Why a Best Buy Turnaround Hinges on the Geek Squad
- 3 comments
- June 20, 2012
Geek Squad is dubbed as a task force for big box retailer Best Buy that’s “dedicated to solving the world’s technology challenges.” But in the wake of recent management upheaval and ongoing fierce price competition (from Amazon, Walmart, and Costco, among others), could the company’s field service arm also be the key to fixing its parent company’s business woes?
It won’t be easy, certainly. But some industry analysts and, perhaps, the company itself, seem to agree that any kind of turn-around for the big-box giant will have to focus on the geeks.
Why Geek Squad?
Consisting of nearly 20,000 service technicians nationwide, Geek Squad functions as Best Buy’s field service operation, providing 24/7 installation and repair support for computer, home theater, auto electronics, and appliances for residential and commercial clients — either in-store, over online chat, over the phone, or on-site at the client’s home or office.
“[Geek Squad] is one of the few defensible areas where Best Buy can compete and an aspect of retail that Amazon and Walmart can’t touch,” says Austin Smith, an editor and consumer goods analyst for the website The Motley Fool. “Because Best Buy has so much overhead [due to its large number of big-box stores], it can’t really compete on price, particularly on certain products where they used to make money. It used to be they could sell you a TV for really low margin but make their money by offering high-margin cables, accessories, and other stuff that goes with the TV. But now you can get those items online for a reasonable markup.”
Best Buy, for its part, also appears to recognize that its old business model is dying. While the company declined to comment to theSmartVan on specific questions regarding Geek Squad’s role in the company’s turnaround strategy, Mike Mikan, Best Buy’s interim CEO, said in an excerpt from the company’s May 22 first-quarter earnings call: “We cannot be seen just as a hardware company. We must be relevant in the much larger and constantly evolving market of services that is driven by technology innovation and broader customer needs.”
Mikan said the “mandate” for Geek Squad agents “will be to shift the customer expectation from repair, our traditional Geek Squad offering, to one of relationship.“
To illustrate what this “shift” looks like, Mikan cited Geek Squad’s new tech support program tailored to members of AARP. Starting at $169.99 for a one-year subscription, the program offers millions of AARP members 24/7 access to Geek Squad agents by phone, online, and in-store, as well as special discounts on additional products and services, including in-home service calls. The program also features a dedicated AARP Geek Squad staff, specially trained to support elderly customers.
But for the Geek Squad strategy to work, the company needs to change the negative perception of its retail sales tactics, Smith says. “Even if they did everything right at Geek Squad, they would have to re-image the company as a whole, as a friendly, helping, convenient and intelligent company, instead of being a pushy sales staff-based company. That makes your service aspect much harder to sell because you have an image of a company that people don’t want to deal with because of pushy sales staff.”
The Bottom Line
While Geek Squad alone can’t fix Best Buy, it may well be a crucial component of an overall turnaround strategy, Smith says. “Amazon can deliver the electronics to your doorstep. But Best Buy [through Geek Squad] could offer the added component of getting that device installed. Amazon won’t get rid of your old TV. They won’t sync your stereo system and bluetooth. [Geek Squad] could be a way that Best Buy remains relevant. Because right now what they’re trying to do is a dying strategy.”
Image used under Creative Commons by Flickr user The Consumerist.