The trend: Best Buy and Walmart are increasingly looking to membership programs in the mold of Amazon’s Amazon Prime and Apple’s AppleCare to provide them with a recurring revenue stream and deepen ties with customers.
More on this: There's a good reason for the push: Amazon generated $31.77 billion in subscription revenue last year (the vast majority of that is from Amazon Prime memberships), which was a 15% jump year-over-year.
The value argument: Both Best Buy and Walmart are pushing their membership programs, TotalTech and Walmart+, by highlighting the significant value that members receive.
Holiday bump: The number of consumers who pay for membership programs tends to increase during the holiday season and drop off in the following months, according to research conducted by Bizrate Insights for Insider Intelligence.
The big takeaway: Membership programs can significantly boost customer lifetime value.
“These programs offer the retailer the ability to understand the voice of the customer from their feedback and from their behavior, which can be two different things,” said Patty Soltis, eMarketer principal analyst at Insider Intelligence. “Companies that execute this well take the combination of feedback and behavior to tailor their marketing programs and personalize.”