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Did Bad Customer Service Doom Circuit City?

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Best-practices guru Joel Spolsky thinks Circuit City imploded because of their terrible customer service, not any "recession" or "macroeconomic conditions" nonsense. To prove his point, he looks at thriving New York electronics retailer B&H, which succeeds because they understand that stellar service leads to healthy profit margins.

What's so great about B&H? Try dirt-cheap prices, uber-knowledgeable salespeople, and a sense of trust the store cultivates with its customers. Says Joel:

The most amazing thing is that I have often gone into B&H to purchase a specific product, only to be talked into something cheaper. For example, once I went in to buy a field video monitor to use for some interviews I was conducting. I expected to pay $600 until the salesperson said, "Why don't you just get one of these cheap consumer portable DVD players? They have video inputs, they work just as well, and they're under $100." This was no accident. "The entire premise of our store is based upon your ability to come in, touch, feel, experiment, ask, and discuss your needs without sales pressure," B&H's website says.

Go visit, if you can. They're on 9th Ave and 34th Street in New York, but don't go on Friday because they're closed for Shabbat.

Why Circuit City Failed, and Why B&H Thrives [Inc. Magazine]
(Photo: F33)

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Is it just me or does the picture totally look like snoop dog?

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He is correct. The President and upper management of Circuit City were idiots that ran the entire operation into the ground starting with that famous firing of top paid employees in the stores, who were also the most trained and provided the best customer service.


Circuit City never recovered from the horrid PR that move created. I visited their stores several times after and could barely find someone to ask a question to. I also stood in very long checkout lines twice because they had one register open and only one really nasty cashier who mumbled under her breath while ringing you out.


Maybe the economy just made the end come sooner. Why this guy was allowed to stay in control and distroy the place makes no sense.

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They're well-known in Photography circles as arguably the best store in the country. Their prices are competitive and I'd agree, the service was outstanding.

I finally was able to visit on a visit there for business & it's an amazing place. Little conveyors take your merchandise to the register (fun to watch themselves) and literally every DSLR I could imagine was on display to play with. (What other stores put $8k cameras in your hands to demo?)

I only had a brief time but the guys there knew more than any other salesperson in memory. They were eager to help, knowledgeable and friendly. They're my pick for my next major photography purchase. Definitely worth the visit.

Jeff

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Judging by the fact that I was once asked to show my driver's license while paying for a laptop hard drive with cash, I'd say yes.

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@PLATTWORX: What's sad is that move not only got rid of the best people in the stores, but it also gave all the remaining employees incentives to be as bad at their jobs as they could be. Why work harder and try to be a good employee if it means either a) you'll never get a promotion or b) if you do get promoted, you'll be honored by getting canned.

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It might not help that every Circuit City I've ever been to was built like a dungeon, where lights were randomly burnt out, product was strewn about, and the place was just flat out dirty.

I mean, the salespeople were always morons, but I expect that. What I don't expect out of an electronics retailer is a store that looks like goodwill.

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B&H is great. They have some good customer service and some yummy Israeli candy!

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@PLATTWORX: I worked for Circuit City before the mass exodus of said employees, and trust me, that isn't what sank them. It certainly didn't help, but there was rampant apathy and incompetence long before they cut the highest earners loose.

I credit part of their downfall with their elimination of commission-based sales. While I refuse to work for commission myself, you can't yank that carpet out from under your employees then expect them to continue to perform as if they still have incentive to sell only to receive a smaller paycheck.

When your manager tells you that your $3000+ sale "doesn't matter" because you didn't talk the customer into a $200 warranty, that tends to affect morale also.

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@bnelson333: I don't know. I think he looks like Sugar Ray Leonard. Or maybe even Pepper Johnson.

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If bad customer service killed CC, how does that explain Best Buy's survival?

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@bnelson33 Thats Snoop. Its a good photo shop.


Circuit City failed because they sucked at customer service. I got a computer there once and had I not had some backround in computers I would have left very confused and without a computer. You can't run a business with bad customer service. You want your customers to keep coming back for more business not for returns and aggervation. Not every retail company can please everyone but the ones that have a high overall rating put customer service first. Better not to sell the cusomter something then have them leave mad.

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@HenryES, Best Buy wont last long. Just wait and see. They are heading down the same road as CC. You cant do business like that. Customers are what make your business and when you piss them off you have no business. Best Buy is starting to do just that
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@thrashanddestroy: The elimination of commission based sales doesn't really explain how Circuit City failed but Best Buy is still around.

