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The customer is always right? Not anymore (Best Buy)

Old 07-07-04, 08:49 AM
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The customer is always right? Not anymore (Best Buy)

The customer is always right? Not anymore

http://www.sfgate.com/cgi-bin/articl...332EDT0564.DTL

JOSHUA FREED, AP Business Writer
Monday, July 5, 2004

(07-05) 16:36 PDT MINNEAPOLIS (AP) --

So much for the customer always being right.

Some retailers are deciding that the customer can be very, very wrong -- as in unprofitable. And some, including Best Buy Co. Inc., are discriminating between profitable customers and shoppers they lose money on.

Like a customer who ties up a salesworker but never buys anything, or who buys only during big sales. Or one who files for a rebate, then returns the item.

"That would be directly equivalent to somebody going to an ATM and getting money out without putting any in," Brad Anderson, Best Buy's chief executive, said in a recent interview. "Those customers, they're smart, and they're costing us money."

Anderson said Best Buy was tightening its rebate policies in the case of customers who abuse the privilege, but declined to say what else his company was doing to discourage its most costly customers.

"What we're trying to do is not eliminate those customers, but just diminish the number of offers we make to them," Anderson said.

Larry Selden calls them "demon customers."

Selden, a consultant who works for Best Buy, co-wrote "Angel Customers & Demon Customers." In his book, he said that while retailers "probably can't hire a bouncer to stand at the door and identify the value destroyer," they're not powerless.

Selden, a business professor emeritus at Columbia University, said an investment firm found that one customer with a portfolio of $500,000 was tying up three financial advisers almost full-time with requests for help and information. "Eventually, reluctantly, and very politely, in this one case the company asked him to go elsewhere," Selden said.

Selden worked as a consultant for Royal Bank of Canada, which at one time traced checks faster for its most profitable customers, while other customers waited up to five days, he wrote. While that's a bit out of date, the bank now has other ways of prioritizing customers.

Laura Gainey, vice president of client segment strategies, said the bank's phone system sends certain customers to the front of the line, where they get the most experienced customer service representatives, depending on criteria that includes their account size.

"I don't really believe that any customer at Royal Bank is a demon customer," she said, "but there's no doubt that there are different ways of approaching different customers, which will allow us to better serve their needs, and allow us to serve the bank and our shareholder's needs."

Sometimes it's the retailer's fault that a customer is unprofitable, Selden said. He cited an upscale retailer in New York that lost sales because its changing rooms were dirty and in bad repair. Women who had probably taken up a salesperson's time were declining to change in those rooms, and declining to buy, he said.

"Then there are those customers that are just evil customers ... fundamentally they're out to cheat us," Selden said in a telephone interview. "It's not a large number of customers, but they can have a material impact on a business."

Once in a while, stores need to "fire" their worst customers, Selden said. Filene's banned two sisters from all 21 of its stores last year after the clothing chain's corporate parent decided they had returned too many items and complained too often about service.

The sisters claimed they had been loyal customers for years.

Best Buy executive vice president Philip Schoonover said the idea of "firing" some customers is one place where Best Buy disagrees with Selden. The company will try to find ways to make money-losing customers profitable, he said.

Retail consultant Karl Bjornson of Kurt Salmon Associates said the idea of discouraging bad customers can work if a company is careful about it. He said it generally works better to, say, offer fewer sales rather than discouraging individual customers who shop aggressively on price.

Every store has customers it doesn't like, he said.

"The question is, how public do you go with it, and how big a deal do you make out of it? There are ways of discouraging people from shopping in your store without point-blank telling them you don't want them in your store."

Best Buy customer Steve McCuskey pondered the company's efforts with a set of computer speakers in his hand. McCuskey, an industrial chemical salesman, said he shares Best Buy's frustration with "extreme price shoppers" who are so low-cost oriented that it's tough to make money off of them. He said he recently paid extra to buy a better portable compact disc player for his son after the first one lasted just four months.

"I'm definitely looking for the best price, but I'm also tired of cheap stuff that's going to break right away," he said.
www.bestbuy.com

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2004 Associated Press

I wonder if I am a "demon customer" since I only buy sale items?
Old 07-07-04, 09:36 AM
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This article is just about the right to refuse service or a sale to anyone, which Best Buy, along with every other retailer in the country has the right to do. I work part-time retail for gas/beer money, and I'll nicely inform customers of newer models on the horizon, or the possibility of a better deal, if I think they won't make the company money. I don't really care about the company, but if they are so "cheap," they can wait another month to get the ultimate value before i get chewed out for it.
Old 07-07-04, 10:15 AM
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if people are only buying sale items, its probably because your regular prices suck and they can get better value elsewhere. so demonic.

