Best Buy Uncovers Angels in the Market
Best Buy is retailer of consumer electronics, home-office products, entertainment software,
appliances, and related services.
One of their main goals is to make life easier and more fun for
To obtain this goal, the company's retail environment focuses on enlightening customers on
the benefits of technology in the entertainment product market.
This case discusses Best Buy’s method of
discovering the wants and needs of its customers.
To do this, they developed a database that integrated
information from 19 customer touch points and enhanced it with Experian's INSOURCE consumer
marketing data to develop a complete portrait of a Best Buy customer.
To gain further insight about what
its customers wanted, Best Buy used secondary sources from transactions, mailing lists, and demographic
information from local census numbers, surveys of customers, and targeted focus groups to collect data.
“INSOURCE helps us get deeper insight into our customers,” Anglum explains. After enhancing
customer data with INSOURCE marketing information, it’s possible for Best Buy to better understand the
types of products its customers will be interested in. For example, customers buying video games may
have children and may soon be in the market for a Walkman®, an MP3 player or other popular personal
electronics. After appending age, presence of children information and other relevant data to their
customer database, it’s possible for Best Buy to segment consumer groups for the most appropriate offers.
Best Buy’s comprehensive customer database also enables operational efficiencies such as quickly
producing duplicate receipts for returns or repairs, and validating a customer’s current address for home-
delivery of merchandise.
From this data, Best Buy was also able to categorize their customers into two
groups, the angel customers and the devil customers. The angels were customers who bought high-
definition TVs, portable electronics, and newly released DVDs without waiting for markdowns or rebates.
The devils bought products, applied for their rebates, and then returned the products and bought them
back again at returned-merchandise discounts.
The company launched the initiative with 67 stores, each of which would analyze the
demographics of its local market and then choose one or two of these groups to be their focus. Executives
believe that this model offers its angel customers a richer in-store experience, including better shopping
assistance, and provides more of the goods and services that they are looking to purchase.
shopping assistants were also provided to assist customers from the moment they enter the store until they
reached the express checkout.
Best Buy has already transformed 85 stores to the new customer-centered
model and plans to convert all of its U.S. Best Buy stores within three years. The 67 stores that underwent
conversion in 2005 have reported a considerable 8.2% gain in revenue in comparison to the standard Best