Offering free rewards can be expensive for companies, and they are trying to control costs during a period of high inflation. More brands have been redesigning their loyalty programs during the pandemic to manage rising costs of advertising and technology expenses and credit card liabilities.
Best Buy’s changes were designed to offer customers a free alternative to Amazon Prime and Walmart+, both paid membership plans, and it was also aimed at getting them to switch to its branded credit card. Around 25% of Best Buy’s sales are transacted using one of its credit cards, and research shows that customers with store credit cards spend more money than customers without them.
The reaction to Best Buy’s move mirrored customer backlash after changes to Dunkin’ and Starbucks’ rewards programs last year.