Geek Squad: Best Buy’s Jiffy Lube

They have been called the "Peep Squad."

Allegedly, certain members of the Geek Squad organization have been caught pilfering private customer information during home service calls.  (A simple Google search will yield a myriad of specific examples; I will not indulge them here.)

Certainly, the label is not fair.  The Geek Squad boasts thousands of employees, the largest organization of its kind in the United States.  While there is almost certainly some truth to the charges for a tiny fraction of all employees, the vast majority of employees have never - and will never - do anything wrong.  (The same argument for limited malfeasance could be made for any organization of its size.)

But the facts do not seem to matter, do they?

Bad news always travels faster than good news, and being the top organization of your kind is akin to giving the bad news engine premium fuel.

It really comes down to this: Has Best Buy made a strategic mistake bringing the Geek Squad into its stores?  Has the nation's largest electronics manufacturer put its reputation in the hands of a group of modesty-trained 20-somethings?  Should the company rethink its decision now?

One side of the argument says "no."  The Geek Squad is a sound long-term investment.

From its humble beginnings in the brain of Robert Stephens, the Geek Squad essentially created the brand name computer service industry.  Anyone over 30 remembers what it was like before then.  If you did not work for a large organization (with its own internal IT staff), you were at the mercy of the Yellow Pages.  Sometimes, you got someone who knew what he was doing.  Most of the time, you did not.  Getting your home computer serviced was a game of poker where the house had all the face cards.

But Stephens changed all that.

He made fun of the technicians' reputation (called them what everyone else did: Geeks), made them dress the stereotype (pocket protectors and all), and made them drive around in dorky little cars painted to look like police squads (the VW bug is quite dorky).

And it worked.  People could remember the Geek Squad.  It stuck in your head.  And the business itself backed up the rhetoric.  Agents - as technicians are called - were very smart. Better yet, they communicated well.  They understood people's reluctance and fears regarding home computers and made the service experience comfortable and satisfying.

By 2004, Best Buy recognized a very good thing, as well as a panacea to a vexing (and growing problem).  As computers took up a larger and larger share of Best Buy's sales (and home theater systems were beginning to get just as complicated), the company knew that its customer satisfaction index was at the mercy of the support experience.  What's more, Best Buy saw the Apple Stores' successful model of melding sales, service, training, and support.  So it took the plunge.  Best Buy bought out the (still tiny) Geek Squad chain and brought it completely in house.

Today, nearly all Best Buy locations serve as "precinct" locations for the Geek Squad.  A nice value proposition, really.  Trouble with your computer?  The Geek Squad is just an in-store visit away.

It seemed like a perfect marriage.

But the Geek Squad is almost a victim of its own success.

In order to grow to the critical mass Best Buy required, the Geek Squad needed to expand.  Fast.  Literally, the company needed to hire hundred of new agents almost overnight to staff hundreds of Best Buy stores.

In the early days, Geek Squad agents could be carefully chosen.  Agents had a much longer time to indoctrinate into the Geek Squad culture.  They had a solid culture and experienced mentors.  But these new agents were thrown into the mix, given some training, and thrown into the field.

And therein lies the problem.

From our business case days, we remember a similar situation of rapid expansion: Jiffy Lube.

While the specifics differ, the basic facts remain the same.  Until Jiffy Lube came around, getting your oil changed was an all day affair at your corner service station.  Service was slow, unreliable, and expensive.  You never knew if the greasy technician under your car was actually doing what he was supposed to be doing, and you secretly (and sometimes explicitly) thought he was cheating you.

Jiffy Lube changed all that.

In about 30 minutes, your car was in and out.  Jiffy Lube standardized the process.  They instituted service checklists.  They made the process understandable to the average person.   They dressed in clean uniforms.  They had clean waiting areas.  Heck, you could even look trough the window to watch them work!

The concept took off.  Clones followed, but it was Jiffy Lube who transformed the industry.  It made auto dealer service departments more responsive and (nearly) put the corner service station out of business.

But much like the Geek Squad, Jiffy Lube was a victim of its own success.  Thinking that it was the process - and not the people - who mattered, the company expanded too quickly for its own good.  With a breakdown in controls, nefarious Jiffy Lube technicians would use the company’s brand trust to their personal advantage - overcharging and cheating customers.

It got ugly, to say the least.  Only now is Jiffy Lube climbing out of its hole.

The real parallel is simple: Can the Geek Squad crawl out of its hole?  In their rapid growth, they have expended significant reputation capital for not only themselves, but their corporate parent as well.

In the end analysis, I believe the Geek Squad can recover.  Best Buy has the cash as well as the long-term commitment necessary.

But I am not sure it will be worth it.

Here's why.

Most people do not, and will not, understand computers or computer repair.  That lack of understanding leads to the explicit and implicit feeling they you are bring "taken," even if in the end your computer gets fixed.  Much like the Jiffy Lube case study, owning a computer is, today, analogous to owning a car.  Most people really don’t understand most of what goes on under the hood, and have only fleeting trust for their mechanic.

As their market matures (I would argue the computer service market largely has done so), it will become less and less possible to "thrill" customers as it was in the heady early days of the home computer.  The computer has become an appliance, like any other in your home, and few people are likely to be "thrilled" with the service on their dishwasher.

Look at it this way: Imagine a continuum with "Ecstatic" on one end, "Content" in the middle, and "Disgusted" on the other.  In an immature service provider market, consumer information is so poor, and most service providers fall into the right side of the scale, that it is possible to develop a system that - for a time - moves the bar far to the left, delighting customers and building solid business.  That is what Geek Squad and Jiffy Lube were able to do.

But the advantage doesn't last.  As the market matures, it is harder and harder to "delight" customers. Expectations increase as clones copy your model.  While the bottom of the satisfaction index tends to stay put, the left side gets harder and harder to economically achieve.  As time goes on, what remains is "content" at best and "mad" at worst (essentially the midpoint to low end of the continuum).  In other words, over the long term, the best a company like this can do is make customers feel "OK" about the experience.  Worse yet, the law of averages tells you the overall index will trend negative.

If I were Best Buy, I wouldn’t like a business unit where the best I could hope for is "OK" customer satisfaction.  But is that a bigger risk than not being in control of service at all?  Probably not.

If Best Buy is really lucky, perhaps the Geek Squad can rewrite the rules of the game one more time.