January 17, 2005
Circuit City's New IT Approach to Customer Service
By Evan Schuman, eWEEK
When major customers walk into a Circuit City location, CIO Mike Jones wants to whisper customized sales pitches into their ears—literally.
Jones's scenario is simple: As customers walk into the store, they receive a very light wireless headset. As they walk through the store, the device uses sensors to learn where the customer is. When the customer stops in a certain area, the headset can explain items, present audio from a TV demonstration and potentially even connect the customer live with a centralized sales assistant. In theory, that sales assistant might be 2,000 miles away—assuming no one in that store is available.
The headphone helper is just one of several non-traditional ideas that Jones is trying to push through the $10 billion retail chain's corporate structure. As senior vice president and CIO, Jones knows how much of a structure the chain's 1,648 U.S. and Canadian locations pose.
Jones uses the popular corporate phrase that retailers today must "surprise and delight" their customers. Many chains mouth a "surprise and delight" strategy while unveiling marketing strategies as radical and unexpected as Fourth of July clearance sales.
But Jones is trying to put mental muscle behind that phrase. Why? In many respects, the answer is long-term survival.
"The consumer marketplace today is very much a polarizing place. You have to decide where you want to play, and we are not going to win on price," he said. He reasons that radically improving customer experience is mandatory, especially when selling products that—for the most part—are also offered by their largest competitors.
For example, most retailers today are offering buy online, pick up in store programs. Jones wants to do that one better. The system will know the ZIP codes of registered users. When orders are placed, the system does a lookup and determines if there is a Circuit City within so many miles of the customer. If there is, the system can offer to have a store employee deliver the merchandise to the home, Jones said.
Putting aside the delivery charge issue, this program has several strategic benefits over a delivery from Federal Express or UPS. First, this sidesteps the inventory problem by giving the retailer a little extra time to find the product. Second, there is the branding and customer service advantage of having the product delivered by "a Circuit City-logoed shirt driving a Circuit City-logoed truck," Jones said. And there is the future potential for having that employee install the system. With that installation comes the CRM (customer relationship management)-oriented intensive knowledge of all of the other electronic components that customer owns.
Another Jones scenario: When customers are at the checkout line making a large purchase, have an alert go to the chain's CEO. In theory, the CEO could phone that checkout aisle and speak with the customer, thanking him personally for the order. "That's surprise and delight," Jones said. Can he make it happen? Jones said he is still working on it.
The CIO—who also wants to sell MP3 systems with that customer's favorite music already installed—said that he truly likes RFID embedded into loyalty cards and is trying to figure out ways to creatively leverage it. "When you come into my store and you break my beam, a coupon dispenser that is standing right at the door could spit out specific coupons because of your behavior," he said.
With Web-offline integration, Jones hopes to know, for example, that a customer entering the store was evaluating plasma TVs on the Web site over the weekend and—when he breaks another beam—is now standing near the plasma TVs.
"It's now obvious that he's evaluating plasma TVs. He's been in my stores and walked through the TV area, watched a demo and walked out. He had looked at those pages on our Web site," Jones said. "Let's say I have year's inventory of RCAs. Maybe I offer him a $500 coupon right on the spot."
Jones said the chain is currently upgrading and replacing major systems—all POS (point of sale) systems are being replaced with new Linux units—but he wants to see more software intelligence built in. Software should be able to do a lot of the monitoring and decision-making referenced above, he said. "You've got to build in a sophisticated neural learning engine." Jones is working with various technology partners, including Yantra, IBM and 360Commerce.
Most of the things he is exploring have to happen in the store, preferably soon after—or when—the customer walks in the store, he said. "The point of sale is not the point to be doing this. It's too late," he said.
Jones also sees cultural and community changes in a post-9/11 world, which is what fueled his "store employee delivering to the home" concept. "There are going to be a lot more gated communities. We're talking home schooling and having to digitally accommodate people in their homes.
"We can have a debate about who is going to own the customer in the store. That customer walks into the store and puts on Circuit City headsets, where we pipe in promotional material based on GPS input. I own the customer at that point," Jones said, adding that integrating digital signage into the equation helps.