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Is Barnes & Noble’s Membership Upgrade Worth $40?
Barnes & Noble’s newly revamped membership strategy, which represents the first change to the program in 22 years, consists of two separate tiers: a paid option that adds more benefits at a higher cost and a free one with more limited perks.
The paid tier, now called Premium Membership, costs $39.99, up from $25 under the previous plan.
Perks under the new program include:
- Ten percent discount for purchase at Barnes & Noble stores and bn.com;
- Free tote bag each year (valued under $19.99);
- Free size upgrades on drinks from the café;
- Free shipping;
- A new “Stamps & Rewards” rewards program tied to purchases. One stamp is earned for every $10 spent in purchases, and the customer receives a $5 reward for every ten stamps.
The old plan only covered the 10 percent discount for store – not online – purchases and free shipping. The new plan eliminates a 40 percent discount on hardcover bestsellers.
Perks like the prior program include special member birthday offers, exclusive early access to special titles and events, and exclusive offers.
The free tier, called Rewards, only includes the “Stamps & Rewards” program and is being launched after a successful trial.
Shannon DeVito, senior director of books, Barnes & Noble, said in a press release, “We now have levels of the program fit for all our customers. We’re especially looking forward to making curated recommendations, supported by compelling and interesting offers both in our stores and online, to the broadest sweep of readers.”
Barnes & Noble CEO James Daunt told The Wall Street Journal he estimates that at least 75 percent of the 5.5 million members of the $25 plan will sign up for the new plan. He predicted total paid members to remain the same at year-end as the beefed-up $40 offer appeals to new customers.
He further expects the enhanced plan to help B&N deliver better-personalized offers.
“If you’re interested in ornithology or cookbooks, we’ll be in a position to offer you recommendations and special offers,” he told the Journal. “It allows us to be much more intelligent and engaging and interesting.”
Discussion Questions
DISCUSSION QUESTIONS: Is Barnes & Noble’s new $40 paid membership program any better or worse than the former $25 plan? Will the retailer maintain its paid subscriber count at the higher figure?
Poll
Loading …BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
The higher cost and some of the new benefits seem aimed at customers who buy a lot of physical books and likely already do so at Barnes & Noble. To be fair, this probably includes a lot of the existing membership base. As such, Barnes & Noble should get a nice bump in membership fee revenue in exchange for some nice, but not too costly changes. There might be some mumblings around the elimination of the 40 percent hardback bestseller discount which was quite popular among some, but I don’t think it will be a major deterrent to renewal.
Wahoo! Now I can get another tote bag that I can stick in the back of the closet with the other 27 tote bags I seem to get at every event I attend.
I think they added the tote bag because they felt guilty about raising the price. Give me free shipping and a 10 percent discount for $25, and I will be happy.
Actually, I am already a Prime payer with many more perks. B&N can get my attention with free shipping and a 10 percent discount for free.
Brick-and-mortar bookstores are enjoying a resurgence, and this includes independents. Barnes & Noble will need to keep refreshing its loyalty efforts to stay competitive. I believe the paid plan is a better plan for the hardcore B&N customer. Their best customers will enjoy the new perks and the $15 dollar difference won’t really matter. Adding the online discount will be the another key to success for the paid version. I’d suggest caution when removing perks, though. The 40 percent off hardcover bestsellers was significant. That being said, this plan also allows more customer intimacy going forward, and it hearkens back to the days when the books that a bookseller sells were the ones they actually read and would recommend. A little back to the future for B&N is a good thing.
This move telegraphs that B&N really doesn’t want people to sign up for the paid tier. You now have to spend $400 to break even before you even start to realize benefits. This isn’t customer friendly; it’s customer gouging.
Barnes & Noble is on a slippery slope to being complex and convoluted with this one. The “upgrade” featuring tote bags and such has a “But wait! There’s more!” quality to it. The beverage upgrades might help increase dwell time but the combined benefits seem disjointed and cobbled together overall. At a time when book buying has become digitized and commoditized, Barnes & Noble can’t afford to lean into complexity. Hopefully its store associates are well-versed in explaining the new program tiers.
I’m a Barnes & Noble fan. I had the old membership plan. I was delighted to see the many great moves they’ve made in the last few years to bring the company back from the brink. This one, however, feels like a one-step-back situation. At $25, it felt like a good deal. I buy a lot of books, and with the occasional 40 percent off a best seller, it was pretty easy to recoup the $25 “investment.”
$40 is a much larger barrier, and now with only 10 percent off all my purchases I’ll have to spend more to realize the ROI. Given that Amazon and Rakuten now both have unlimited reading subscriptions and bigger discounts on best sellers, this move feels less enticing and not a great value.
It’s probably worse but, that said, it also probably won’t lose them that many members, assuming that current members are B&N loyalists in the first place. The more interesting question is, will it be a vehicle for attracting new members? And I think the answer to that is no. So the net/net will probably be that B&N will get more money out of their existing customers which isn’t all that bad. The real problem is that the discounts, shipping, etc. still are uncompetitive with Amazon and the format isn’t competitive with independent bookstores which are in the midst of a mini-Renaissance. So what B&N really needs to focus on is making a sustainable, differentiated space for itself in the book business. Telling loyal customers that their 65 cent tote bag is really worth $20 isn’t a good start in that direction.
How much a customer spends annually at Barnes & Noble will determine if the new $40 premium membership is better or worse for them. While the 10 percent off is appealing, the free shipping is still a huge value for members. At the higher membership fee, Barnes & Noble only needs to retain 62.5 percent of its members to break even on membership revenues and they anticipate 75 percent will sign up for the new plan.
I really just can’t understand the draw for this for new customers who aren’t already loyalty members. Perhaps I’m just not the core target, but the perks don’t seem to validate the cost.
I don’t think this moves the needle. They can blame Amazon Prime and Audible for that. They need a more effective program and differentiation to get me back into a physical store, only to walk in and find out that they do not carry the title in-store and that it would have to be shipped. Coffee, for me, is a non-starter. I am not a fan, if you can’t tell.
If the goal is to drive frequency and to the most loyal customers, looks like real value is basically in the 10% discount and free shipping. Break even happens at 8-10 books? Seems like a hill to climb when you compare to Amazon Prime, a little more than 3x the price at $139, comes with free shipping of everything/anything, movies/tv, weekly grocery discounts at Whole Foods, music and games.
Wondering if they will have any provisions to maintain the old plan, like grandfathering in the plan in lieu of a price jump. I’ve been on the $25 plan- which was great. Now it seems that I’ll be pressed to increase my buying online, thereby increasing BN’s delivery costs.
Barnes & Noble has a strong customer network because it’s a place where people love to hang out, sit around, read quietly, or simply meet like-minded people. As long as Barnes & Noble’s upgraded membership delivers some value that ups the in-store experience, customers might find the membership worth it. However, there is still a dilemma because, despite the upgrades, customers may not choose to renew their membership after the expiration of the existing one. So, I guess we’ll just have to wait & see at this stage how everything turns out.