Geeks in ‘Da House

Jun 22, 2006
Rick Moss

Commentary by Rick Moss

geek – noun – 1: a carnival performer often
billed as a wild man whose act usually includes biting the head off a live
chicken or snake

– Merriam-Webster

Amazing how words bubble up through the lexicon. The term “geek” has come a
long way, from sideshow freak to world’s-richest-man. Geeks may be more respectable
nowadays, but the term stuck for a reason. A more contemporary definition found
on is “a person who is single-minded or accomplished in scientific
or technical pursuits but is felt to be socially inept.” (Somewhere along the
line, they must have hired good PR people.)

After Bill Gates, perhaps the best example of the “Geek Chic” phenomenon is
found in Best Buy’s Geek Squad, that house call-making team of computer experts
that have elevated the comfort level of many customers while pointing to higher
margin possibilities for electronics retailers.

At a recent Reuters Consumer and Retail Summit, top execs at America’s two
leading office-supply retailers, Office Depot and Staples, were asked about
their strategies relative to high-tech customer service. They agreed on its
merits, i.e. good margins; better consumer loyalty. They disagreed, however,
on staffing approach.

Office Depot has made an outsourcing arrangement with Best Buy, now in test,
to offer round the clock Geek Squad services to its customers. Revenue is shared
between the two companies. “The concept is to expand (Best Buy’s) business and
leverage the overhead and training they’ve got in place (which) doesn’t require
our big investment,” said Office Depot Chief Executive Steve Odland.

Conversely, Staples has gone the in-house route, developing its own “Easy Mobile
Tech” (EMT) program a few years ago. Explained Ronald Sargent, Chief Executive
at Staples, “We want to control and own our customer. We don’t want to let other
people control and own them.”

“The problem with outsourcing is that it costs you more and you give up your
contact with your customer,” Sargent added.

Moderator’s Comment: How important is it to keep the
experts in-house? Isn’t intimate product knowledge important to running a good
retail organization?

Now…some of my best friends are Geeks, but it’s easy
to imagine a big collective sigh of relief coming out of Office Depot’s human
resources department when they found out the whole service was being farmed
out. Socially inept is one thing, but when they’re smarter than you…well it
makes for challenging performance reviews, let’s put it that way. Even so, it
doesn’t seem logical to me. By relying on out-of-house intelligence, you’re
separating your brains from your beauty.

Staple’s Sargent said that one hidden advantage of building
their team in-house was that it provided entry positions for people interested
in careers in IT, not just retail sales.

Whether it’s explaining why you should sell the customer
a Bluetooth-capable device or showing a shopper in produce how to prepare a
fresh artichoke, experts are best when they’re integrated throughout the organization.
Experts are, well…smart. And smart is good, even if it makes conversations
at company picnics a bit more challenging.

Rick Moss – Moderator

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9 Comments on "Geeks in ‘Da House"

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Ryan Mathews
14 years 8 months ago

The question really is how smart is it for Best Buy to lease out the Geek Squad? It seems it is a high profile brand, easily identified with Best Buy…until you can get Geek Squad service from anyone. Then it’s a stand-alone brand. Keeping service in-house is a good idea only as long as it’s good service. That might seem obvious but let’s assume that there is a great retailer with a terrible after-purchase service program. Sooner or later, people are going to assume that they aren’t such a great retailer either. I’d say the Geek Squad has helped Best Buy raise its brand profile. Not so sure about EMT.

Michael Tesler
Michael Tesler
14 years 8 months ago

I would rather build my own brand than someone else’s. Either way, the store will be held accountable if service is not good and credit would go to the geek provider which reinforces Staple’s comment, “We want to control and own our customer. We don’t want to let other people control and own them.” Also being the authority and knowing the workings of your product as well as accepting accountabitly are all important to retail success. My bet is on Staples.

Bernie Slome
Bernie Slome
14 years 8 months ago

Dirty Harry once said, “A man has got to know his limitations.” The same is true for a business. Each business must focus on what they are good at. This is not about customer service; it is about further monetizing the customer.

