Buy's Brilliant Bouncer
By Duff McDonald,
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customers are not created equal. So declares Columbia Business
School professor Larry Selden, coauthor of the book Angel Customers
and Demon Customers, in which he argues that shoppers can
be segmented into two general types: "angels," who buy high-margin
goods at full price, and "demons," who can chew up profits by
bargain hunting, returning purchases, and tying up customer
service reps. Smart retailers, Selden says, cater to the angels,
find ways to reform the demons -- and then watch profits take off.
CEO Brad Anderson is a believer. A couple of years ago, Selden
convinced Anderson that the consumer
electronics giant wasn't as profitable as it could be. So Anderson
hired Selden to redesign 32 Best Buy stores around four angelic
archetypes: "Buzz," the young male gizmo fanatic; "Jill," a busy
soccer mom who shops for appliances; "Barry," an affluent entertainment
lover; and "Ray," the budget-conscious family man. To deter demons,
Best Buy cut back promotions and charged restocking fees for returns.
Last year the stores showed increases
in sales, profits, and "close rates" -- the percentage of shoppers
who make a purchase. Anderson is now retooling 68 more stores,
and analysts predict a 16 percent rise in Best Buy's net income