CASE STUDY: Best Buy adapts customer-centric model for increased profitability and enhanced customer service.

Introduction

The goal of Best Buy is to make life fun and easy for its consumers. In order to achieve this, they started applying the customer-centric model in some of its stores around the US. They gathered information about their customer and their buying habits, developed a database making them better understand existing customers; identify new consumer segments, etc. The application of the model made a good impact in terms of profitability, therefore making it an effective step despite the negative effect of the conversion costs it requires which is only a one-time expense and will be recovered over a span of time.

Statement of the problem

Their data analysis, which is a part of their customer-centric model practices, was able to identify five Angel customer segments and their Devil consumer. They found out that losses produced by Devil customers can wipe out profits generated by Angel customers.

Strategic Alternatives

1) Encourage the Angel customers to make more frequent and in larger volume purchases a. Group bundle promos such as ‘family bundle’ or ‘barkada bundle’ promos, these are promos where customers can buy specific items at a lower price by buying in groups. b. Membership Cards to increase customer loyalty. These cards will let members avail special privileges such as free delivery, service priority, and special discounts on promo items. This will also generate profit since membership cards are for sale.

2) Discourage the Devil customers
Discourage the Devil customers from their buying schemes by
a. improving return policies by setting an allowable ‘return period’ which is 15 days from receipt date. However, there is an allowable ‘free’ return within the first three days.
b. cutting back on promotions and