For Office Depot, if the Best Buy Geek Squad screws up, they have a fall guy. If they succeed, Office Depot is a hero who has added revenue. Additionally, this will give Office Depot the time to develop their own squad of techies, but at a comfortable pace.

For Staples, this appears to be a huge undertaking. It is also at some risk. It is a classic risk/reward scenario. If successful, it propels Staples into a higher position as a high-tech retailer. If it fails, it will relegate them to non-tech office supplies.

This will be a compare and contrast paper for some MBA candidate in the near future.

Jeff Weitzman
Jeff Weitzman
14 years 8 months ago

The Office Depot strategy may be born of necessity. Having just concluded a search for an IT person, I can attest to the fact that qualified candidates are in-demand and commanding good salaries. Joining the Geek Squad is not, I suspect, high on the list of goals for any decent IT person. While having in-house expertise is perhaps ideal, it is more important that a retailer have a reliable and qualified service staff.

Art Williams
Art Williams
14 years 8 months ago

Quality of the service is the key whether it’s in-house or not. Best Buy’s Geek Squad is certainly the better known due to their advertising, but I haven’t been impressed with the service. I tried to use it once in desperation, but they had a long waiting list and were going to call back. They didn’t and I tried again and finally gave up on them. I can only assume that my experience is an exception. The fact that Best Buy claims to have on-site service available should be a very good selling point for them, unless you have had a negative situation like mine.

I haven’t tried Staple’s EMT, in fact, I wasn’t even aware that they had it. It’s terrible to be so intimidated by technology, but thank goodness for our kids who can usually save the day, if not Dad’s fragile ego.

Karin Miller
Karin Miller
14 years 8 months ago
Given that the Selectric typewriter was probably the highest-tech item that Staples signed up to sell when they first opened their doors, I give them credit for trying to build their own version of the Geek Squad! A good service program needs scale and undivided attention to quality, training, hiring of good individuals and customer service focus to be successful. I can understand wanting to keep tech service in-house, and not wanting to build a quasi-competitor’s brand if at all possible. Since high-tech items are a much smaller part of the product mix, sales and overall focus at office supply vs. electronics big box stores, it would take a lot of resources for the office store to build a high quality national service program, and it is very doubtful that such a program could be profitable (or break even) anytime soon. No doubt Office Depot will find that the Geek Squad test solves immediate problems. Nevertheless, if I were them, I would be looking at scenarios to bring the services in-house within the next 5… Read more »
Mark Lilien
14 years 8 months ago

When Dell first offered nationwide on-site service, they outsourced a good part of the work. It’s reasonable for any new venture to try outsourcing since, if it’s done well, the financial risk, training cost, and startup time can be reduced. Many retailers aren’t well-known for running their stores very well, so there’s no reason to believe they’d run a service organization well, either.

David Livingston
14 years 8 months ago

One thing I have learned over the years is that basically “smart” qualified people to not work for someone else; they work for themselves, particularly geeks. How important is it to keep experts in-house? Real experts generally will not settle for working “in-house” unless there are some significant financial consideration involved. Outsourcing will probably cost more but companies will probably end up working with more qualified people. Keeping the geeks “in-house” will probably result in employing less qualified people who will settle working for Office Depot type wages. When they do get lucky and get a highly qualified employee, that employee will soon be moonlighting and eventually move on. I keep a black book of home phone numbers for geeks and repairman. It’s cheaper, you get better quality service, there is no paperwork to fill out, and no foreign call centers to deal with.

Camille P. Schuster, PhD.
14 years 8 months ago

The real test will be which approach allows consumers to get their questions answered and the help they need when and where they need it. Recruiting, training, scheduling, and monitoring the performance of the people needed to perform this activity can be a challenge and is not necessarily a task that current managers of a retail outlet may want to tackle. The back office activities and customer interface activities need to be well managed to be effective, whether that is done in-house or out-sourced.


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