Bed Bath & Beyond Pilots New Loyalty Program

Bed Bath & Beyond, the home furnishings retail chain, announced that it is testing a new loyalty program among customers in hopes of boosting online sales.

The pilot program, called Beyond Plus, costs members $29 annually. In return, those who participate receive free shipping on all orders and 20 percent off purchases.

CEO Steven Temares recently told analysts that the invitation-only beta version of the loyalty program was launched by Bed Bath & Beyond during its third quarter.

“The initial test includes a small cross-section of our customer base, and we are currently monitoring the purchasing behavior of our members,” he told analysts during the company’s last earnings call, according to a transcript from Seeking Alpha. “We will formulate the next test for this program based on the key learnings from the beta test, which to date remain encouraging.”

However, the question remains if Bed Bath & Beyond’s recent choice to pull the plug on 20-percent-off coupons in favor of pushing a membership program à la Amazon Prime will go over well with customers.

“The coupon is clearly and has been strongly associated with us,” the CEO said on the call. “But really, we need to be working, and we are working on becoming a lot more intelligent about our marketing and making it much more personalized.”

Coupons may work, but they come at a rather high price for Bed Bath & Beyond, according to various analysts. And in a big way, they were causing a shrink in the bottom line for the last 15 quarters running. And those losses are catching up, with share price declining about a quarter this year. The more cost-effective — and, in fact, revenue-generating — model that is a membership loyalty program hopes to stem that tide — and soon. During Q3, Bed Bath & Beyond reported yet more increases in coupon use, though decreases in amount.

“The advantage is that customers who have ‘paid’ for a discount are actually more likely to come in and claim it, which means more spend. We’ve observed that pattern time and time again — at wholesale clubs, Barnes & Noble — consumers who come for a discount don’t come back unless there is a discount. Customers who have invested in a discount tend to reappear,” Laurie Walden of Dunn Retail Associates told PYMNTS back in October.