Best Buy Analytics Exec Shops for Customer Insight


I'm back in the office today after three days of nonstop data and analytics at the SAS Global Forum and SAS Global Forum Executive Conference events in Orlando, Fla. I listened in to some great presentations, watched cool demos, and -- what I always like best -- got the chance to speak with analytics practitioners one-on-one. Now I need to decompress.

OK, done -- who, after all, can take off for more than a second in this data-crazed, results-hungry world!

I've got a ton of great insight and information to share. Unfortunately, I can't do that all at once, so I'll be spreading out highlights over the next few weeks, both here in my blog as well as through video.

I want to start with insights gleaned from Scott Friesen, senior director of analytics in consumer insights at big-box retailer Best Buy. Friesen participated in an Executive Conference panel discussion on integrated marketing management, and I had the opportunity to sit down with him for a brief chat on his strategy and vision.

At Best Buy, Friesen's group handles customer analytics -- econometrics, market share measurement, predictive modeling, optimization, segmentation, and so on -- as well as operational elements such as data enhancement and tools management. He reports into the CMO, but doesn't consider customer analytics as a marketing function because his group also services the channels, the business units that roll together by product type, the merchant organization, Geek Squad services, and business-to-business operations.

He describes his group's role in this way: "We're a domestic capability and an enterprise center of excellence."

Best Buy knows its customers extremely well at a transactional level; it can assign about 60 percent of its transactions and 80 percent of revenue to a customer, Friesen says. However, he admits, identification falls off drastically when trying to associate Web behavior with a customer. And he feels that being able to make that connection is where the real opportunity lies.

"I've stopped even thinking about the transactional element. Instead I spend all my effort to understand the stuff that's not the transactions. The fact that we know that a customer bought something is, yes, fine -- but that's yesterday's insight... We have to move past the notion that we should only concern ourselves with the transaction as an important event."

Toward that end, Best Buy is in the process of setting up a new customer analytics master for the enterprise. The goal is getting a global view of all events and interactions associated with a customer, Friesen says, noting that this will require a mind shift as well as a change in root systems.

"We have to stop thinking about transactions and start thinking about events, and we also have to stop thinking about products and start thinking about items," with the latter referring to digital, ethereal things like music downloads and monthly services with variable pricing. "These need some sort of generic framework in our root systems to allow for flexibility."

The new customer analytics master, he says, will give Best Buy a better sense of events and items then it's ever had. "The world has gotten fuzzier, which means we have to be clearer, and we have to accept the lack of definition. You can't fight that reality too hard, or your systems will have no realistic representation of the real world."

Take customer IDs, for example. "Abstracting a human being and putting that representation in a database is a really fascinating challenge that gets really interesting, especially the digital age."

Consider a customer named William, who sometimes is known as Bill, Friesen says. He might sometimes use his home phone and sometimes his cellphone. Sometimes he uses his work email address and sometimes his personal email address. "We would like people to be these wonderfully consistent beings, but people aren't that consistent. So you have to start constructing your systems and the way you do your customer analytics to handle layers of certainty... as opposed to a thing that's absolutely known."

Events and items, layers of certainty -- how do notions like this fit in your organization's customer analytics vision? Share on the message board below.

Beth Schultz, Editor in Chief

Beth Schultz has more than two decades of experience as an IT writer and editor.  Most recently, she brought her expertise to bear writing thought-provoking editorial and marketing materials on a variety of technology topics for leading IT publications and industry players.  Previously, she oversaw multimedia content development, writing and editing for special feature packages at Network World. In particular, she focused on advanced IT technology and its impact on business users and in so doing became a thought leader on the revolutionary changes remaking the corporate datacenter and enterprise IT architecture. Beth has a keen ability to identify business and technology trends, developing expertise through in-depth analysis and early adopter case studies. Over the years, she has earned more than a dozen national and regional editorial excellence awards for special issues from American Business Media, American Society of Business Press Editors, Folio.net, and others.

