Best Buy, according to most prognosticators, should be dead by now… bulldozed by Amazon, but it’s not. How did they turn the trick?
They changed their business model.
If you are in a products business these days, you will want to add services. If you’re in the service biz, you’ll want to consider adding products.
What Best Buy did was this:
Great business models are ones that have CMRR baked into them; the best business models have both CMRR and close to zero operational work actually needed to earn those revenues.
In Bloomberg Businessweek’s July 23rd, 2018 article, Best Buy Should Be Dead, But It’s Thriving in the Age of Amazon, https://www.bloomberg.com/news/features/2018-07-19/best-buy-should-be-dead-but-it-s-thriving-in-the-age-of-amazon, there are a couple of paragraphs worth quoting in their entirety; it deals with sales training of Best Buy’s in-home advisors.
Most sales training that I’ve seen is mediocre at best, but this I agree with almost 100%:
In Best Buy’s perfect world, all 380 of its new “in-home advisors” would park their clean, white Priuses in front of a customer’s house rather than in the driveway, where the car could block others. They would quickly appraise the neighborhood, survey the landscaping, and see if a security system is in place. After knocking gently on the front door, they would step back and stand to the right, smiling, head down slightly, arms uncrossed, name tag visible on their blue, wrinkle-free Best Buy polo shirts. They would shake hands firmly, avoiding the dead fish or the lobster claw.
Once inside, they would offer to remove their shoes. They wouldn’t lean on the walls or place their Best Buy tablets on the furniture. If they noticed a cat, they would know better than to say they own a dog, and they definitely wouldn’t talk politics. The advisors would make customers comfortable by mimicking their conversational style and pace: If a customer talked with her hands, advisors would, too. They would have a tape measure with a laser, and they wouldn’t tease the cat with it. They wouldn’t knock on walls to determine where a stud was—they would use their stud finders—and they would never put the tool on their chest and say “beep.” That wouldn’t be amusing. “If you’re using that for rapport, start again,” says Bryan Bucknell, a self-proclaimed “longtime sales dude” at Best Buy Co. who’s training recruits for the program. He’s with his aspiring advisors—27 men and 9 women, uniformly enthusiastic in their blue shirts—in a windowless conference room at Best Buy’s headquarters outside Minneapolis, where they’ve come for the final session of a five-week initiation in late May.
Best Buy’s better-known Geek Squad deploys agents to help customers with repairs and installations. The advisors act as, in Best Buy’s language, personal chief technology officers, helping people make their homes smart or merely more functional. Some in this group worked on the Geek Squad, some as retail staff, a few were lured back to Best Buy, and at least one was employed by companies that Best Buy put out of business. They’ve already learned about the devices and appliances they can offer: TVs, sound systems, refrigerators, washing machines, security cameras, doorbells, garage doors, and smoke alarms, as well as Amazon Echo and Google Home and Apple HomePod, and smart shades and lighting and thermostats.
Now they’re in this conference room practicing how to sell by seeming not to. “Be a consultant, not a salesperson,” Bucknell says. “Use phrases like: ‘How would you like it if,’ ‘Do you think it would help if you could,’ ‘Have you ever thought about.’ ” They’re supposed to establish long-term relationships with their customers rather than chase one-time transactions. They won’t need to anxiously track weekly metrics and, unlike the Geek Squad and blue shirts working in stores, they’ll be paid an annual salary instead of an hourly wage. Their house calls are free and can last as long as 90 minutes.
Best Buy, the last national electronics chain, is counting on these advisors to distinguish it from Amazon.com Inc., the company’s competitor, partner, and would-be vanquisher. With more than 1,000 big-box stores in North America and about 125,000 employees, Best Buy was supposed to have succumbed to the inevitable. “Everyone thought we were going to die,” says Hubert Joly, who was hired as chief executive officer in August 2012 after profits shrunk about 90 percent in one quarter and his predecessor resigned amid an investigation into his relationship with an employee.[Written by Susan Berfield and Matthew Boyle]
I have argued for years that realtors (of which I am one) must “sit on the same side of the table” as their clients and become lifetime real estate investment advisors rather than viewing them as a single transaction. If a realtor views her/his clients that way, they are sure to be (mostly) disintermediated out of business, rendered so by AI and the internet.
Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD
Century 21 Explorer Realty Inc broker
Ottawa Senators founder
Real Estate Investment and Business coach
MAKING IMPOSSIBLE POSSIBLE
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