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Oh man did they suck! Each Sunday I would read their ads (because the had some good loss leader pricing) and then go to BB and get the price match because every time I would actually go to CC none of the ad items were ever marked or even displayed in a way to make them easy to find. If the idea of a loss leader is to get people into the store so they will have additional spend, then you have to make it easy for them to find the stuff they come in for, otherwise they will too pissed at having to go on a treasure hunt just to find what they come in for. Best Buy sucks as well, but if I want something now and don't want to wait for Amazon, where am I going to go, Radio Shack? Fry's is good here in California, but there are only a few around.

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Surely it's more a function of the big box electronics chain no longer being a viable business model. Geeks shop on the internet - only big screen family TVs do well at retail and then have to compete on price against Walmart and Costco.

B&H is a busy one store destination model drawing from a huge hinterland - not a cookie cutter chain.

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@HenryES: I was going to post exactly this. I actually prefered the maginally better CS at CC over the horrid service at BB

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B&H is definitely a good example of how to do things right. I don't live anywhere near NY, but I recently purchased a new reciever and 67" TV from B&H.


You can't just do one thing right and succeed - like have great customer service but bad selection or prices...just as you can't just have low prices and expect to succeed in spite of horrible customer service.


B&H and other companies like NewEgg are successful because they not only have very competitive prices, but they also have great customer service, and excellent selection. As for knowledgable sales staff, I can't personally comment - I would not ever expect a salesperson to know anything, so I wouldn't bother asking. But, others seem to think that's a plus for B&H too, so there you go.

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B&H rocks. When I wanted a digital projector, they were the only store that had all their projectors set up in a darkened area of the store so you could actually see what the image looked like.

Also when I was there saw two associates training on the floor. One was grilling the other, pointing at various digital cameras and saying 'Tell me about this one.'

I don't know that their prices are the best but they know what they are talking about. Good place to start shopping.

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I always felt Circut City prices were on the high side . And they used alot of those stupid MAIL-IN rebates . Computers seemed to be the worst using alot of rebates . Service was always SLOW in coming , you were lucky to find an available employee .

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Circuit City was screwed up as long as I have known it. The most un-ethical place I ever worked. Left there in '99. too much employee theft, people not being paid what they were promised in their interview, manager/associate "relations" at work like whoa, and all these wanna-be used car salesmen pitching electronics. I have never actually hated a previous place of employment after leaving.

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Actually, B&H is open Friday, they just close early. They're closed all of Saturday, because Shabbat runs from sundown Friday until Saturday evening.

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@HenryES:


When two stores carry the same product and have the same crappy service - go to the one with cheaper prices, more staffed (even though the staff is horrible), and locations. To many, Best Buy is horrible but it was still better than Circuit City.

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I don't know how great a comparison B&M is - they sell a lot of high end and pro gear and cater to that kind of customer, who spend a lot of money. They have one location (and a good sized mail/web business). They are in NY, where there are a lot of pros and businesses.

CC's lack of customer service didn't help, but Best Buy is surviving and they aren't any better. I think CC was killed by the low margins on consumer electronics, run-down locations, and competition from internet retailers on the high end and mass-market stores like Target and Wal-Mart on the low end.

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@mgy: Actually, all the Goodwills around here are spacious and have a lot of natural light coming in them. On the other hand, the Circuit City I went to definitely had a dungeon-y vibe.

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Hey, I loved CC in the late 90s when they had cheap CDs. I built a substantial chunk of my music collection there. They had better selection than most music stores, and loss-leader prices. There is some music I want on CD because it sounds better than MP3s.

Of course, I never bought anything else... I guess this contributed to them going out of business.

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Main weakness of the article is comparing ONE store to a corporation/chain. If you compare any chain that way, the same outcome would apply. Operational costs and functions are totally different between one store and a chain.

I am not saying that CC would wave survived if they had better whatever, or not fired whoever. They are DEAD. Get over it.

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Also, before you even account for CC's lack of organization, Best Buy simply carried more items, among them appliances.

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We do not have a CC where we live. We make trips frequently to the real city that does. Twice we went into CC, looked around and left. There were no highly desirable products or good deals on anything. It was like they took all the items we would have overlooked at Best Buy and stocked a store with them.

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@yoni242: I'd like to agree but I think at this point, they'd have to commit nothing short of murder. For every Best Buy hating customer, there are going to be a lot more non-computer-savvy people looking to want to buy something today rather than wait for Newegg. And from what I've seen, a lot of non-geeky people just don't like going to Fry's.

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@Darklighter:
Yeah, you would think someone named Carey Greenberg-Berger would understand how the orthodox business hours work more that some mishagoyim!

