find yourself in a viscious cycle fighting with your customers and losing money in the process!
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