Best Buy for Business builds data powerhouse

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When consumer electronics retailer Best Buy Co. introduced its b-to-b unit four years ago, it did not have a business marketing strategy.

The $40 billion company lacked institutional knowledge when it came to talking to business customers, and there was a structural problem, too. The Richfield, Minn.-based company had multiple purchasing systems—point-of-sale at its 1,300 retail stores, telesales, a Web site (, and later a business site,, a proprietary internal sales database and a CRM platform. The different systems meant that even if Best Buy managed to identify its business customers specifically, it was almost impossible to have a clear and comprehensive view of them. This made lead-generation activities difficult.

"The challenge was none of those systems talked to each other," said John Samuels, the director of business-to-business at Best Buy for Business. "You can imagine the challenge of trying to understand a business at 123 Main St. in Chicago. It was impossible to understand that customer, and the chances of being irrelevant to them significantly increased."

"It's not an unusual problem," said Dave Frankland, a direct marketing analyst at Forrester Research. He said the challenge to having a centralized view of the customer is the way organizations are typically structured. Silos tend to exist either organizationally (by department or function) or by channel, where companies often have separate databases for online customers, store customers and call center customers, for example.

In order to better understand its business customers, Best Buy's first step was to study the market.

"We started at the ground level with a marketplace segmentation study about 18 months ago," Samuels said. The study gave Best Buy for Business five "segments" or types of potential customers. In the end, the company decided to focus on two of those: "innovative adopters" and "thrifty followers."

Innovative adopters (customers who adopt technology early and understand how technology can give them a competitive advantage) bought two to three times more products and services for their businesses than each of the other four segments while thrifty followers, which accounted for about 30% to 35% of the overall market, purchased less than 15% of Best Buy products. (Samuels describes thrifty followers as the volume, or mass marketing, target.)

The next step was to merge all the data being collected by the company through its multiple channels into a single view of the business. It was a formidable task.

Together with Engauge Direct, a direct marketing agency, Best Buy for Business began to build a "business data mart" to use for customer analytics focused on its business customer. The process took several months, but once the database was built, Best Buy for Business finally had a multidimensional, comprehensive view of its business customers and prospects.

"The build-out of all this ended last October, and now the processes are fully automated where we push the data down to the data mart and then we're able to do analytics, which helps us target customer groups," Samuels said.

That intelligence now helps Best Buy for Business pick the right messages for each customer segment in its two target categories and generate leads.

One customer who purchased a lot of items six months ago, for example, now purchases relatively little. "How do we talk to them and what do we offer them?" Samuels asked.

He answered his own question this way: "We were able to identify them by doing deep-dive analytics to uncover highly differentiated groups within our customer set. And we're able to recognize and speak to them in a voice that is relevant."

Further refining its segmentation with analytics, the Best Buy for Business team identified seven discrete groups of business customers within the innovative adopters and thrifty followers.

Analytics dictated whether customers and prospects received more promotion messages, for example, or content-related messages with information for customers, mailings with a strong interactive component with a quiz or a webinar or live chat with an expert.

Datacentric lead generation

On any give day in a single channel, retail, Best Buy for Business can identify 16% of those walking into the store and making a business purchase.

"Businesses are coming in to Best Buy," Samuels said. "We just haven't had good processes in place to recognize their needs in the way we can now."

Janet Rubio, president-direct at Engauge, said this is a new style of lead generation for marketers that is built on a holistic approach to the database.

"We have these highly segmented groups," she said. "We're able to score prospects using modeling techniques for who is likely to be best served by each of the [marketing] channels."

This datacentric lead-generation approach also enables marketers to leapfrog past the step of qualifying leads manually.

"We have a system where leads are constantly created because of the fact that we now have such rich information that exists without having to go through lead qualification," Rubio said. She added that this process skips the standard way that b-to-b does lead generation where you qualify the lead with the usual questions: Are you in the market to buy? What kind of product? What is your time frame? What is your budget?"

Another plus is that the database approach provides much more robust data to the marketer.

"The problem we've had as database marketers for so long is we've never had enough data to build robust models," Rubio said. "You've got SIC codes and number of employees—and maybe you have geography and the title of a person—but the data is constantly changing and people leave companies, so the only thing you can build on is those core variables." She said a framework based on behavior that can be tracked across multiple sources of that data is much more robust and accurate.

Integrated b-to-b lead gen

In February, Best Buy for Business launched a direct mail effort created by Engauge to 250,000 customers and prospects. The effort also included phone and e-mail. Best Buy declined to comment on its spending for the campaign.

"It was really an integrated effort," Samuels said. The idea, he added, was to try to understand which vehicles—print, electronic, direct mail, microsite or phone—would be most effective to reach customers.

One set of customers received a direct mail piece. Another segment received a direct mail piece plus one e-mail. A third set received one direct mail piece and two e-mails, and a fourth group got three e-mails. Each of those segments contained a subset that also received follow-up by phone. The company also set up another segment that received only the usual monthly e-mail communications.

In addition, variable data printing was employed so that personalization appeared several times in each piece of direct mail.

Test results showed that all the groups that received a phone call showed a positive ROI. The groups that received the direct mail piece and more than one e-mail but no phone call were break-even. The group that received the e-mails alone also broke even.

"The telesales and electronic mail combination showed the strongest results" in generating leads, said Samuels.

This information was in turn shared with the sales force.

"That is where Microsoft CRM comes in handy, because we're able to push the information out to the reps," Samuels said. Reps are now aware of which customers received which marketing piece; the CRM also creates specific tasks for reps to follow up on with customers.

"We've never been able to run an integrated campaign like this before," Samuels said. "Now we can, supported by the datamart and the tools available to us."

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