Live From NCDM: Best Buy’s Sales Pivot on a Joystick

Food staples such as bread and milk are often placed at opposite ends of a supermarket. This requires customers to walk across the store – past a wide range of temptations – to fill their baskets with necessities. People buying electronics, however, are less likely to traipse the floor of a retail outlet looking for their desired items. For marketer Best Buy, the trick was finding which products would trigger additional purchases, and then laying out its stores so these fulcrum products are right in the middle of the store. Hopefully, they lead customers from one product category to another. When Best Buy created a visual representation of product affinity, it found that people who purchased computer hardware and a joystick usually bought video games as well. The purchases don’t necessarily have to be simultaneous: Best Buy stores nine years of transactional information on its database, and is able to analyze consecutive as well as concurrent purchases. Best Buy relies on Peacock, a transaction analysis program from Fair Isaac, to uncover and visually map correlated products. Best Buy has broken its customer base into cohorts, and made determinations (based on a variety of demographic information) as to a given customer’s next likely purchase. In addition to influencing retail layout, Best Buy has used Peacock to design package bundles. For instance, when a male consumer fitting Best Buy’s “Barry” profile buys a home theater, his probably going to toss a full installation program, along with a PlayStation Portable, into his shipping basket. What is important to a “Barry” is getting a setup with maximum bells and whistles attached. Best Buy approaches him by touting its upscale, or European, appliance offerings. “Buzz”, however, is more of a one-off technology buyer. He may have a Best Buy credit card, but his main concern is getting his plasma TV home than buying a full installation package at one fell swoop. To grab a larger share of Buzz’s wallet, Best Buy will play up the “coolness” factor of its offerings, and promote the PlayStation Portable and installation package more aggressively. Best Buy’s plans for Peacock include expanding is use of “trigger event” direct marketing campaigns; making its research findings available for comment by general managers across its chain, rather than on the corporate level, and analyzing how online shoppers differ from brick-and-mortar shoppers. Jane Johnson, Fair Isaac’s vice president of retail markets, presented Best Buy’s use of Peacock during a session at the National Center for Database Marketing Conference in Orlando.