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I remember one time during the after Christmas sale, CC wouldn't pricematch the Godfather Trilogy from Fry's for $30. They said they don't do one day pricematches. The girl in the front counter was an idiot and his superior was too. I have no sympathy for Circuit City going under. Business in business and if you can't cut it, that's just too bad.

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I discovered by accident (via PriceGrabber) that B&H Photo (www.bhphoto.com) has a robust online store as well. Words can't express how well they exceed my already absurd expectations. It's my fav for shopping for all things digital. So, it's not just for Manhattanites!
Whoa - hawking two different sites? I wanna coupon!!

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@YouDidWhatNow?: I've always liked B&H too. They seem to pride themselves on downselling. I guess they figure that repeat business makes them more money than one large sale.

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@madanthony: You should visit their site. B&H Photo has a wide range of items, from $3 cables, to $200 cameras to the high-end stuff. They're a LOT more than a high-end boutique.

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@mgy:


I agree with you, you'd thunk an electronics store, for goodness sakes, would be all about flash and presentation. Circuit City stores looked like a chamber of horrors. You felt like jumping off a building if you had to go in there.


For sure all of the other factors like customer service, warranty overkill, etc. etc., all spelled doom for CC. But we all know that there are other intangibles from a psychological aspect, like design and layout that makes a huge difference (just ask the casino's of Las Vegas).

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@sven.kirk: Bigger isn't better. Often the opposite. And if their web site offers everything that a consumer-hating chain does, with similar prices & shipping rates without the tricks, shams and hostility, who cares how many stores they have? The UPS guy delivers your box to the same doorstep either way, and in one case you're rewarding excellent corporate practices and the other, you're buying them bullets to later fire randomly into a crowd.
Why wouldn't you want to frequent the better place? :)

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@TheObserver: Dunno if you've ever shopped at a Fry's electronics store, but they are definitely dungeonlike. I think it's deliberate - going for a basement lair kind of atmosphere.

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@SomeoneGNU: And to the rest, doing your own research (instead of having access to knowledgeable salespeople) and shopping online at one of the few trusted retailers, all while giving up the thrill of immediate gratification, was the way to avoid both Best Buy and Circuit City. That's what I ended up doing.

When I did need something immediately, I got it from the closest BB or CC outlet, and I held my nose the entire time. Those occasional trips were good, though, because they reminded me why I moved all of my purchases to online retailers in the first place. Like a vaccination.

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It's a stretch to compare B&H to Circuit City. One is a local electronic retailer and the latter is nation-wide retailer w/ hundreds of stores. The point about good customer service can never be emphasized enough though.

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@ajlei: Ironically, there's a Goodwill store in my area (Midwest City, OK) that is an old Circuit City store.

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@Trai_Dep:

because some customers want to see an item in front of them before they make a purchase decision? Sure, some sites like NewEgg and Amazon do a great job of giving you pictures, but it's nice to see what the picture on a tv actually looks like or how a camera feels in your hands or the like.

And sometimes you need an item NOW and don't have time to wait for the UPS guy.

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We buy almost all of our AV equiment at work from B&H (and we buy a lot of it.) They have good service over the phone, their prices are great, and they take purchase orders.

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Closed on Friday? WTF? That should be illegal! All of the stores need to be open 7 days a week.

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B&H is hardly dirt cheap. their prices are often right at msrp, and you can always find the item much cheaper elsewhere on the web..

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@yoni242: Are you calling the person who took the pict a liar?

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@scootinger: Mine had the big ugl reciepts and the ones you still had to manually sign. I always thought that was humorous that an electronics store had such outdated POS systems.

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@YouDidWhatNow?: Exactly. I had good experiences buying a $60 USB drive from Newegg a while back, with awesome service and shipping. I raved about it to my RA on my dorm floor and he bought $500 worth of computer parts from them when his old computer died.

Same story with B&H - I'd almost never buy from anyone else.

It's about time that retailers understood the only reason why they didn't learn about the value of good customer service in whatever business school they went to is because there isn't an equation for it yet.

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@mgy: The Goodwill near me is a palace, always tidy and clean with plenty of natural light, especially compared with the trash-strewn dump that was the nearby Circuit City.

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@yoni242: Best Buy was always sleazier than CC if you go by the cheating on warranties and other advanced customer-harrassment tactics. Before CC was gutted I found it a much more honest and helpful place to shop and took all my electronics business there. I wouldn't touch BB with a pole back then, and still wouldn't now.

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You can't complain about the customer service at Circuit City. There wasn't any.