Best Buy rolled out its $200 Totaltech membership back in October 2021, offering subscribers such perks as tech support, waived delivery fees and exclusive prices.
Fewer than two years later, the Richfield-based electronics retailer is replacing that program with a new version that aims to appeal to more customers with price points ranging from free to $179.99 a year. These new memberships are available starting June 27.
"We're excited about introducing a new tier of membership that we believe leverages the insights that we gained around member pricing being really important and really attractive to a lot of members and making that available to a much wider swath of customers," said Patrick McGinnis, Best Buy's senior vice president of memberships.
Especially as Best Buy and other retailers have experienced a drop in consumer electronics purchases and discretionary sales in general, the company's emphasis on memberships not only serves as a potential revenue generator but also a way to keep customers engaged with the brand even during a slowdown.
The new memberships come in three tiers: My Best Buy (which is free), My Best Buy Plus for $49.99 and My Best Buy Total for $179.99. The free level's main perk is free shipping, but the benefits are more extensive for the paid versions.
My Best Buy Plus members score exclusive member-only prices on thousands of items, access to exclusive sales and new products, free two-day shipping and extended 60-day return and exchange windows on most items. My Best Buy Total includes all of those benefits as well as Geek Squad's 24/7 tech support (even for tech not originally purchased from Best Buy) and up to two years of product protection, including AppleCare Plus and 20% off repairs.
Traditionally, the free My Best Buy was a points-based loyalty program. But after some feedback, Best Buy added the free shipping for all purchases to My Best Buy customers and moved the ability to earn points for cash back to only purchases made on store credit cards.
When Totaltech arrived nationally, company leaders talked about how some of the goals of the program were to help drive more sales, increase the frequency of interactions with customers and enhance customer satisfaction.
Best Buy has found its 5.8 million Totaltech members purchase more of their tech products at Best Buy and have higher satisfaction rates compared to nonmembers. Some of the benefits Best Buy discovered were the most important to members included free shipping, member pricing and extended product protection. Best Buy hopes the cheaper options for the new tiered program will broaden the base of customers who sign up for memberships.
"Membership schemes are a great way to engage customers and to try and stimulate loyalty. They also allow retailers to gather data on shoppers," said Neil Saunders, managing director of the retail division of data analytics and consulting company GlobalData. "However, paid membership programs have to offer great added value to persuade consumers to sign up."
Saunders added that the top tier of Best Buy's membership could be useful for people who are "very into technology" and buy a lot of tech products. However, electronics are an infrequent purchase for most people, Saunders said, and some customers might question how much they will actually use some of the membership benefits.
Best Buy has continued to evolve its membership program during the past year. In March, the company said it adjusted benefits to add back restocking fees for certain product returns and remove free same-day delivery as a membership bonus.
"The goal here … at the end of the day, is to deliver the best possible customer experiences that are important in a new world where a customer is shopping differently," Best Buy CEO Corie Barry said at the time.