Best Buy to merge Rewards Zone with bestbuy.com

  • Article by: THOMAS LEE , Star Tribune
  • Updated: June 12, 2013 - 8:14 PM

The Richfield-based consumer electronics retailer wants to use its customer loyalty program to drive additional online sales.

 

Best Buy Co. plans to dramatically overhaul its website over the next several months so that it can use its large customer loyalty program to boost digital traffic and sales.

The Richfield-based consumer electronics retailer said it wants to integrate Rewards Zone with bestbuy.com to entice shoppers to write product reviews or post purchases on Facebook in exchange for points that can later be redeemed for perks and discounts. Currently, myrewardszone.bestbuy.com operates separately from the general website.

“We continue to identify opportunities to further integrate that ‘best customer’ experience in our stores and online,” said spokeswoman Amy von Walter.

Among major retailers, Best Buy has one of the worst online conversion rates — getting customers who visit the website to buy something. In fiscal year 2012, digital sales totaled $2.3 billion even though bestbuy.com attracted 1 billion visits that year. By contrast, Best Buy’s stores generated $35 billion from the 600 million visits to its physical stores.

The company also calculates 70 percent of its customers research bestbuy.com before purchasing merchandise in the stores. Best Buy wants those customers to spend more time and money on the website in addition to visiting stores.

That’s why Best Buy is turning to its Reward Zone program. With 40 million ­members, Reward Zone is one of the largest retail loyalty programs in the country. Members can earn points from purchases and swap them for special benefits such as discounts, early access to Black Friday deals, free shipping and access to Geek Squad.

“To be honest, [Reward Zone] doesn’t have a big enough role,” Scott Durchslag, president of bestbuy.com, recently told investors at the Goldman Sachs dotCommerce conference. “It needs to be utterly central because it is what gives the customer a reason to log on to the site.”

Retail analysts agree, saying that Best Buy needs to do more to maximize the potential of its Reward Zone program.

“Best Buy has a huge customer database they haven’t harnessed (yet),” said David Strasser, a retail analyst with Janney Capital Management. Integrating Reward Zone with its online and mobile sites “could be potentially enormous.”

For example, Best Buy wants to use Reward Zone to incentivize shoppers into behaviors that could lead to additional sales down the road. So rather than earn points just by buying something, consumers can also accumulate points by writing product reviews or spreading the word on social media sites such as Facebook and Twitter, actions that could influence other shoppers to purchase merchandise.

Best Buy could also lure customers into stores by awarding them points for visiting the Samsung Experience store-within-store concept. But the real prize, Best Buy executives say, is the information they can glean from customer behavior so they can target shoppers with deals and products suited to their tastes.

“Almost all of our customers today on the site are transacting as guests,” Durchslag said. “But to personalize, you’ve got to know who they are. You’ve got to tie it in to all of the other information we have about customers. And here’s the great thing about Best Buy. It’s a gold mine of data.”

 

Thomas Lee • 612-673-4113

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