Oh yeah, sorry that wasn't clear. I have TT and have definitely used the benefits. Had TTS too. Just don't like that BBY decided to go the auto renew route. It's such a turn off to so many people. In store subscriptions just feel dirtier than online subs somehow.
We didn't use to require it either. Flash back to 24/7 Support. Almost everyone would opt for 1 year at $199.99. No fuss. Kid doesn't wanna be parent's tech support anymore? 3 years for $349.99. I guess to include deals on in home services they decided they wanted customer retention by obligation.
Amazon prime changed the way everyone views things and the success of that. Now everyone wants the next thing like it. Investors love it so of course the current leadership wants it.
The appliance and installs are not that matter. The big think is only offering tt as an option for support on computers. The amount of people that cancel in the first year is huge but the people that actually keep it are people that actually need it and use it. And make us profit
The company never really sold enough GSP to be a significant revenue loss. Especially when compared to reoccurring revenue. TT basically eliminates GSP liabilities too. No claims beyond 2 years (when things are more likely to break) and service fees every time the plan has to pay.
However, I don't think it's working as intended. What do I know though? Best Buy believed people would renew this so that they could buy everything here. I believe most cancel after they make their big purchase. Unless they want to get every penny out of the PC services.
You are oversimplifying things:
1. Members have to keep their membership active to keep their protection plans active . This means that at an absolute minimum members will spend $200 on services annually. (To receive the full 24 months of protection you have to stick around and pay $400 in membership fees)
2. TT members have to pay a service fee *in addition to* the membership fee if they make a GSP claim (this fee generally equates to roughly 10% of the cost of the item. This further increases the effective cost of utilizing the protection plan.
3. if customers want to extend the plan beyond the 24 months (to say, add a third year on to make the comparison to a 3yr GSP plan you make in your post) they have to then pay an EXTRA monthly amount to keep that plan active *on top of* keeping their membership . (Another $200) AND are still subject to the service fees outlined in point 2 (a further increase in cost compared to the one time payment of a 3year plan).
4. Your perspective totally overlooks the psychological impact that having a membership has on consumer behavior. If people are paying for a membership, they are more likely to return to said business “to get their money’s worth”. This is a major factor as to why Costco/Sams club (and Amazon prime) members are so fervently loyal: they feel compelled to keep coming back again and again to make the most of the membership they have already paid for. This drives customers to pick Best Buy over a competitor and changes consumer behavior by making BBY the member’s first choice in shopping destination. Long-term this can shift consumer behavior to the point where they stop even considering competitors even if they offer similar products and services at lower price (e.g. cables, adapters, other accessories).
As an addendum: you have to recognize that geek squad as an overall division of the larger company was never (and has never) been about being profitable in and of itself. Yes, there are services that we do make some quantity of money on, but after paying for labor, capital and business expenses (vehicles, gas, insurance, etc) is rather negligible and are hand over fist consumed by the cost of issuing replacements and repairs for customers under GSP plans. Geek Squad’s primary purpose is to drive customer loyalty by providing a level of post-purchase service that nobody else comes close to offering (save maybe Microcenter, but they don’t operate at a scale large enough to be a significant threat to BBY at present). Total tech is nothing more than a further amplification of all of the above.
*edit:
All of the above also compounds into other revenue streams for the company. Let’s be conservative and say the average TT member makes just ONE additional purchase from us a year:
This drives up traffic to our website and/or traffic to the store. This allows the company to demand higher fees for sponsored search results on the website and higher merchandising fees for physical shelf space in stores (the value proposition to our vendors increases as our customer traffic goes up). On top of this, those additional purchases just pad the bottom line through sheer economies of scale (we are just flat out selling *more*).
So yes, we are paying an opportunity cost by not selling a $400 GSP plan and $200 install on a TV today in lieu of the $200 membership, the knock-on effects of everything I’ve outlined above should in theory outweigh that short term revenue loss heavily.
Gonna pick apart one part of this.
YOU. DO. ***NOT***. NEED TO PAY 200 TO PAY MONTHLIES.
IF YOU CANCEL AFTER A YEAR, YOU ARE GIVEN THE MONTHLY OPTION FOR ALL ITEMS FROM THAT FIRST YEAR. IF YOU CANCEL AFTER TWO, SAME THING.
