In Search of Superior Guidance: Best Buy vs. Home Depot

by Britton Manasco | Oct 21, 2008 | Positioning

In an era of great expectations and still greater disappointments, buyers of all sorts -- B2C and B2B -- are seeking out sellers and solution providers that can offer superior guidance.

Credible and reliable guidance, as I have argued here, represents a powerful new source of differentiation and growth. Just as important to recognize, the absence of this powerful element may undermine one's market position.

Consider the cases of Home Depot and Best Buy -- two titans on the retail landscape. Home_Depot_Thought Leadership

Home Depot pioneered the big box category of home improvement and remains a widely respected brand  overall. But, in recent years, the company's impressive brand status has started to slip. The company's sales, profits and stock price have plunged in the past few years and it recently announced it is closing 15 of its flagship stores. Last year, it ousted its CEO and got hammered in the press when the man's golden parachute exit package was made public.

As I see it, one of the main reasons for its troubles is that it is not meeting the customer expectations it set. What's the company's tag-line? You can do it. We can help. Well, Home Depot isn't helping.

One recent news report put it this way:

Several shareholders spoke at the Atlanta-based
company’s annual meeting about poor experiences in Home Depot stores. They said
some employees don’t seem well-trained in the store’s products, and also
criticized the performance of people who do home installations on behalf of the company. One shareholder said he couldn’t get the attention of
Home Depot workers. “They don’t see you or they don’t want to see you,” he

So the company has set expectations that it will provide guidance -- help you remodel the kitchen, design that patio or at least pick out the right gardening tool. But once you get there you find that there's no one aroBest Buy_Thought Leadershipund to help when you need them. Of course, there may be someone there to guide you through the automated, self checkout process -- ensuring you can do it yourself next time. But don't expect too much more these days.

Contrast this situation with what you might find at a Best Buy. This company has excelled in the consumer electronics space. At a time when other retailers are retrenching, its revenue rose 11% to $40 billion in the last fiscal year. And, unlike Home Depot, it is getting applauded for its customer service efforts. Why is that?

Several years ago, the company launched an initiative to engage its customers more effectively and actively assist them in their buying decisions. Working
with Larry
Selden, a professor at Columbia University's Graduate School of Business,
Best Buy began to reorganize itself as a "portfolio of customers" as opposed
to product lines. The company CEO, Brad Anderson, embraced Selden's theory that future shareholder growth will
increasingly depend on reorganizations of this sort.

Having analyzed customer purchasing
behavior and histories, the company identified five distinct  customer groups that
represent strong growth potential: upper-income
, suburban mothers,
small-business owners, young family men, and technology enthusiasts.

These customers
are identified by sales specialists and directed to areas in the store that match their interests and criteria.
Specially trained reps then provide assistance as customers consider the dizzying array of choices that might be associated with the purchase of a laptop or high definition television. 

So Best Buy's ability to profile its customers -- to recognize them by their buying personas -- has accelerated and enhanced its ability to guide them through a successful decision. Such skills and capabilities can make all the difference in today's hyper-competitive markets.

"In our world the way you win the game isn't the price of the TV -- which is about
the same for all retailers -- but the experience you give customers once they are
in our stores," says Anderson in Fortune Magazine.

Clearly, one of the most critical aspects of providing superior guidance in this case revolves around effective employee training and a supportive company culture. Adds Anderson:

" We know that
our ability to create an environment that encourages employee innovation in
support of a better customer experience is as important as having deep insights
about our customers in the first place... We know that we must do three seemingly
simple things to succeed: gain deep insights into our customers' priorities and
lifestyles; figure out how we can encourage and nurture employee ingenuity on
behalf of our customers; and then offer solutions that will result in great
experiences for our customers."

While these are clearly B2C examples, it's clear to me that B2B players should also be picking up on the the larger pattern they represent. When a complex and considered purchase is at stake (for a consumer or a business buyer), superior guidance is highly valued.

But setting and meeting expectations is critical, too. Companies like Wal-Mart and Costco aren't expected to provide personal service because they don't set that expectation. Instead, they promise lower prices -- and they don't disappoint. Home Depot, by contrast, sets an expectation it isn't meeting. Best Buy, whose name promises little more than a good price, pleasantly surprises us by offering something more.