banned for complaining about poor service??? how about training your employees better so they provide better service, blame the customers instead, thats logical. those damn demons.

if customers return items within your posted store policy, deal with it or change your policy to 14 hours for a return. i need to be careful next time im in Best Buy, i had no idea of the demon prescence, i thought the poor employees with their service plans and subscriptions were the demons.

does Best Buy look like a total ass in this report? i think so. maybe they had a real point somewhere in there but it just comes across like they are jackasses.
Old 07-07-04, 11:04 AM
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Re: The customer is always right? Not anymore (Best Buy)

Originally posted by Alvis

I wonder if I am a "demon customer" since I only buy sale items?
I get the sense that the "demon customers" are the ones who take it to an extreme, or as quoted from the article "extreme price shoppers". These are the people who want to price match +10% a sale item with an instant rebate on top of the mail in rebate, and then want a discount for the hassle, etc. Basically, they're the ones that are a pain in the ass. If you are simply walking in to buy an advertised sale item, then I don't think you're going to be blacklisted.
Old 07-07-04, 11:18 AM
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I agree with Movie_Man. If you've ever worked retail, you know there are those few people who come in every single week with a return or want a price match or something. I don't have a problem with 'flagging' these customers.
Old 07-07-04, 11:19 AM
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Originally posted by scarredgod
if customers return items within your posted store policy, deal with it or change your policy to 14 hours for a return.
I worked for Circuit City. We would have customers buy the extended warranty, and "upgrade" every 6 months. They knew exactly what to do to get a new model. When I finally gave them their money back and told them to shop elsewhere they act like they were gods gift to profitablity. We are talking about ultra cheap cameras, and exchanging them in excess of 6 times, with nothing "wrong" with the camera.

Take your slimey business elsewhere.

Now if you are talking about "discount" shopping, like always buying what's on sale, never purchasing higher profit items, etc...that is a customers right, and as a retailer, I should have no complaints.
Old 07-08-04, 08:36 AM
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For the most part, I have to agree with Ben Affleck's customer assessment in Mallrats.
Old 07-08-04, 11:34 AM
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Perhaps they whole "mail-in rebate" garbage should be done away with.
Old 07-08-04, 12:08 PM
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Originally posted by UAIOE
Perhaps they whole "mail-in rebate" garbage should be done away with.
But the mail-in-rebate allows them to advertise items at lower prices than the customer actually pays, because they know that most consumers won't bother to send them in.

Heh. Next thing you know, anyone who sends in for those rebates will be labeled a "demon."
Old 07-08-04, 12:54 PM
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I think they are talking about the kind of customers who only show up to price match a competitor's misprinted ad, tie up 3 employees for a half hour trying to get an item well below cost, then have the nerve to complain about having wasted their time when they don't get it.

Last edited by NCYankee; 07-08-04 at 01:07 PM.
Old 07-08-04, 01:37 PM
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Originally posted by NCYankee
I think they are talking about the kind of customers who only show up to price match a competitor's misprinted ad, tie up 3 employees for a half hour trying to get an item well below cost, then have the nerve to complain about having wasted their time when they don't get it.
That's the impression I got as well.
Old 07-09-04, 10:07 PM
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The aricle stated that Best Buy doesn't want to "fire" the demon customers, but change them to make them profitable. That doesn't sound like the beast Best Buy is made out to be.
Old 07-12-04, 07:51 PM
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This news is new to you?

(oh, and in my experience, the customer is hardly ever right )
Old 07-12-04, 08:48 PM
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Nothing wrong with the article... and i'm glad this thread hasn't turned into a "Best Buy sucks" thread yet. I have no problems with Best Buy looking for a way to deal with customers that are pushy about squeezing every penny and spending 30 minutes arguing when they're denied a 75% discount and hold up the lines.
Old 07-13-04, 01:16 PM
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Originally posted by Tarantino
This news is new to you?

(oh, and in my experience, the customer is hardly ever right )
Hold on to your socks Tarantino, I'm going to agree with you in a Best Buy thread! My personal philosophy is such: "The customer is rarely right, but they must always think that they are."
Old 07-13-04, 01:42 PM
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Re: Re: The customer is always right? Not anymore (Best Buy)

Originally posted by Movie_Man
I get the sense that the "demon customers" are the ones who take it to an extreme, or as quoted from the article "extreme price shoppers". These are the people who want to price match +10% a sale item with an instant rebate on top of the mail in rebate, and then want a discount for the hassle, etc. Basically, they're the ones that are a pain in the ass. If you are simply walking in to buy an advertised sale item, then I don't think you're going to be blacklisted.
I don't want to get off on a rant here . . . so here are a few random thoughts instead:

Yes, a person who buys something, mails in the rebate, and then tries to return the product and keep the rebate is WRONG. No argument there . . .