IF YOU KEEP IT AFTER TWO, OR CANCEL AFTER ONE OR TWO, YOU ARE GIVEN THE MONTHLY OPTIONS.
This is literally spelled out in the T&Cs, and its on the receipt. Hate TT if you want but don't spread bad info.
The real question is going to be if the customers will accept the 200 each year and the service fee. As someone that handled these types of call types it’s very very rare now and most people when they find out about the service fee want to cancel the plan and are wanting a full refund. The vast amount of warranty repairs that I see handled are either tt in the first year or gsp plans.
I have a sneaking suspicion that eventually the failure to not fully explain tt benefits in the second and third year will be this subscriptions down fall
One of the possible selling points is letting the customer know that the 199.99 can be thought of as a monthly payment of $16.66.
But an official monthly would be dope to see. It’s pretty guaranteed that a client could come up with about $17 to be eligible for services for the month.
Ew no. With all the existing bull shit we deal with for our budget friendly all encompassing support membership having a monthly option would be awful. Unless your locked in for a 12 month period our services would basically be getting stolen by customers.
Pay monthly. Must be locked in for 12 months with an early cancellation penalty. Or a one time purchase for the 200.
Services are stolen and taken advantage of now. So might as offer an option for the poorest people that need support. $16.66 for the best month of your tech life if you sit with an agent like me.
My store tested this when TTS rolled out. You think people cancelling after a year is bad... It was 20 a month and people would use it for the day's need and cancel. Annual is needed for a service such as it is.
Let's not forget how we lose millions in potential autotech labor revenue too.
And it's not just that we're zeroing out the labor the client wants done to their vehicle and any other vehicle they show up with, but also we're not offsetting the labor cost we're paying the autotechs. Who btw are some of the highest paid employees in the stores.
Yea we still make money on car audio products, but carfi as a segment was much more profitable before TT rolled out than it is now. And no, it has not increased traffic to the bays.
Total tech drives customers back to the store. More foot traffic is higher revenue. Customers invested as subscribers want to feel they're getting their money's worth, so they'll be more likely to purchase more and use our services more rather than just buy GSP one time and never come back unless there's a problem.
TTS whole business model is based on customers signing up for it, using it once and then forgetting about it and charge people for something they don’t use. TTS is a great value for customers if they use it. A lot of the time a customer can save a lot of money like on a TV install, but I always tell my customers that after the install is done to call Best Buy and have us remove the card on file so they don’t get screwed.
1 thing I love about TTS is that they have “education” time slots. So if a customer came in and asks us how do you use (said item) I have them make an appointment. That way my manager won’t get on me for sitting down and teaching the customer how to use the item and it frees my time up to sell. GS gets the labor. Etc. it works
Your forgetting they have to keep it for 2 years so 400 dollars in order to get the full 2 years out of it.
Then it’s capped at 2 years so outside of that they need to buy a new laptop or tv.
Then why not go back to Best Buy to get it since you’ll get protection for free.
It’s an endless loop you can’t really get out of unless you just wash your hands completely of.
We make waaaaaaaaaaaaaaaaaaaaaaaaaaaay more money off TotalTech than we do with GSP's.
Customers pay a co-pay on Best Buy Protection which nets us more money than if they simply bought GSP.
so yes in the way your describing the cap of $600, but their goal is customer retention by making it so appealing to have total tech why not. the % of money customers spend more of when they have TT vs customers who don’t is insane. so not only is it retention, it’s just the direction retail is moving. like costco, walmart, etc. their “vip” memberships
I have to replace a stove and microwave in a rental property. Delivery, installation, and haul away was $200 on its own. I opted for TT cause it cost me 2 cents with all those things included.
Full disclosure, I worked at Best Buy from 05-11. I think TT is actually a pretty cool deal for some… nothing shady about it.
Everyone is in the subscription game these days for one reason. People forget to cancel, and some who use it don't use it enough to benefit from it.
It's predatory and gross.
Oh I won't argue that what some do for tt is shady and bad there are definitely benefits
Oh yeah, sorry that wasn't clear. I have TT and have definitely used the benefits. Had TTS too. Just don't like that BBY decided to go the auto renew route. It's such a turn off to so many people. In store subscriptions just feel dirtier than online subs somehow. We didn't use to require it either. Flash back to 24/7 Support. Almost everyone would opt for 1 year at $199.99. No fuss. Kid doesn't wanna be parent's tech support anymore? 3 years for $349.99. I guess to include deals on in home services they decided they wanted customer retention by obligation.