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Re: Anlaytics
  • 5/2/2012 9:41:45 AM
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Well, it is of course cheaper and more efficient to have a human representative man four checkout points rather than one assuming no major mishaps.

Still, I'm with Bill Burr on this. (link has NSFW language)

Re: Anlaytics
  • 5/2/2012 9:21:05 AM
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Hi Joe. I'll only use automated checkout for a few items -- like really no more than 3 or 4. Otherwise I'm inevitably finding myself ticked off at the machine (and myself for using it) as it tells me I've bagged an item without having scanned it or some such nonsense! Having to wait for a store clerk to help out does defeat the purpose (and I often think to myself, if this process works so well, why must the store station a clerk at the automated checkout area to begin with!). I wonder if any grocery chains have analytics to share on how effective automated checkout really is.

Re: Anlaytics
  • 5/2/2012 8:59:52 AM
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The "If you need assistance..." bit is also precisely the reason I avoid automated checkout lines and strive to deal with a human being in each of my transactions as a customer.  Chances are, if I have a problem, outlying situation that it probably is, the automation can't help much.

Re: Anlaytics
  • 5/2/2012 8:21:42 AM
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Hi Joe. Just read the Time's piece you shared and of all the points McCracken makes, the one that I found most damning is this one: As I swiped my credit card, I noticed a message: "If you need assistance, please see a Store Representative." That clearly is the sign of a bad user interface and lack of integration. I have to wonder whether McCracken would have proceeded at that point had he not be satisfying a long curiousity (and probably thinking about column fodder, too). I have to believe he's savvy enough to have taken that as not such a great sign of things to come.



Re: Anlaytics
  • 5/2/2012 7:41:49 AM
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This critical piece by Harry McCracken about Best Buy airport kiosks has picked up a lot of steam recently.  Suffice to say, buying something at a Best Buy kiosks is apparently not as  convenient as buying something from an actual Best Buy.

And, as it turns out, Best Buy kiosks are reportedly operated by a third-party, making customer service issues all the more difficult to rectify.

Re: Onionskin Customers
  • 5/2/2012 7:38:08 AM
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Indeed, Callmebob, many a divorce could have been spared but for the want of a secure password.

(Of course, we're talking about cases very different from yours.)

Re: Anlaytics
  • 4/30/2012 12:48:55 PM
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Hi Maryam -- I've seen the kiosks, too, and have always been curious who might find purchases from them tempting. Then on a recent trip back from L.A., while awaiting my flight, two young men sat down near me and one was using a nice pair of those noise-cancelling earphones. The other guy was like, "Shoot, I'm going to go get a set of those." And off he headed to the Best Buy kiosk and came back with a pair. Not that I was listening, but I did happen to hear him say he'd been pricing them out anyways and he was happy with the kiosk deal. 

But, to your question, I didn't get a chance to ask about how kiosk data fit into the analytics plan. Only had 20 minutes with him!

 

Anlaytics
  • 4/30/2012 12:32:14 PM
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Beth also wondering if they provided any insight into their kiosk business, I love the idea and see them in airports and malls regularly.

Re: Onionskin Customers
  • 4/29/2012 6:41:09 PM
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I am a big electronics buyer, and as such have noticed that Best Buy has recently changed its attitude towards the "in Store" buyer. I am fully content with that service, but as an avid online shopper, I also notice that the "deals" are not as available or as widely communicated. I think it may be a step in the right direction to analyze exactly what online buyers are doing as well as those who come into the store. 

Re: Thanks for the report
  • 4/29/2012 1:57:29 AM
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Beth,

The investment in a customer database will help Best Buy combat the mobile-browsing-while-in-store experience. Certainly other retailers will be watching. As along as they can avoid the intrusion Target encountered with discovering someone was pregnant when the main household buyer did not know, creeping customers as an end result.   Combining a stronger customer engagement with their current plan of smaller retail stores will lead to better ability to understand the customer.

Reading this article, I could not help but think about attribution, matching the message with behavior.  Best Buy's effort is a subtle, wonderful testimony to the marketing attribution process. Thanks for writing this post.

 

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