Best Buy is experimenting with Premium Loyalty Programs, and piloting “Best Buy Beta (BBB)” in select markets.
According to Best Buy’s website, the $199/yr membership ($179 with a BestBuy card) provides members with benefits including the following:
- Dedicated and exclusive concierge support
- Unlimited Geek Squad technical support on all technology in your home (whether purchased at Best Buy or not)
- Fast and free shipping with no minimums
- Exclusive member pricing on a wide range of products
- Free in-home standard delivery and installation on most products
- Two-year protection on most purchases at Best Buy, including AppleCare on Apple products
- 60-day extended return window
- 10% off subscription services billed through Best Buy
While this seems like just a slight iteration of their current membership offering, Total Tech Support (TTS), I think there’s more going on here. Here’s what you get with TTS:
- Unlimited tech support for all your tech and appliances, no matter where you purchased them
- Only $49.99 for standard in-home services
- 20% off repairs and advanced services
- 20% off Geek Squad(R) Protection and AppleCare Products
- Internet security software is included
So BBB adds free shipping, extended returns, more price certainty and a concierge. It’s easier to understand what you’ll spend and save. And it’s more focused on the complete experience–from shopping through support, rather than just focusing on support.
Why is Best Buy piloting BBB?
There hasn’t been a public answer to the “why” question. But here’s what I think. First of all, this new offering takes a more complete look at the member journey–and is a less transactional approach. Best Buy may have learned that they need to provide this more premium experience in order to attract and engage the kind of members they want. Or, they may have known all along that this was the direction they were going to take, but they wanted to phase in the benefits.
This test and learn approach would mitigate risk, because they could see how the various benefits would be used, before expanding more broadly. They are now piloting the new program in a few markets, which allows them to compare behavior both to past behavior in those markets with TTS as well as current TTS behavior in other markets, before expanding.
How does BBB compare with Amazon Prime, Walmart+, Costco and other Premium Memberships?
Best Buy, while large, is nowhere near being the kind of “everything store” that Amazon, and to a lesser extent, Walmart and Costco, aspire to. Best Buy is squarely focused on technology products, which have different ongoing goals and problems than buying a book, or lettuce, or a sweater. This focus allows Best Buy to really understand their ideal members, and make a compelling Forever Promise to them.
I’d describe that Forever Promise as “Making it easy and affordable to incorporate tech solutions to support your lifestyle.”
This promise is very different from Amazon, who wants to “remove friction from all buying processes.” Amazon doesn’t really promise anything after the purchase, other than the ability to return items. They don’t really help with installing or maintaining or getting the most out of the things you buy. Don’t get me wrong–Amazon Prime is still a terrific value. It’s just not directly competitive with BestBuy.
Costco delivers on a different Forever Promise, more focused on the prices of unique items and deals inside their stores that are better than elsewhere. Costco members know that anything they buy from Costco will be at the lowest available price and likely a unique packaging of that offering–extra large ketchup for example, or a particular vacation tour. Costco is about value and surprise. You need to be a member just to access the deals. This is different from both Amazon and Best Buy, whose memberships are optimized for a subset of the most engaged customers.
And Walmart+ leans heavily on their physical presence within 10 miles of most American consumers, to blend delivery and in-store shopping and services. They provide immediate gratification, access to real people, and often, discounts on gas, an everyday purchase.
What does this mean for other retailers?
Retail memberships are rapidly becoming the new normal. There are already so many examples of this type of “premium loyalty program” for best customers, such as CVS Health which provides in store discounts and benefits, and RH (aka Restoration Hardware ) which offers deep discounts, swatch samples and access to designers. These premium memberships are also increasingly available at restaurants. There’s been a recent run on coffee memberships at places like Burger King and Panera Bread.
Why? Because businesses are learning that engaging their best customers more deeply is a more powerful tool to growth and profitability than simply increasing the number of anonymous transactions. And to do that, you need to really understand the needs of those best customers, and to optimize your experience for them.