Customer Intelligence Analysis of Best Buy Downfall

This article titled “Best Buy struggling as shoppers flock online” was published in San Francisco Chronicle caught my attention and inspired me to question the title assertion.

“The one critical thing we offer the world is choice,” said the Best Buy chief executive officer Brian Dunn in a March 2012 phone interview. He was trumpeting in particular his company’s role in guiding customers through the expanding smartphone universe.

“We provide the latest and greatest choice of all technology gear, from Apple products to Google products, and that brings more opportunity to help people put technology to use. That is a great place for us to be.” A week later, reality intruded. The consumer electronics retailer posted a $1.7 billion quarterly loss and announced it would close 50 stores nationwide. On Tuesday, Dunn resigned.

Later in the same article, this reason was cited to explain Best Buy’s fall from grace of consumers:

“Shoppers are finding more choices online, primarily at Amazon.com, where they can often find a better deal.”

Price is the favorite excuse of every salesman who failed to earn the trust of the customer. It is interesting to look at the Customer Intelligence Analysis of the feedback given about experience of doing business with Best Buy. We have looked at 185 customer stories that describe their experience during a period from 1/1/2012 till 4/17/2012, the date this article was published.

 

Snapshot of the CIA dashboard

I would like to point out that the “price” was opined on only 4% of all opinions expressed, and the sentiment is statistically neutral while “customer service” is the most mentioned by customers at 42%. It is decidedly disappointing to them with a “general satisfaction” score of 0.67 (see the score legend at the top right corner of the image above).

Perhaps the analysis of a larger number of customer feedback for a longer period of time would show exactly when Best Buy started to lose its competitive advantage and push their customers away. However, I would like to suggest that the “greater selection” strategy has definitely played an important negative role in the Best Buy decline. There are three reasons for this suggestion:

  1. No brick and mortar store, regardless how big it is, can out-inventory an online operator like Amazon.com that does not need to have an inventory on hand to sell products and have a network of store to fulfill orders;
  2. A very large selection of products on shelves results in poor support for most products as the store personnel cannot keep up with knowledge requirements for such a vast number of products. Many customers come to store seeking for help to select a “right” product for them, and Best Buy staff fails to do it;
  3. The larger selection leads to lower quality of products being sold to consumers. Look at “reliability” bar on the chart above—26% of all opinions mined are indicating a miserable satisfaction with the quality of products sold by Best Buy stores
  4. Snapshot of snippets screen

 

Couple this problem with the well publicized Best Buy return policy issues, and it becomes clear that it is easier for customers to deal with online stores than less expensive.

 

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6 Responses to Customer Intelligence Analysis of Best Buy Downfall

  1. Am I reading this correctly? This is based on 185 reviews? I am concerned about the size of the “sample.”

    How are these reviews collected? Is this social conversation? Unless this is a random collection of Best Buy shoppers, the data could be skewed toward those with complaints. In my experience consumers with a concern are much more likely to provide feedback, especially unsolicited feedback.

    While it is interesting to see the nature of the negative feedback, there could be other market forces also driving the decline of Best Buy.

    Thanks for asking for comments.

    Jim Alexander

  2. Gregory says:

    James, you bring up a good point. It is only 185 reviews and I agree that the sample is rather small, but I wanted to analyze only the comments left by customers this year and not to go before 1/1/2012. These reviews came from Yelp, Resellerrating.com, and my3cents.com. I have noticed that most of the Best Buy positive reviews on these sites were submitted before the year end, and not too many during the last few months. Most of our projects so far involved analysis of customer reviews for specific products, rather than retailers. Over the years we have mined millions of unsolicited customer reviews. The sentiment distribution pattern is similar to a standard bell curve.

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