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Published: November 30, 2006

 
 

Best Buy's 70 Percent Solution

At Best Buy, we faced the unknown when we had the opportunity in 2003 to partner with the advertising agency National Cinemedia, AMC Theatres, and cell phone providers to sponsor faux movie previews that would run during the “golden minute” right before the feature starts. The message was to turn cell phones off. Each “preview” ended with a cell phone ringing followed by a tragic consequence, such as the discovery of a stealth World War II U.S. submarine by the enemy when a cell phone rings in the boat. Needless to say, the true impact of this project was impossible to measure initially. But we decided to take the risk, and it paid off: The campaign was viewed by thousands and thousands of people, it helped add an aura of edginess and irony to consumer perception of Best Buy, and it placed our brand in an entirely new medium in a relevant way.

During my tenure at Best Buy, if a calculated risk was not moving the financial meter during its allotted time frame, we did not hesitate to shut it down, see what we’d learned, and refocus the energy and money on a new innovation. We applied what we called the “70 percent rule” to calculated risks: We tried to get our plans 70 percent complete before launching them. Once the idea was out there, we learned from it, whether it worked well or fell flat. Overall, we would rather have taken 20 small steps and have been right 13 times than have taken five big steps and have been right four times. The opportunity to gain new marketing knowledge is greater with more endeavors, and the chance to explore more ideas results in more innovation.

Of course, there’s a caveat. If an idea is so expensive or so important to a company that failure would be catastrophic, it probably makes sense to take the time to get it 90 percent right before moving forward. For example, at Best Buy we spent a year building our loyalty program — a program to attract repeat customers by rewarding them with financial incentives and other benefits. We then tested it as the “Reward Zone” for one year in one region on a limited number of products to generate feedback, see if the idea had merit with consumers, and find out if our systems would work. The program now has more than 8 million members. We were still years behind some of the best-in-class players in the market, but — because we couldn’t afford to get it wrong — we knew that the program required a high level of investment in research. When a national rewards program fails, it can be a huge embarrassment for a company, and it is virtually impossible to relaunch.

Whichever marketing choices are made, it is important to innovate within the existing parameters of a company’s brand. That’s easy to say but hard to do, because marketers often feel pressure from their functional peers and other managers to do what competitors are doing. They’ll hear, “Let’s have a Web site like Company Y and an incentive program like Company Z, advertising like Company A and community giving like Company B.” The best advice I ever received as a marketer was to make sure that each brand and each company has to find its own way.

The sweet spot where marketers can succeed is small and probably getting smaller as the marketplace gets faster, more global, and more customized. The ability to keep up with that marketplace will be driven by achieving the right balance between tried-and-true endeavors and the innovative tactics that require calculated risks. We learned at Best Buy that striking the right balance is a never-ending task; it takes a combination of judgment, savvy, good math, and, most likely, a little luck.

 
 
 
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