A company who sets policies and the REFUSES to follow them is WRONG.

A customer who searches for the best deal is NOT WRONG.

A customer who uses a company's policies is NOT WRONG. If Best Buy offers price matching PLUS 10% then they should honor it. If Best Buy offers an instant rebate then they should honor it. If Best Buy offers a mail-in rebate then they should honor it.

If Best Buy wants to make their customers more profitable, maybe they should try treating them as an ally and not as an enemy.

A customer who has legitimate questions about a product that they plan on buying (maybe not right at that moment) is NOT WRONG. Corporations don't see that a person who isn't willing to drop $800 on a computer RIGHT THIS SECOND just might be willing to come back and drop $1200 because you were actually helpful to them.

A company that doesn't train their employees or encourages them to flat out lie is WRONG.

Last edited by Abob Teff; 07-13-04 at 01:58 PM.
Old 07-14-04, 05:10 PM
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Re: Re: Re: The customer is always right? Not anymore (Best Buy)

Originally posted by Abob Teff
A customer who uses a company's policies is NOT WRONG. If Best Buy offers price matching PLUS 10% then they should honor it. If Best Buy offers an instant rebate then they should honor it. If Best Buy offers a mail-in rebate then they should honor it.
Agreed, but many of the price match threads on this site, talk about misprints or wrong pictures and trying to get some other store to honor the price. Or if someone is out of stock and they go to another store and try and price match, when all of those things are NOT in the "Price matching policy".
Old 07-14-04, 10:44 PM
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I understand BB's view point here, because there are some customers out there who wants to really rip big business off. Just from working on the RZ line, I've figured out several ways that I could rip them off regarding that program itself. Of course, I'll never tell....

About the employees lying, I had a customer call tonight who purchased a 50" tv for over 5000 dollars (using the credit card). He said he purchased a tv so expensive because the rep told him that the RZ coupons he got back could be used to help pay the bill. He was understandably upset when I told him that that was not possible. Fortunately, he had the store number and the employee's name, so I filed a complaint.

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Old 07-16-04, 04:09 PM
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Read this...

Saw this article posted on another forum (thanks to OP "HIV" over at FW), and thought it was an interesting response:

July 13, 2004, 9:35PM

Some people become real shopping demons
By LOREN STEFFY
Copyright 2004 Houston Chronicle

Dear Best Buy: You can't fire me.I quit. And I know what you're thinking. That I will come back.

That I will stand there on the threshold of your automatic doors, thinking about buying gadgets I don't need and probably can't afford, regardless of your low, low prices and convenient financing plans.

Not this time. It turns out, you don't even like me.

In an interview with the Associated Press, your chief executive, Brad Anderson, says you're trying to weed out problem customers, ones who tie up salespeople and then don't buy anything, for example, or shoppers who buy only during big sales.

"Those customers, they're smart, and they're costing us money," he said.

The story wasn't just about Best Buy, of course. It was really about how retailers try to discourage what one consultant described as "demon customers."

I'm not, by any stretch, a demon shopper. By Anderson's definition, I'm not smart, either. I show up in your store wanting to buy something, oblivious to sales or rebates.

I once raced in on the way home from work, looking for a video camera cable so I could tape a program at my daughter's school. I had less than 10 minutes, but I figured, no problem. I thrive on deadlines.

Finding the cable was easy. Paying for it was the problem. The three salespeople laughing around the computer kiosk couldn't ring me up. Nor could the guy at the camera counter, nor the woman at the customer service desk. No, they told me, I had to wait in the line behind 12 people at the checkout counter, where you had one person working.

I bailed out and went to RadioShack.

But I came back. I'm not sure why. Maybe I was drawn by the flickering screens of a hundred TVs. I bought one of those big ol' TVs for darn near four figures, and the checker (yes, I waited through the line this time) told me I should join your Reward Zone.

The Reward Zone had some complicated formula for rewarding me that basically meant for $1,000 in merchandise, I could get about $30 in coupons.

So I came back again to spend the $30 you gave me, but, demon that I am, I didn't buy anything extra.


Pushing subscriptions
You've done other things to me, too. You've pushed magazine subscriptions on me at checkout. You sell an extended warranty on everything short of the very air in the store.

Yes, you wooed me and abused me.

And now, Mr. Anderson says I or some of my fellow shoppers may be too smart. We see through your little ploys, find the loopholes in your gimmicks, and now you want to get rid of us.

