Photo: Best Buy
Will Best Buy’s customers love its new service and savings plan?
Best Buy is testing a new membership program — Best Buy Beta — that will deliver benefits including unlimited technical support from the retailer’s Geek Squad, exclusive pricing, free standard shipping of online orders, extended 60-day return windows and installation of most appliances and consumer electronics purchases at no extra charge.
Best Buy is currently running the pilot program for Beta at select stores in Iowa, Oklahoma and Pennsylvania. It will expand to other locations in Minnesota, North Carolina and Tennessee later this month. About 60 stores in total will be involved in the test.
Best Buy customers will pay $199.99 per year ($179.99 for Best Buy credit card holders) to join the Beta program. As members they will have 24/7 access to the retailer’s concierge service via chat, email, phone or the Best Buy mobile app.
“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,” said Allison Peterson, Best Buy’s chief customer officer, in a statement. “This pilot offers premium service, complete with support aimed at anticipating our customers’ needs.”
Best Buy will migrate customers in its current Total Tech Support program to the Beta plan in the pilot markets. Those in other markets will continue with Total Tech Support as-is.
Best Buy declined to comment on any of RetailWire’s questions about details not included in its announcement.
The retailer’s test of the program comes on the heels of a record fiscal year in 2020 when consumers, forced to work and attend school from their homes during the novel coronavirus pandemic, went on a shopping spree for the various types of technology they needed. Same-store sales for the year jumped nearly 10 percent. That said, Best Buy’s leadership understands that 2020 was an outlier and that a year-over-year decline is likely when 2021 is in the books.
Total Tech Support and now its apparent replacement in Best Buy Beta are intended to accentuate the retailer’s strengths — service, extensive in-store network and buying power — to give the chain a competitive edge over a wide variety of rivals, running from Amazon.com to Walmart, that offer membership plans of their own (Prime and Walmart+).
Discussion Questions
DISCUSSION QUESTIONS: Do you expect the Best Buy Beta annual subscription program to be broadly popular with the retailer’s customers? What do you see as the benefits and potential drawbacks of the Beta plan from an organizational as well as competitive standpoint?
Poll
BrainTrust
Georganne Bender
Principal, KIZER & BENDER Speaking
Trevor Sumner
Head of AI and Innovation, Raydiant
This is interesting and I am sure it will be valuable to some people, especially those who need a lot of support with technology. However I don’t think it will have very widespread appeal for two reasons. First, it’s quite a niche service – not everyone needs the benefits it is providing; and benefits like free shipping are readily available elsewhere. Second, there are a growing array of subscription services being thrown at consumers and there are limits to how many people want to buy into.
I like this. It’s Best Buy’s version of Amazon Prime. Amazon’s offerings of free-shipping, Prime membership, etc. is of great value to the customer. Best Buy’s offering of tech support, concierge level service, exclusive pricing, etc., offers the Best Buy customer a similar type of value. Once customers subscribe, they are more than just financially invested. They are also emotionally invested. They don’t want to waste money. They want value for what they have paid. So given the choice of doing business with Best Buy versus a competitor, the customer will choose Best Buy. The key for Best Buy will be to reach scale.
Yes, I think this could be broadly popular. My parents are in their 70s and have already expressed interest in a Geek Squad program, this would certainly be something they would sign up for to help with device issues, set up, etc. and it’s a low enough amount that tacking it on to an electronics or appliance sale is nominal.
I see the benefits in that they are building consumer intelligence, getting people to consider Best Buy first if they don’t already, incentivizing them to buy all electronics there and meeting a real unmet need for a trusted source of hassle free support for an aging population.
That service element is a monetization of (and a personalized) last mile whereas the competition is leaving that last mile generic (any delivery person) and losing margin from its cost.
24/7 technical support from the Geek Squad might be worth the cost of Best Buy Beta if that’s something you need on a regular basis. Installation of new appliances and consumer electronics is certainly important at the time of purchase, but I am not sure most consumers will be willing to pay for an extended return policy and free shipping; things they can get from other retailers for free.
