Loyalty Marketing Helps Best Buy Evolve Around Core Consumers

Are you a Buzz or a Barry? If you have a Best Buy Rewards Zone card, the electronics retailer has you pegged as one or the other—or as a Ray or a Jill.

Best Buy introduced its hip-looking Rewards Zone loyalty card in 2001 in part to encourage repeat purchases. But by scanning Reward Zone cards at the point of sale, Best Buy has also collected purchase data and demographic research to help it define its most profitable customer segments. It is using the information to create stores that better target the unique customer base of each—and are boosting sales growth appreciably.

Best Buy has created four consumer models–Barry, Buzz, Ray, and Jill— as well as a model for its small-business customers. Barry is the affluent professional who wants the best and demands excellent service. Buzz is the young male who wants the latest in entertainment and gadgets. Ray is the family man and practical adopter of new technology, while Jill is the suburban mom who wants gear that enriches her kids’ lives but doesn’t quite understand what she needs.

“Whether we’re personalizing service or expanding product selection, we’re constantly refining customer experiences to make shopping at Best Buy more fun and easy,” says Mike Linton, Best Buy’s executive vice president/chief marketing officer.

Best Buy has been using the point-of-sale data to begin converting its 840 North American stores into more customer-centric versions. Since May, it has revamped 98 of its retail locations; by next March it expects have converted 235-285 stores.

Some stores cater to just one customer model, while others have as many as three niche customers in mind. Two stores just a few miles apart could generate dissimilar customer experiences, says spokesperson Paula Baldwin.

A Best Buy store designed to accommodate Jills, for instance, would have several shopping assistants on staff to accompany customers, listen to their needs, review products with them, and help them make sensible purchase decisions. A Jill store would also have a broader selection of products and services relating to digital imaging, kitchen, laundry, gaming, home theater, and mobile video.

But at a Barry store, store associates might encourage customers to sample from a library of personal computer or video games and an assortment of components, while offering advice and tips about how to sharpen their skills and get to the next level of gaming. The Barry store would be equipped with gaming areas, including interactive displays that showcase online gaming, surround sound, wireless technology, personal computer upgrades, and high-definition screens.

The customer-centric approach is clearly working. Same-store sales at the redesigned stores rose 8.4% during the fiscal year ended Feb. 26. Same-store sales at its traditional stores rose 2.3%.