Ninety-five percent of retailers with only traditional loyalty programs have discussed launching a premium loyalty program in 2021 and Best Buy’s new Beta membership program is the latest example.
It’s no secret that Best Buy saw increased sales since the pandemic started as consumers bought technology for work and school, and to entertain themselves.
While online sales, and at stores open at least 14 months, grew by nearly 10% in its most recent fiscal year, Best Buy saw sales growth fall from 23% in the third quarter to 12.6% in the fourth quarter.
And consumer spending trends remain uncertain for the rest of 2021.
“As it relates to FY22 specifically, the demand for technology remains at elevated levels as we start the year,” Best Buy CFO Matt Bilunas said in a press release. “However, there is a high level of uncertainty related to the impacts of the COVID-19 pandemic that makes it difficult to predict how sustainable these trends will be, including, but not limited to, the timing of administration of the vaccine and the subsequent impact to customer demand and shopping patterns, as well as potential government stimulus actions.”
As a result, Bilunas forecast comparable sales growth in the range of (-2%) to +1%, with the assumption that consumers “resume or accelerate spend in areas that were slowed during the pandemic, such as travel and dining out, in the back half of the year.”
These facts may not explain the whole story, but could be partially why Best Buy launched a premium loyalty program called Best Buy Beta. In these programs, members pay a fee in exchange for instant, enhanced benefits. Popular examples are Amazon Prime, Walmart+ and CVS CarePass.
Here’s how the Best Buy Beta program can help the company gain increased wallet share and elevated engagement levels beyond the pandemic.
Best Buy Beta Offers the Right Mix of Benefits to Attract Tech Customers
The success of a premium loyalty program depends on the strength of its benefits and Best Buy Beta has them covered.
Program members receive:
- Unlimited tech support from the Geek Squad.
- Round-the-clock concierge service.
- Exclusive member prices on merchandise.
- Free installation of many appliances and products.
- Fast, free shipping on all purchases and no minimum-order restrictions.
- Two-year warranties on most purchases, including Apple products like iPhones.
Free shipping and instant discounts that can be used whenever you shop are the top two perks that motivate consumers to join premium loyalty programs.
Plus, our 2021 Loyalty Industry Data Study found that 86% of retailers who offer benefits within the first week say their loyalty program members shop at least once a week.
With fast free shipping and exclusive member pricing and round-the-clock concierge service, Best Buy Beta captures these perks.
Best Buy Beta is currently offered at some stores in Iowa, Oklahoma, and eastern Pennsylvania. Later this month, it will expand to stores in Minnesota, North Carolina, and Tennessee. By the end of the month, it will be piloted in about 60 stores.
Consumers can join the Best Buy Beta program for $199.99 per year or $179.99 per year for customers who have the retailer’s credit card.
Premium Loyalty Members Are Your Best Customers
Premium loyalty members are your brand advocates who spend more, engage more, and talk to others about your program more.
They live your brand every day. And that is the hope behind Best Buy Beta.
“As we look to evolve our membership programs, the goal of Best Buy Beta is to create a membership experience that customers will love and to leave them feeling confident throughout their relationship with Best Buy,” Allison Peterson, Best Buy’s chief customer officer, said on the company website. “This pilot offers premium service, complete with support aimed at anticipating our customers’ needs.”
According to our 2020 Premium Loyalty Data Study, 94% of premium loyalty members shop at that retailer at least once a month and 88% are likely to choose a retailer whose premium loyalty program they belong to over a competitor that is offering a lower price.
And nearly 90% would recommend a retailer to family or friends if the retailer’s premium loyalty program offers valuable benefits.
Meanwhile, according to McKinsey, members of premium loyalty programs are 60% more likely to spend on your brand, while free loyalty programs only increase that likelihood by 30%.
Here’s a staggering statistic: consider that premium loyalty members are 4x more valuable than non-premium loyalty members.
Best Buy Beta will treat members well and the company will feel the same in return.
Best Buy Doesn’t Need to Phase Out Its Free Loyalty Program
Best Buy has a free loyalty program called My Best Buy, where members earn points for every dollar they spend on eligible purchases.
This is an important point because of the relationship between a brand’s free and premium programs.
Consider that 67% of consumers are likely to join a premium loyalty program if they already belong to that retailer’s free program.
That is a huge point for brands that offer both types of programs, or ones thinking of adding a premium tier.
Casual customers who belong to a free program might not aspire to elevated benefits. But your best customers will.
Once they are in your free program and you launch a premium loyalty program, it’s easier to convert them.
Having free and premium tiers in your loyalty program covers addresses most, if not all, options from your customer base.
Look at CVS CarePass.
While CVS ExtraCare has been around quite a while, the retailer rolled out CarePass in 2019.
This gave customers who wanted elevated benefits like instant discounts, free shipping, and 24/7 access to a live pharmacist an opportunity to opt-in. This has resulted in a 15-20% average increase in purchases after a member joins.
Free and premium programs can work together harmoniously.
Is a Premium Loyalty Program Part of Your Strategy for 2021?
Ninety percent of retailers say expanding their respective loyalty programs is a priority for 2021.
Last year the world’s largest retailer, Walmart, launched its Walmart+ premium loyalty program. Within two weeks of launch, Walmart+ had secured membership from 11% of U.S. consumers.
But you don’t have to be Walmart or Amazon to get on board. Just recently, Urban Outfitters started testing their new UP program.
Are you thinking about premium loyalty in 2021?