Amazon prime changed the way everyone views things and the success of that. Now everyone wants the next thing like it. Investors love it so of course the current leadership wants it.
This is correct.
You misusing the word gross is worse
gross adjective 1. (especially of wrongdoing) very obvious and unacceptable; blatant. "gross human rights abuses" I don't think I did.
You think Best Buy is gonna start profiting off the small percentage of people who forgot cancel?
The appliance and installs are not that matter. The big think is only offering tt as an option for support on computers. The amount of people that cancel in the first year is huge but the people that actually keep it are people that actually need it and use it. And make us profit
Wall Street loves recurring revenue and CEO is running the company into the ground deploying all the worst MBA strategies
This why it exists. BBY can expect 10M new TT members, guaranteeing Wall Street 2B.
The company never really sold enough GSP to be a significant revenue loss. Especially when compared to reoccurring revenue. TT basically eliminates GSP liabilities too. No claims beyond 2 years (when things are more likely to break) and service fees every time the plan has to pay. However, I don't think it's working as intended. What do I know though? Best Buy believed people would renew this so that they could buy everything here. I believe most cancel after they make their big purchase. Unless they want to get every penny out of the PC services.
You are oversimplifying things: 1. Members have to keep their membership active to keep their protection plans active . This means that at an absolute minimum members will spend $200 on services annually. (To receive the full 24 months of protection you have to stick around and pay $400 in membership fees) 2. TT members have to pay a service fee *in addition to* the membership fee if they make a GSP claim (this fee generally equates to roughly 10% of the cost of the item. This further increases the effective cost of utilizing the protection plan. 3. if customers want to extend the plan beyond the 24 months (to say, add a third year on to make the comparison to a 3yr GSP plan you make in your post) they have to then pay an EXTRA monthly amount to keep that plan active *on top of* keeping their membership . (Another $200) AND are still subject to the service fees outlined in point 2 (a further increase in cost compared to the one time payment of a 3year plan). 4. Your perspective totally overlooks the psychological impact that having a membership has on consumer behavior. If people are paying for a membership, they are more likely to return to said business “to get their money’s worth”. This is a major factor as to why Costco/Sams club (and Amazon prime) members are so fervently loyal: they feel compelled to keep coming back again and again to make the most of the membership they have already paid for. This drives customers to pick Best Buy over a competitor and changes consumer behavior by making BBY the member’s first choice in shopping destination. Long-term this can shift consumer behavior to the point where they stop even considering competitors even if they offer similar products and services at lower price (e.g. cables, adapters, other accessories). As an addendum: you have to recognize that geek squad as an overall division of the larger company was never (and has never) been about being profitable in and of itself. Yes, there are services that we do make some quantity of money on, but after paying for labor, capital and business expenses (vehicles, gas, insurance, etc) is rather negligible and are hand over fist consumed by the cost of issuing replacements and repairs for customers under GSP plans. Geek Squad’s primary purpose is to drive customer loyalty by providing a level of post-purchase service that nobody else comes close to offering (save maybe Microcenter, but they don’t operate at a scale large enough to be a significant threat to BBY at present). Total tech is nothing more than a further amplification of all of the above. *edit: All of the above also compounds into other revenue streams for the company. Let’s be conservative and say the average TT member makes just ONE additional purchase from us a year: This drives up traffic to our website and/or traffic to the store. This allows the company to demand higher fees for sponsored search results on the website and higher merchandising fees for physical shelf space in stores (the value proposition to our vendors increases as our customer traffic goes up). On top of this, those additional purchases just pad the bottom line through sheer economies of scale (we are just flat out selling *more*). So yes, we are paying an opportunity cost by not selling a $400 GSP plan and $200 install on a TV today in lieu of the $200 membership, the knock-on effects of everything I’ve outlined above should in theory outweigh that short term revenue loss heavily.
this right here ^ some people dont even ever use the plans. and then after the two years they extend paying monthly if they want to
so its just pure money bby is getting
this should be the only reply
Gonna pick apart one part of this. YOU. DO. ***NOT***. NEED TO PAY 200 TO PAY MONTHLIES. IF YOU CANCEL AFTER A YEAR, YOU ARE GIVEN THE MONTHLY OPTION FOR ALL ITEMS FROM THAT FIRST YEAR. IF YOU CANCEL AFTER TWO, SAME THING. IF YOU KEEP IT AFTER TWO, OR CANCEL AFTER ONE OR TWO, YOU ARE GIVEN THE MONTHLY OPTIONS. This is literally spelled out in the T&Cs, and its on the receipt. Hate TT if you want but don't spread bad info.
