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Superstores figure it out

They’re turning their biggest weakness–service–into a strength.

One of the first things former editor Steve Deyo said to me in my brief tenure as his managing editor was “Friends don’t let friends buy from superstores.” The comment was in reference to my purchase of a computer from Best Buy for Father Kelley, whom I eulogized in my November 2002 column. Steve left me in charge a month after I came to this organization, so I never really got him to explain his comment. But my own experiences over the years on the job have helped me fill in the blanks. Superstores are historically poor in the service category, and service is the most underrated aspect of computing.

It’s not that superstores haven’t tried to improve their service. In some cases, they have spent millions revamping their service divisions. But once you acquire a reputation, it can be hard to shake. And they earned their reputations more from their business models than from any deliberate lack of attention to service. The ’90s were a time of great growth for companies like CompUSA and Best Buy. When you open a dozen stores per month for several years, it’s bound to take a while for the new stores to get fully operational, complete with highly trained service staffs and attention to customer retention. And when you’re focused on making sure your business is working amid great growth, you can easily lose sight of the customers’ experience with your products. Consequently, you spend all your resourses marketing to new customers with sales and promotions rather than developing relationships with repeat customers through attention to their needs. The result is low margins and a bad reputation.

Robert Stephens is the founder and chief inspector of the Geek Squad, a rapid-response computer-repair company that currently operates in the Twin Cities, Chicago, L.A., and the Bay Area. If you live in one of these markets, perhaps you’ve seen their V.W. Beetles painted to look like cop cars. Geek Squad “Special Agents” wear retro uniforms and carry Dragnet-style badges. I’ve known Robert since a few months after I took this job, when we were just a couple of punks with strong opinions. We’ve both matured with the PC industry, but when we get together, we talk about industry trends with the intensity of two chess masters.

The other day, I sat down with him for a late lunch at a local diner that’s been serving downtown for more than 50 years. As usual, the subject of our talk was his plan for world domination. He’s been perfecting the Geek Squad concept for eight years, always with the goal of eventually making it into the ultimate computer-service company in the world. He was routinely approached by interested buyers in the late ’90s, but he turned down every offer because he felt the concept still needed tweaking. “I could have made a lot of money had I sold it back then,” he said between bites of his BLT. “But it wasn’t ready. I was concerned that the concept would be lost in the new management if all the processes and procedures weren’t perfected.”

In 2000, he began working on a deal with Best Buy to eventually merge with the superstore chain. It took more than two years to consummate the deal, because Stephens insisted on testing the concept to make sure it worked before pulling the trigger. His tests confirmed that an infusion of enthusiasm and process control could turn an average support team into a good one. He renamed the in-store techs “Directors of Counter Intelligence” and made them part of his hip team of agents. He also analyzed how they did everything and found ways to cut down the turnaround time on repairs. Since downtime is the biggest single source of frustration for users, this was his primary quest. For example, rather than needing to send broken parts back to the manufacturer and receive a replacement before the machine can be fixed (a two-week process), techs can now pull parts from store inventory and replace them within a few hours.

The merger gives the Geek Squad the cash and the talent–4,500 in-store technicians strong–to roll out in other markets. It also gives the Geek Squad the economy of scale to offer replacement parts, such as new hard drives, at a fraction of their former cost. The merger enables Best Buy to improve its in-store service and augment it with in-home service at a premium price. If a system crash causes you to lose a proposal you’ve been working on for months, it’s worth the extra cost for in-home service. In less critical situations, users can save money by bringing the machine in.

As I edit our annual Small Business issue, service has come to the forefront of my thinking once again. In these tough times, small businesses are not out to deploy the latest cutting-edge systems. So our offerings are not exactly glamorous, but they do speak to small businesses’ IT needs. Our cover story on outsourcing focuses on how to save money in IT by farming out seasonal tasks. Many of these tasks relate to scheduled service issues–systems upgrades and the like. Our second feature, on Application Service Providers (ASPs), shows another way to reduce the service and administration burden. You need not administer a network if your entire IT organization is hosted offsite. We also have a feature in this issue that could serve as a primer on backup-and-restore issues-the bane of many administrators’ jobs. And my Q&As with two prominent members of the Linux community focus on saving money through reduced server administration using Linux.

While these features are directed toward the small-business audience, they are applicable to SOHO businesses and even consumers. Though superstores focus on consumer business, a lot of individuals purchase computers from them for business purposes. “The line between consumers and businesses is blurring,” Best Buy Vice President of Service Strategy Sean Skelley says. “Business people make great consumers and most consumers use computers at their workplace.” Because service is generally more crucial for business users, it is even more important for superstores to improve their service offerings. And as computers have matured into cheap commodity items, service is a key competitive advantage in the industry. That’s good news for all users, who have long suffered with downtime and other negative effects of poor PC service. And it’s good for COMPUTERUSER, because our audience contains elements of both the consumer and business market. As the business/consumer distinction fades away and everyone becomes simply a computer user, we may not be in a position for world domination, but our position will stay strong.

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