Inside Best Buy's Analytics-Based - Event Marketer

Inside Best Buy’s Analytics-Based

Once focused on all-media-all-the-time Best Buy now connects with customers using a blossoming event marketing mix

A lot has changed since Best Buy first opened its doors 41 years ago.

For one the buyer has changed. As growing product sophistication intersects with falling prices consumers are now afforded every opportunity to grab the latest and greatest. Two the category itself has also changed evolving from a hardware-packed sector into a lifestyle channel serving consumers gadgets and gizmos to fit virtually every want and need. And the product technology has changed weaving itself into the DNA of everyday life.

How has Best Buy responded? By making its name synonymous with the category. The chain now operating a base of more than 1 100 stores throughout the U.S. Canada and China has swelled into the defacto category killer. The brand has been refined now perceived more as a horizontal halo provider of consumer-electronics than vertical products such as music and video games.

Connecting with the customer is core to Best Buy’s blueprint a philosophy espoused by ceo Brad Anderson and phased into the stores beginning in 2003. This “customer-centric” focus as Anderson calls it segments core customers and buying habits into groups: young technology buffs suburban soccer moms affluent male professionals budget-conscious family guys and small business owners. (Not to mention Hispanics gamers NASCAR fans and music lovers.) As many as 400 stores—with more in the planning stages—have been outfitted with fixtures new layouts updated product and retrained personnel to meet the needs of these different types of customers. The environment has been physically adjusted to facilitate conversations purchase inclination and obviously merchandise movement.

Anderson’s mantra has impacted the marketing portfolio as well. For years media-driven and anchored by a once totally in-house marketing agency Best Buy marketing has gone live. Event marketing may have been let out of the gate slowly by director of marketing Debbie Estes when she first joined seven years ago but it’s now become a galloping bronco for the brand. Mobile tours and sponsorships are meshed with in-store and out-of-store event campaigns. Partners are engaged and connected to the stores when appropriate. And consumers too often marketed to by companies are now marketed with literally engaged and pulled right inside brand experiences in an effort to create longer-lasting connections and communications.

At the center of it all? Data and an aggressive lean on analytics. The company analyzes sales results and customer demographics to target the needs of its top customers those shoppers dropping a few thou on a new flat-screen or notebook computer. Its Reward Zone loyalty program which launched nationally in 2003 is another good source of information on customer spending. “The company is one of the first to transition from being product-focused to more customer-centric understanding [the consumer’s] attitudes and behaviors wants needs and preferences and that drives a lot of their marketing strategy ” says Jeff Zabin director-marketing at Fair Isaac a Minneapolis-based firm that helps Best Buy analyze its data and understand customers.

According to Zabin approximately 31 percent of Best Buy customers drive 80 percent of revenue. Even more striking he says seven percent of customers drive 43 percent of overall sales volume. Translation: It would take 39 “uncommitted customers” to replace the lost lifetime value of a single “best customer ” he says.
Giving these best customers unique experiences they can’t get anywhere else is key to building and keeping their loyalty. That’s where event marketing fits in. Hundreds of sponsorships and events are now becoming the lynchpin of a growing customer-centric marketing portfolio at Best Buy and Estes and her team of nine full-time staffers are hardly slowing down. “Event marketing serves as the emotional connection between consumers and the company ” she says. “The brand experience is now leading [our marketing] not advertising.”

The Portfolio
You want a taste? Oh OK. For starters there’s the Fun Zone a mobile marketing tour that has hit the road over the past five years and this summer trucked primarily to NASCAR races filled with PCs and digital cameras a home-theater set-up kitchen appliances and gaming activities such as race simulators to appeal to race car fans. “It’s reinvented every season with new content and products ” says John Steltenpohl senior vp-client services at New Berlin WI-based GMR Marketing which handles Fun Zone as well as other projects for Best Buy.

There’s also Tour Out part of Best Buy’s sponsorship of the Dub Tour an auto show and concert series for urban fans of Dub magazine. The 2007 Tour includes autograph sessions and performances by rappers Lil’ Scrappy Lloyd T Pain Rich Boy and others at large convention centers from Los Angeles to Atlantic City. The Best Buy exhibit features a custom Alpine 2007 Chevy HHR and Kenwood Ford Focus outfitted with audio products sold and installed at its stores.

In mid-July Techno Zona hit the road heading to 12 markets through September with home theatre and digital imaging products for the Hispanic customer. Then there’s this year’s sponsorship of the sell-out Police Reunion Tour and the No. 66 Haas CNC team which goes to NASCAR events. Add in regional baseball sponsorships the NBA NFL Reward Zone special shopping nights movie tie-ins and partnerships with brands such as McDonald’s Coca-Cola and General Mills and well you can see how a person might lose count (Estes jokes that she sometimes does).

