Wednesday, December 10, 2008

Do You Want Proof that Salespeople Are Still Needed?

The woes of Circuit City have certainly been overshadowed by other American industry failures as of late. That's too bad, because the lesson of the Circuit City failure should be business 101. The decline of Circuit City began back in 2003, when they decided to eliminate commissions from salespeople. Then in 2007, Circuit City fired 3400 of their highest paid staff in their stores to be replaced by lower skilled workers. This culminated in Circuit City filing for bankruptcy in 2008.

It is all about price and salespeople aren't needed, right? Go ahead and follow the Circuit City model - and I'll see you at the bottom of the cliff.

6 comments:

Ian Brodie said...

Hi Will,

Not being based in the US I'm not up to speed with various things like this - but I believe that Best Buy has done well and taken a lot of share from Circuit City.

It would be interesting to see what Best Buy did over the same time period. Did they add salespeople? Keep the same? Or decrease too and maybe it was some other factor that was critical?

Any observations?

Ian

From the Author: Will Fultz said...

I actually anticipated the Best Buy question. Thanks for your comment by the way.

Several years ago, I was listening to the audio version of "Why Business People Speak Like Idiots" (a great book, also) on a business trip. Best Buy was referenced as going forward with plan to be the #1 source for consumers who needed education. This has brought about the "Geek Squad" and heavy training for their salespeople.

Although they are non-commission, they seem to have vast knowledge on the product lines they sell. This new way of thinking from Best Buy was happening at the same time Circuit City was beginning their decline. When they (Circuit City) changed the compensation for their salespeople in 2003, they lost the edge in having the most knowledgeable sales staff in the retail electronics industry. I believe Best Buy has taken a vast amount of customers from them because of this.

Brad Trnavsky - Sales Blogger said...

I am by no means an expert on the consumer electronics retail sales, but my experience having shopped both stores is that the customer service at Best Buy is Far and above superior. If they could combine better sales skills with the customer service ability and product knowledge they currently have they would do even better.

Short answer though Best Buy offered a better shopping experience.

From the Author: Will Fultz said...

Brad,

I agree, and had the same experience you described in dealing with both stores. Best Buy is getting some real good publicity here - at no charge?

Sales Training for Startups said...

Where is Skip from selling to consumers. Circuit City does not train their people to be objective, appreciative, or receptive. They are cold transaction people with no heart. When Best Buy came to Santa Cruz, I never went back to Circuit City again.

The funny part is hi tech and hi value sales organizations are making the same mistakes.

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