Best Buy offers some of the most consistently good service in all of retail. Personally, I think I can leave Best Buy feeling confident about my purchase without spending $199.99.
No surprise that Best Buy is jumping on the “annuity” bandwagon. Amazon Prime has blazed that trail and the concept is now becoming ubiquitous. The success, or lack thereof, will ultimately be determined by the value proposition to their customers and that feels like it ought to be somewhere north of what has thus far been revealed.
The price point seems high for the services that are being offered. I would have to expect to need a lot support, or have made a number of big ticket purchases to justify $200. I just don’t think there is a huge population of customers who need to have the Geek Squad on retainer. For installation services and discounts on purchases, I can see customers buying this for a year to take advantage of a big purchase. But these aren’t the kind of purchases most people make every year. I expect retention in this program to be a challenge.
Is there value to the extent that there is from Walmart or Amazon? For some yes, for most like me that is a no. I have always been fortunate to be a tech savvy person, and really don’t need someone to help me set up a home theater system or Wi-Fi router. In regards to free shipping, I can find other options in the electronic arena to order product. But in the end you won’t know how it will do until you put it out there.
Any chance you could drop in at my place once I get the new stuff Richard? 🙂
Hi Ian,
Sure thing! I will send you my consultant’s estimate. 🙂
Best Buy is already my go-to retailer for appliances, phones and computers. Their service has been great over a number of years. But my rate of purchase on these kind of items is low. Once every several years. And my need for tech help is infrequent. So the extra $200 per year might not make sense. The Amazon Prime fee pays for itself many times over every year for my household. I don’t think the same will be true of the Best Buy Beta program.
This initiative may have positive possibilities which will or will not become self-evident quickly. My first issue is that, based on my experience, I have almost zero confidence in the skills of the local Geek Squad. Frankly it’s been a nightmare. Second, once one has the products needed and the system set up, it’s hard to see why one would draw on the service repeatedly. Given I’m in the midst of a renovation, I might pay the $180 to get a new system set up because I hate doing that stuff. Then I’d take advantage of the “cancel at any time” clause.
When I read this news, the first thing I looked for was whether the technical support will cover all devices irrespective of where they were purchased. What if I had an issue with a printer purchased at Best Buy but it turns out it was due to faulty software installed on the laptop that was purchased at Costco? In the age of connected technology, a point support model will not work. I was glad to see this statement on the Best Buy announcement- “Unlimited Geek Squad technical support on all technology in your home (whether purchased at Best Buy or not).”
I understand what they are offering. But I can’t understand why I would pay $200 a year for that offer.
I bought my last laptop at Best Buy. For a minimal up-charge, less than $50, they transferred all my data and set up the new computer. Something wasn’t right and I took it back and they fixed it. That is the extent of what I have needed in technology. We have TVs, phones, and other computers. We haven’t needed any help other than what the retailer gives for free.
So, why?
Broadly popular at $200 a year? No. Mildly popular at, say, $100 a year? Maybe. The benefits are conceptual. If you were moving into a new house, for example, and had nothing — would this be a good offer? Sure, because you could amortize the cost across all your new appliances, entertainment systems, home office technologies, security systems, and the “smart home” features. The drawbacks? Have you ever used the Geek Squad? How often are you going to buy new appliances? Free standard shipping ought to be table stakes. Etc., etc.
On the one hand, I struggle to believe that I would personally find value in the program. On the other hand, I know there are those who spend far more on tech and have a need for a program like this.
As a result, I’m impressed. So many loyalty and member programs try to appeal to the unwashed masses. This program is focused on a meaningful niche of Best Buy customers and delivers a value they can find compelling.
Good work, Best Buy.
If this were more like RH loyalty program, insofar as customers only go to them, it could work — but it seems a decade late. More of us simply go to YouTube or a grandkid for these kinds of services.