Last fall for the launch of Sony’s PlayStation 3 Best Buy took over a city block in Los Angeles for an evening as it brought every game within the PS3 to life. Besides Sony more than 20 partners including the movie studios Activision EA Sports and Blue Ray—along with celebs such as Tony Hawk Xzibit and Marvel Entertainment’s Stan Lee—tied in to the excitement. Camp Freddie played Velvet Revolver and Slash took to the stage while Good Charlotte spun tunes. The event drew 1 500 people who partied until midnight when Tony Hawk awarded the first PS3 to a lucky consumer at the adjacent Best Buy store. “It positioned Best Buy as doing something very unique within that industry and being able to break the norm ” says Donna Graves ceo at handling shop nCompass West Hollywood CA.

Tuning It Up
Best Buy continually fine-tunes and sharpens its event and sponsorship strategy making sure it is spot-on when it comes to reaching its target. “We always look at an event uniquely in how we measure it ” Estes says. “It may be one that we want to build equity and sustain or it could be an event that hits the objective and target in that time and space. There’s no template.”

There are however what Estes calls four “pillars” of criteria that help identify an event’s ROI as well as determine whether it was successful or not.

First are the sponsorship levers which Estes describes as “what you have and what the values of it are—whether it’s signing media sweepstakes rights or logo rights.”
Next are opportunities to build on those levers with in-store appearances a community-relations element if there is one merchandise tie-ins and cross promotions.Third is employee engagement and opportunities for employees to attend an event. And last how the event relates to Best Buy’s products and services.

The retailer measures each event against these four pillars as well as other metrics such as attendance and sales but what really matters Estes insists is a quality interaction with the customer one that makes that all-important emotional connection. To remain fresh and relevant Estes borrows ideas from everywhere. “You just have to listen hear and be creative in how you bring things together ” she says.

The merchandising team and its strategies provide the cue for carefully choosing partners to tie to the events. But the company also receives proposals from brands looking to partner with the retail giant. “Wherever the idea begins it must make its way through Best Buy’s strategic filter one that everyone in the marketing communications mix has to hold up to ” she says.

But it all comes back to the customer. “When we look at partnerships whether it’s a media partner or a sponsorship partner it starts with the customer and what customers we are trying to appeal to ” says Jim Lawrence senior manager-event marketing.

To satisfy the music lovers that means affiliating with industry icons such as The Rolling Stones Elton John and Usher whose DVDs the retailer sells. Justin Timberlake visited stores last year for listening parties (and helped Best Buy win an Ex Award in the process. Just sayin’.) Mariah Carey and Tiger Woods appeared for autograph sessions.

And then there’s this summer’s sold-out Police Reunion Tour which began in May in Vancouver and wraps up in November in Mexico City making stops from Seattle to New York along the way. The thrill of hearing Sting Stewart Copeland and Andy Summers belt it out onstage continues behind the scenes at every show with the Best Buy Police Station designed as a Moroccan oasis for the store’s top Reward Zone members special guests and celebrities. The oasis features a 100-year-old restored arch from Marakesh autograph sessions with the opening band and authentic touches such as fresh rose petals and traditional mint tea. The store’s 20 million Reward Zone customers get first dibs on tickets and a chance at ticket giveaways.

Graves whose agency activated the Police Tour backstage oasis for Best Buy has received emails and letters from consumers praising the event. “They’re saying this makes it worthwhile for them to shop at Best Buy ” she says. “And that’s just one experience.”

Best Buy has also connected with families via a four-year program in conjunction with McDonald’s and Monopoly. Customers collected game-pieces off packages of hash browns fries soft drinks and sandwiches for cash prizes McDonald’s food Best Buy bucks and a chance at a $5 million grand prize. “That was a unique way to hit the customer when he is not at Best Buy to drive him back to the store ” Estes says.

The retailer also partners with Coke in promotions to reach Hispanic consumers. “They’ve been in that arena for years but it is relatively new for Best Buy ” Estes says. “We’re partnering with them to reach a very important demographic.”

On tap for fall is a new partnership with General Mills’ snack division in which music and movie promos on packs of Bugles and Gardetto’s mix will have a bounce-back offer to Best Buy entertainment. “We’re reaching that customer in a non-traditional way to bring value to both brands ” Estes says.

And that reach is extending. In 2008 look for more of it all: More events and sponsorships more partnerships more experiences—and more analysis. After all it’s a laser focus on the customer and a wealth of information that keeps Best Buy on track. Having more than 1 100 stores keeps everybody on their toes but that’s 1 100 reasons to keep the customer connections flowin’.

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