Isn't the point of sales to draw people into the store? People who wait to buy things on sale generally are considered "smart shoppers." I guess one person's smart shopper is another's demon.

Instead of running off customers to solve your problems, here's a better idea: just stop. Stop with all the rebates and breathless sales, the magazine subscriptions, the Reward Zone and the litany of warranties.

After all, if you're going to try to game us, we're going to try to game you. Some people look at beating the system as a challenge, a hobby.

You're the ones who created all the gimmicks. We're just trying to figure out how to get the best deal. Now, apparently, we find out all your little enticements are costing you, and you're blaming us, the customers.


Just say no
So just stop. It would be easier for us to not have to sift through the caveats and restrictions on every sale and rebate, and apparently it would be better for you, too. Just offer a fair price and a modest profit. We don't begrudge you the right to make money.

I've never met Mr. Anderson, but I have a hunch that, like his customers, he's no dummy. He offers sales because he hopes to sell more stuff at lower prices and make up any losses with volume. That means those of us who don't buy during the sales are just mullets, subsidizing the buying habits of those who are
savvier.

And up to a point, I don't mind. I don't want a shopping "experience." I don't want to spend hours in a store playing with toys I can't or shouldn't afford.

Occasionally, I indulge myself, and before I do, I like to talk to a salesperson who may know something about the product.

I don't want to be "sold," I just want a little candid information. Then I like to go home and think about it. And, demon that I am, I reserve the right to decide not to buy.


No toaster warranty
If I do buy, I don't need a 25-year warranty on a toaster or a year's subscription to Sports Illustrated to close the deal. I don't need another plastic card in my wallet to rack up points on another reward system. If that makes me an unprofitable customer, so be it. It is, after all, my money, and if you want it, you're going to have to put up with me.

So cut out all the hoopla and just sell stuff. You'd probably find you can lower your prices overall, and you and your customers might like each other a little more.

And who knows? Maybe you can put a few more people on the cash registers.


--------------------------------------------------------------------------------

Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at [email protected].
Old 07-17-04, 12:23 PM
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Go tell it on the mountain! Amen!
Old 07-18-04, 12:06 AM
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I think that article sums things up nicely.
Old 07-18-04, 04:33 PM
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I don't see the big deal here. Best Buy is a buisness. Buisnesses want to make money. If a buisness isn't making money because certain customers are trying to screw them over, then I see no problem in weeding those customers out.

I work at an ice cream parlor and if someone came in on a daily basis and just tied up employees and never bought anything then I would want to get rid of them too.
Old 07-18-04, 06:25 PM
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First off, "The customer is always right" was an advertising slogan created by Wollworth to promote his dime stores in the early 1900's. What kills me that since that time moron consumers think that applies to them at any damned store they decide to walk into and think that they should be called right even when they are in the wrong. The sooner people get over that phrase, the better. And last time I checked, Wollworth's dime stores were closed down a long time ago.

There are too many customers who want something for nothing, and they also annoy the living crap out of me as well. It's great to get a deal once in a while, but to revolve your life around getting things for free suggests a deeper problem that's probably not even being addressed here. These people want to stick it to "the man" or whatever but all they are doing is cutting into a store's profit margin, which in turn makes them have to raise their prices for the legit and honest customers they have, creating prices that, in some of your opinions, suck. Well, they suck because you suck. People steal, people cheat stores out of items and try to get things for less than they are worth or free and everybody pays in the end.

One case in point, pistacio nuts at the grocery store. A produce manager told me they are like a dollar something per pound when they come in at cost, but the store has to raise them so high in price because people eat them for free, grazing on them like freaking cattle that they are then going, "Duh, why are these so high priced."

The customer is always a moron. That's the new motto for the new millienium.
Old 07-18-04, 08:58 PM
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i think this whole thing is caused by the natural growth cycle of a company. BB is past it's growth where it grows by opening new stores. It now must grow each store's business. Trouble is the investors, which are everyday people want double digit growth. This is what grows our IRA and 401k portfolios. So BB and other mature companies now must concentrate on lowering costs, new marketing ideas and extracting every single penny they can from a customer.
Old 07-19-04, 02:00 AM
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Here's an example of a demon customer. A friend of mine manages a Domino's Pizza. The other night, a guy calls up to order and starts complaining about the $1 delivery charge, which they started in May to help offset the recent doubling in cheese prices. (The computer showed he hadn't ordered since April.) Then he said this would be his last order (he was getting a $18 pizza for $10 with a late night coupon).

So let's see - this jerkoff orders once in three months, gets a hugely discounted pizza, doesn't tip the driver, then has the nerve to bitch about a $1 delivery charge and act as though he is a valuable customer. Who's going to miss his business?

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