Best Buy steps up digital transformation to improve customer experience

Best Buy has been reaping benefits from its digital transformation initiatives as part of its strategy to boost sales and enhance customer experience.
Best Buy IT plans
Best Buy, , a leading consumer electronics retailer with operations in the U.S., Canada and Mexico, is stepping up digital transformation initiatives with its technology partners. It has posted 10 percent drop in quarterly revenue to $10.587 billion with 3.4 percent operating margin during its third quarter of August-October 2022.

Best Buy’s digital transformation investment is spearheaded by Brian Tilzer, the chief digital, analytics and technology officer for Best Buy. He is responsible for information technology and digital to create a seamless and superior multichannel customer experience in support of the company’s Best Buy 2020 growth strategy. Brian Tilzer, who joined Best Buy in 2018 after serving as chief digital officer at CVS Health, the largest pharmacy health care provider in the U.S., also leads Best Buy’s enterprise data and analytics capability.

The company continues to witness the impact of the pandemic-induced shopping behaviour changes. As per the latest earnings report, the digital penetration of Best Buy’s domestic sales will likely remain above 30 percent. Thus Best Buy has positioned itself to lead the way in the future of retailing because they believe the future is where the customer is in control and expects seamless experiences across all touchpoints.

For the first nine months of the year, online sales as a percentage of domestic revenue were 31 percent, nearly twice as high as pre-pandemic, and this is expected to begin to increase again over time. Best Buy has also witnessed increase in customer demand for other virtual interactions; as a result, it has registered strong and sustained sales growth in chat, phone, and video sales experiences this year.

Best Buy has invested in technologies to improve experience of customers and employees at the stores in a more cost-effective way. For example, the Solution Sidekick is a new app designed for the associates to deliver a guided selling experience consistent across departments, channels, and locations. With the app, associates interacting with the customer can see the customer’s profile in the moment, including historical purchases and active memberships. As the associate starts an order with product recommendations, the app automatically calculates total tax savings for existing and prospective members and recommends additional product solution.

Solution Sidekick also helps in driving sales. For example, if a customer isn’t ready to buy at a given moment, associates can send the product recommendations and a recap of the conversation to the customer via email, text or QR code so they can purchase later at their convenience. The app has been well received among the employees, and the results are showing up. According to Best Buy officials, the revenue per transactions when associates leverage Solution Sidekick is higher compared to that gained from the traditional method.

To further improve customer experience, the company has invested in electronic sign labels for products which are locked up or not readily available on the shelf.

Best Buy Totaltech, a membership offering, is also gaining popularity thanks to the innovations that help drive deeper relationship with customers. Totaltech provides round-the-clock tech support, in addition to several other benefits to improve post-sales experience of tech products. Since its launch year ago, Totaltech has been driving the member behavior that the company envisioned.  The net promoter score from Totaltech members has remained considerably higher than nonmembers.

The huge demand for technology over the past three years has led to larger install base; and as we approach three years since the pandemic, customers will want and need to replace and upgrade their tech devices. This drives the need for innovation and collaboration with leading technology vendors. One such example is Upgrade+, powered by Citizens Pay. This is a brand-new program that allows Best Buy customers to acquire Mac laptops and related accessories for a low monthly fee. After three years, they can easily turn in their old laptop and upgrade to the latest tech while they continue paying a low monthly fee.

Best Buy is also activating on ways to continue to improve acquisition through digital channel. From an optimization perspective, they will evolve the program in ways that also reduce our costs to serve.

Best Buy plans to leverage digital tools extensively to develop the newly built 5,000-square-foot store pilot in Charlotte.  The company is adopting similar strategies in Canada as well and continues to see better-than-expected financial results there. Some of those initiatives include technology subscription, online marketplace, a market-focused test and small-store formats.

With online penetration growing, there is an assumption that online will take over in-person shopping. In this context, Best Buy has adopted an omnichannel approach, encouraging customers to use the multitude of channels they offer, including home-based consultations, virtual channels and physical stores. Thus Best Buy wants to double down on a customer who wants to shop across all those channels.

Rajani Baburajan

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