File this under: transactional businesses want subscription revenue and subscription businesses want transactional revenue. Membership and subscription are wildly popular as evidenced by this test and Signet’s acquisition of Rockbox that was announced yesterday.
I give Best Buy – and its credit card partner Citi – credit (no pun intended) for the tiered pricing. The question is the limited value proposition, especially compared to Amazon Prime and Costco membership (free tech support for all purchases included).
You can see the potential in cross-selling this with big ticket/large item purchases that require delivery and/or installation. But back to the credit card integration, will customers tolerate the number of add-ons when you consider those big ticket purchases are also prime (again, no pun intended :)) moments for credit card acquisition as well?
Not a game changer but this is, after all, “Beta” — as in testing this versus rolling it out system wide.
An ambitious plan, seemingly counterintuitive on the heels of the recent reductions to the number of in-store associates. Which likely leads to the reduction in the quality of in-store customer service. Best Buy is promising a lot for $199.99 a year. Like home warranties on major systems in a home, the devil is in the details in terms of insurance coverage and execution by an insurance provider. Plus $199.99 per year? That is a lot of money for an average household.
The Best Buy subscription program is ambitious, and will have adequate curb-side appeal, however, $200 will seem like a lot of money for most customers. That’s not to suggest that it’s not worth $17 per month for total tech support, because if the quality of service is reliable and good, it is a very decent value. I think Best Buy will need to make a sizable investment into new advertising, digital marketing, and public relations to sell their consumer on the service and cost.
The concept is right, but the price point is wrong. $200 is a steep premium to other subscription offerings, even with greater value. This will detract from people subscribing. The value of offering tech support and using those sessions as cross-sell opportunities is higher than the subscription price considers, especially given only a portion of people will really use it meaningfully. The more interesting piece here is the promotion of appliances and install, where the value equation looks to be more differentiated.
If the price point is dropped a bit for this type of white glove service, it can be a big hit. At $200, there will be a select group interested in the special services and free shipping offered — most likely customers who are already loyal. Bring it into the price range of Amazon Prime and it will be a real loyalty driver that can generate tremendous value (for both retailer and customer). Unlimited tech support sounds valuable, but only to those who need the support regularly. It’s great to see service being monetized, but it needs to be in an unnoticeable range for the customer. I’m surprised they’re announcing the program as an annual fee instead of monthly cost.
Whether the program is successful all boils down to one thing. CAN THEY DELIVER?
Best Buy has some very loyal customers and has built their reputation on delivery of good customer service. They are now upping the bet and the key question can they truly deliver concierge service. If they do, they win — if they don’t, they lose and end up with some good customers who are no longer happy with the brand.
BBY already provides great support for products, so unless there are other significant benefits to their program, I’m not convinced customers will sign on.
I cannot recall an experience at Best Buy where pros failed to impress me. The same can be said for the technical staff. Seems to me that the new program might have a tough time repositioning the current service performances to offerings to create the need to sell this program.
You mean I can pay (almost) $200/yr for something that I would traditionally have paid … zero for? Well sign me up!
Sorry: no. It’s pretty well known that most membership or warranty or “extended … (whatever)” plans are a cash-cow for the seller, which usually equates to charging richly for something that will seldom be used. And I think that’s the case here, unlike, say, “Prime” or a Costco membership, which is (or at least can be) used a lot, I don’t think a typical BB customer makes enough purchases to justify the cost … not THIS cost, anyway.
I think back to the launch of Amazon Prime, and how many of us from across retail were critical of the move, both competitively and economically. (How can they possibly make money on that program…?) Well, we see how that worked out.
Move forward to the launch of Walmart+, and the new reports of how quickly consumers are adopting that program. The $200 price point is giving some a bit of heartburn, and I get that. However, the value equation of that offer, the core customer base of Best Buy (more affluent and tech savvy) and the fact that such programs are now more proven, suggests that one should not bet against BBY.