In recent years, there’s been a collective realization that loyalty programs are generally not engaging or valued enough by consumers to even know they belong — forget using them.
Amazon got way out ahead of that with the counterintuitive move of charging a fee, tempting eCommerce shoppers of 2005 with free shipping and discounts for $79 a year. It worked.
It’s grown into a cornerstone of Amazon’s retail ecosystem, with the 2011 addition of Prime Video as a member perk giving a big bump, and free shipping proving its mettle during pandemic lockdowns that morphed into a nesting boom requiring lots of deliveries.
Using “Amazonification” for comparisons gets tiresome, but it’s apt in this case, as more retailers and brands are offering loyalty memberships at a price, seeking the Amazon Prime effect. Incidentally, Amazon Prime has 200 million members paying $119 annually or $12.99 monthly as of 2021. It doesn’t disclose figures, but member fees alone are generating billions.
Among retailers seeing a value beyond basic loyalty discounts is Best Buy, which tested a paid membership program earlier this year and announced the nationwide rollout of its Best Buy Totaltech™ membership plan in October, priced at $199 per year. It’s also promising to help members locate hard-to-find items for gifting season — a shrewd move in a year of shortages.
Best Buy EVP and Chief Customer Officer Allison Peterson said, “Technology plays an increasingly crucial role in our lives today, and each customer needs technology in a different way. That’s why we created Totaltech, to not only meet all of these needs, but also to give them a heightened sense of confidence – in getting a great price, in using their tech and by knowing we have their back if something goes wrong.”
While it doesn’t have streaming video, Best Buy does have Geek Squad — that’s included — as well as Totaltech Expert Access, a VIP phone and chat support service, and “up to 24 months of product protection on most Best Buy purchases during active membership, including AppleCare+ on Apple products,” according to a statement.
Taking to the skies, USA Today reported on Wednesday (Dec. 8) that in addition to a new soon-to-be-announced fare class, “Southwest also announced a new co-branded loyalty agreement with Chase, which is expected to contribute to the airlines’ profitability. Details were not revealed.”
A blog post by Vindicia Product Marketing Manager Vivian Xie gives an idea of what to expect as more retailers opt for paid memberships, noting that, “Costco, for instance, built an entire business model around its membership program, creating both a sense of exclusivity and opportunity by giving members major discounts on bulk purchases. Restoration Hardware went in a different direction, eliminating promotions and sales altogether in favor of an annual subscription program that gives members 25% off all purchases in exchange for paying an annual fee.”
See also: Subscription Commerce Conversion Index: The Exclusive Access Effect Edition
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