Geniuses Behind Apple Stores’ Growth

Nov 22, 2004

By George Anderson

For most of us non-technical types, computer problems often mean a trip to a store, waiting in a long line to drop-off a machine, plunking down a deposit to have someone look
at it and then waiting a couple of days for a call to let us know just how much it’s going to cost us to get it back.

Apple Computer, through its Apple Stores, has taken this impersonal and often costly experience and transformed it into something decidedly less painful — thanks to its Geniuses.

Apple’s Geniuses are each store’s technical support staff offering free technical advice to shoppers.

An article in USA Today recounted the experience of a Carolyn Ramsay, a consumer who wanted to be able to store more digital photos on her iBook. After meeting with a
Genius, she bought additional memory and had it installed for free, even with the machine being two years out of warranty. Within 20 minutes of sitting down with a Genius, Ms.
Ramsay walked out of the store a happy customer.

“This place is fabulous,” she said. “Are you kidding? My family has stopped going to the store that used to service our computers. We don’t need them.”

Charles Wolf, Needham & Co., calls Apple’s retail stores the company’s “hidden secret” because the units have been so successful. The computer maker is about to open it one-hundredth
store and 2004 sales are projected to come in at $1.2 billion.

The “hidden secret” behind the store’s success, according to USA Today, may very well be the Geniuses.

Ron Johnson, a former Target executive, who is Apple’s senior vice president for its retail operation, said, “We hired 60 Mac Geniuses in the last three months, just to keep

According to Johnson, the free service offered by the Geniuses pays for itself.

“The Genius Bar monetizes itself every time we sell another computer to a non-Mac user. It builds our base,” he said.

The concept has worked out so well that many stores have expanded their Genius Bars from 10 to 40-feet.

Half of all the shoppers who enter an Apple Store are said to be Windows users. Many, as the article points out, do not necessarily buy a Mac. They may very well, however, walk
out with an iPod.

Moderator’s Comment: What makes Apple’s stores unique? Why don’t more retailers use service to drive sales?

Our impression of the lack of service initiative from many organizations, retail and beyond, is that they simply do not know how to account for it.

In many cases, the interaction between employees in a service role adds to the customer’s perception of the organization (conversely, bad or lack of service
does the opposite) and increases the likelihood of continued purchases. Because it is often not directly tied to a sale, the service hits the ledger as an expense.

It isn’t usually until the expense is eliminated through job cuts or its perceived value is lowered through price increases that companies get to see the
bottom line impact service has on performance.

We’ve picked the Geniuses’ brains on several occasions and have not been disappointed. Importantly, we also haven’t shelled out unnecessary cash as less
expensive alternatives have been pointed out each time we’ve had to spend money for a fix. In most instances, we’ve walked out with added knowledge, our Mac and a wallet no lighter
than when we walked in.

One of our favorite features of the service is the ability to schedule our appointment online and then head over to the store to meet with a resident Genius.
Once we had to wait five minutes while the previous appointment was taken care of, but every other time we received immediate attention.

George Anderson – Moderator

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