Rosalind Evans
Best Buy Co. is reducing its premium membership cost by $20 and launching a less expensive alternative for customers seeking fewer perks.
The premium membership rate will drop to $180 per annum from its original $200, effective June 27, as announced by the consumer-electronics retailer on Thursday. The firm is also set to roll out a new “Plus” plan, priced at $50, which provides less service support, but still grants access to members-only pricing and complimentary two-day shipping.
“Our goal was to create a plan for members who didn’t need all the services,” stated Patrick McGinnis, Best Buy’s Senior Vice President of Memberships.
Best Buy aims to widen the attractiveness of a program that fosters stronger connections with consumers, a critical strategic objective for the company, bolstering online sales and developing health-centric products. As of March, CEO Corie Barry reported to analysts and investors that the company’s top-tier membership had grown to 5.8 million from approximately 4.6 million the previous year. Barry also hinted at the possibility of a “more cost-effective” option.
Besides reducing its top-tier membership fee, Best Buy will substitute standard installation services with occasional promotional deals, as installation services are not as valued by many customers as other benefits, according to the company. The elite membership will still encompass comprehensive product protection, extended returns, enhanced free shipping, and price discounts.
The company also plans to continue providing a no-cost membership plan with a streamlined checkout process and free shipping without a two-day guarantee. This program has roughly 100 million members, with 40 to 45 million active.
The new pricing options are a strategic move to attract a broader range of customers and strengthen Best Buy’s position in the increasingly competitive retail market.
“By diversifying our membership options, we’re ensuring that a wider range of customers can access the benefits that suit their needs,” McGinnis added. “Whether that’s full-service support for our top-tier members or a more streamlined, budget-friendly option, we’re committed to providing value at every level.”
Best Buy follows a trend in the retail industry where retailers offer tiered membership options to cater to a wider range of customer needs and budgets.
The company is optimistic about the potential of the new “Plus” plan. Despite offering less service support, it is expected to appeal to many customers who value the members-only pricing and free two-day shipping but only sometimes require the full suite of benefits offered in the top-tier plan.
With this decision, Best Buy is hoping to not only retain existing customers but also to convert casual shoppers into committed members. The company believes offering a broader range of membership options can better cater to individual customer needs and build a more engaged and loyal customer base.
The firm also expects the lower cost of the top-tier membership plan will increase its attractiveness and enrollment.
Best Buy continues to monitor the effectiveness of its membership plans and will make adjustments as necessary based on customer feedback and market trends. The company is dedicated to maintaining its competitive edge by innovating and adapting to the ever-changing retail landscape.
