Best Buy Banks on Retail Services to Build the New Blue
Best Buy CEO Corie Barry and senior executives outlined the next phase of the retailer's strategy “Building the New Blue: Chapter Two” during its biannual investor update meeting, revealing it's targeting to reach $50 billion in revenue and $1 billion in cost cuts by fiscal 2025,
“Our Building the New Blue strategy is the right one, and it’s working,” Barry said. “We are excited about what we have accomplished so far, and we believe we will continue to enrich our customers’ lives through technology and unlock profitable growth as we execute on the next chapter of this strategy.”
Chapter Two comprises the same strategy set forth by former CEO Hubert Joly in 2018, “Building the New Blue,” after his “Renew Blue” strategy launched in 2013. Barry, who took over as CEO earlier this year when Joly stepped down, said the updated strategy is fueled by “enhanced insights” and a “continuing commitment to underwrite the cost through efficiencies.”
One of the biggest focuses of the plan is to develop deep relationships with shoppers through services.
Best Buy's Financial Targets for Fiscal 2025
- Enterprise revenue of $50 billion, which compares to the company’s current fiscal 2020 guidance of $43.1 billion to $43.6 billion
- Non-GAAP operating income rate of 5.0%, which compares to the company’s current fiscal 2020 guidance of flat to slightly up from fiscal 2019’s 4.6% non-GAAP operating income rate1
- $1 billion of additional cost reductions and efficiencies
“Our ability to keep customers loyal to our brand by creating deep relationships with them is not just a differentiator in the marketplace, it’s key to our continued growth,” Barry said in the meeting, noting that the essential element to Best Buy creating these deeper customer relationships at scale is the services the retailer offers. “Services drive the deeper customer relationships we strive to create."
Best Buy currently has 20,000 Geek Squad agents, 600 In-Home Advisors, and 900 Magnolia system designers. Best Buy’s Total Tech Support offer stands at nearly at 2 million members to date, doubling the amount of members since the start of this year.
The more than 1,500 advisers and designers consult and design solutions around everything from home theater and smart home, to appliances, mobile and computing. This team is supported by nearly 6,000 professional Geek Squad installers who can do almost any type of work needed in homes.
Barry said she’d like customers to think of the retailer as the “Chief Technology Officer for your home.
“We are there to help you make the right decisions when you are buying. We are going to help you keep it working the way you want. We can even help your mom, if that’s what you would like. We all know how important a CTO is in our professional lives and our intent is to become that for your personal life.”
The retailer’s net promoter score (NPS) of its consultation interaction is close to an 85 NPS, which is 1,800 basis points higher than Best Buy’s next best sales interaction.
“We absolutely love this program and we love that we have enabled our employees to clientele at scale,” said Mike Mohan, president and COO.
Best Buy is investing in technology to support its advisors and designers, including a suite of digital tools that both customers and employees can use, and a brand-new customer relationship management system.
“All of these pieces of technology are designed with our customer experience group to make sure that how we view the experience with both our customers and our employee is kept at the center of experience as we build,” noted Mohan.
Best Buy recently launched online proposal technology so that, shortly after customers receive an in-home consultation, they will receive a personalized proposal in their secured online Best Buy account, as opposed to an e-mail with a complicated PDF.
Best Buy also just launched a digital, mobile-enabled notebook, so advisers can spend more time talking to the customers and taking notes digitally so they can maintain this relationship and information flows into Best Buy’s CRM system.
“This allows our advisers to show customers projects they’ve worked on in the past with customers who have needs similar to them so they can show exactly what they did to solve a similar need,” explained Mohan. "Over time, this will allow our entire adviser network to crowdsource to best way to meet solutions so we can use the benefit of being in millions of homes to keep our team at the tip of the spear of what people want to do next.”