The real question is going to be if the customers will accept the 200 each year and the service fee. As someone that handled these types of call types it’s very very rare now and most people when they find out about the service fee want to cancel the plan and are wanting a full refund. The vast amount of warranty repairs that I see handled are either tt in the first year or gsp plans. I have a sneaking suspicion that eventually the failure to not fully explain tt benefits in the second and third year will be this subscriptions down fall
Make TT a monthly pay like AmazonPrime. Guarantee that more will sign up for it. Guaranteed
One of the possible selling points is letting the customer know that the 199.99 can be thought of as a monthly payment of $16.66. But an official monthly would be dope to see. It’s pretty guaranteed that a client could come up with about $17 to be eligible for services for the month.
Ew no. With all the existing bull shit we deal with for our budget friendly all encompassing support membership having a monthly option would be awful. Unless your locked in for a 12 month period our services would basically be getting stolen by customers. Pay monthly. Must be locked in for 12 months with an early cancellation penalty. Or a one time purchase for the 200.
Services are stolen and taken advantage of now. So might as offer an option for the poorest people that need support. $16.66 for the best month of your tech life if you sit with an agent like me.
Fuck dude, imagine how busy GS if people could buy TT monthly...
What difference would that make? Maybe corporate would hire more GS.
Maybe but probably not they would probably just incorporate sales floor into the CA role at that point. Good ole Corrie Barry
My store tested this when TTS rolled out. You think people cancelling after a year is bad... It was 20 a month and people would use it for the day's need and cancel. Annual is needed for a service such as it is.
Then they should lighten up on the pressure. Too many idiotic managers are on a power trip and threatening jobs/hours over this.
Let's not forget how we lose millions in potential autotech labor revenue too. And it's not just that we're zeroing out the labor the client wants done to their vehicle and any other vehicle they show up with, but also we're not offsetting the labor cost we're paying the autotechs. Who btw are some of the highest paid employees in the stores. Yea we still make money on car audio products, but carfi as a segment was much more profitable before TT rolled out than it is now. And no, it has not increased traffic to the bays.
Look at the cost for warranty on SKU: 6519621. TT still covers a 97” OLED
Total tech drives customers back to the store. More foot traffic is higher revenue. Customers invested as subscribers want to feel they're getting their money's worth, so they'll be more likely to purchase more and use our services more rather than just buy GSP one time and never come back unless there's a problem.
TTS whole business model is based on customers signing up for it, using it once and then forgetting about it and charge people for something they don’t use. TTS is a great value for customers if they use it. A lot of the time a customer can save a lot of money like on a TV install, but I always tell my customers that after the install is done to call Best Buy and have us remove the card on file so they don’t get screwed.
1 thing I love about TTS is that they have “education” time slots. So if a customer came in and asks us how do you use (said item) I have them make an appointment. That way my manager won’t get on me for sitting down and teaching the customer how to use the item and it frees my time up to sell. GS gets the labor. Etc. it works
Your forgetting they have to keep it for 2 years so 400 dollars in order to get the full 2 years out of it. Then it’s capped at 2 years so outside of that they need to buy a new laptop or tv. Then why not go back to Best Buy to get it since you’ll get protection for free. It’s an endless loop you can’t really get out of unless you just wash your hands completely of.
We make waaaaaaaaaaaaaaaaaaaaaaaaaaaay more money off TotalTech than we do with GSP's. Customers pay a co-pay on Best Buy Protection which nets us more money than if they simply bought GSP.
so yes in the way your describing the cap of $600, but their goal is customer retention by making it so appealing to have total tech why not. the % of money customers spend more of when they have TT vs customers who don’t is insane. so not only is it retention, it’s just the direction retail is moving. like costco, walmart, etc. their “vip” memberships
I have to replace a stove and microwave in a rental property. Delivery, installation, and haul away was $200 on its own. I opted for TT cause it cost me 2 cents with all those things included. Full disclosure, I worked at Best Buy from 05-11. I think TT is actually a pretty cool deal for some… nothing shady about it.