Author, direct marketing guru, and always entertaining Denny Hatch focuses on a major story in the news and shows how businesses can take advantage of–or avoid the pitfalls from–the lessons to be learned in terms of marketing, sales, PR and communications.
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The corporate philosophy of most giant retailers is to drive every possible consumer into the store with TV advertising, cents-off coupons, mail shots, special newspaper offers and all the other bells and whistles of marketing wizardry.
But Anderson saw that many of these giants were performing poorly.
Several years ago in analyzing Best Buy's customer file, he discovered that of the 500 million customer visits a year, 20 percent—or 100 million—were unprofitable.
So he hired on as a consultant Columbia Business School Professor Larry Selden, author of "Angel Customers and Demon Customers: Discover Which Is Which and Turbo-Charge Your Stock."
It was Selden who came up with the revolutionary theory that a company is not a portfolio of product lines, but rather a portfolio of customers.
Direct marketers have operated on that premise since the 1920s.
Selden divides customers into "angels" and "devils." Angels are the desirable customers who buy stuff and keep it—the kind of folks worth doing business with.
"The devils are its worst customers," writes Gary McWilliams in his Wall Street Journal account of Best Buy. "They buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts. They load up on 'loss leaders,' severely discounted merchandise designed to boost store traffic, then flip the goods at a profit on eBay. They slap down rock-bottom price quotes from Web sites and demand that Best Buy make good on its lowest-price pledge."
As with direct marketers, Best Buy carefully analyzes its customer base, spending time and money to lure the angels into the store and eliminate promotional efforts to the devils. It is also enforcing a 15 percent restocking fee for bad actors.
Unlike direct marketers, Best Buy cannot keep these sleaze balls out of its stores. But it can make life difficult for them while, at the same time, giving excellent service to its good customers.
On the other hand, when you have 155,000 employees, not all are smooth schmoozers or judges of people and absolutely "go by the book." The result, nice folks can have miserable customer experiences and tell the world.
Satisfied Customers vs. Angry Customers
For years I used to quote the statistic that a satisfied customer will tell three people, while an unhappy customer will tell 11 people. This was B.I. (before the Internet).
Today, an unhappy customer can go online and reach tens of millions of people around the world with an angry message.
What triggered this story was the following e-mail forwarded to me last week by a long-time colleague that directly relates to Brad Anderson's customer angels-and-devils policy.
I received several copies of this email. My own take on dealing with retailers like this: Use a credit card.
BEST BUY, MY FOOT
Best Buy has some bad policies.... Normally, I would not share this with others. However, since this could happen to you or your friends, I decided to share it. If you purchase something from Wal-Mart, Sears etc. and you return the item with the receipt they will give you your money back if you paid cash, or credit your account if paid by plastic.
Well, I purchased a GPS for my car, a Tom Tom XL.S from 'Best Buy'. They have a policy that it must be returned within 14 days for a refund!
So after 4 days I returned it in the original box with all the items in the box, with paper work and cords all wrapped in the plastic. Just as I received it, including the receipt.
I explained to the lady at the return desk I did not like the way it could not find store names. The lady at the refund desk said there is a 15% restock fee for items returned. I said no one told me that. I said how much would that be. She said it goes by the price of the item. It will be $45 for you. I said, all you're going to do is walk over and place it back on the shelf then charge me $45 of my money for restocking? She said that's the store policy. I said if more people were aware of it they would not buy anything here! If I bought a $2,000 computer or TV and returned it I would be charged a $300 restock fee? She said yes, 15%.
I said OK, just give me my money minus the restock fee.
She said since the item is over $200, she can't give me my money back!!!
Corporate has to and they will mail you a check in 7 to ten days. I said 'WHAT?!'
It's my money! I paid in cash! I want to buy a different brand. Now I have to wait 7 to 10 days. She said the policy is on the back of the receipt.
I said, Do you read the front or back of your receipt? She said well, the front! I said so do I. I want to talk to the manager!
So the manager comes over, I explained everything to him, and he said, Well, sir, they should have told you about the policy when you got the item. I said, No one has ever told me about the check refund or restock fee, whenever I bought items from computers to TVs from Best Buy. The only thing they ever discussed was the worthless extended warranty program. He said, Well, I can give you the corporate phone number.
I called corporate. The guy said, well, I'm not supposed to do this but I can give you a $45 gift card and you can use it at Best Buy. I told him if I bought something and returned it, you would charge me a restock fee on the item and then send me a check for the remaining $3. You can keep your gift card, I'm never shopping in Best Buy ever again, and if I would of been smart, I would of charged the whole thing on my credit card! Then I could have canceled the transaction.
I would of gotten all my money back including your stupid fees! He didn't say a word!
I informed him that I was going to e-mail my friends and give them a heads up on this store's policy, as they don't tell you about all the little caveats.
So please pass this on. It may save your friends from having a bad experience of shopping at Best Buy
Takeaways to Consider