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For GameStop, which has built a devout and loyal following over the years, its PowerUp Rewards program is a critical piece of the company’s overall customer-centric focus.
In the past 12 months, the loyalty program has added 1.5 million members to the paid level of its PowerUp Rewards program.
During last week’s second-quarter earnings call, GameStop CEO Paul Raines talked about the continued success of the PowerUp Rewards program.
“Our PowerUp program has been an intense focus since this time last year,” Raines explained. “I am pleased to report that our paid level, which we call PowerUp Pro, is up by 1.5 million members in the past 12 months in the United States, each paying $15 per year to receive the benefits of membership. Our PowerUp Rewards program, with over 50 million members worldwide, provides significant value to our most loyal customers and is a key to our success in driving pre-owned business, omnichannel businesses, and growth in Collectibles as its members represent over 70 percent of our sales volume. So, we know it’s working. Our omnichannel sales almost doubled year-over-year, and we’re using it to drive cross-platform connections like Switch sales at ThinkGeek.com or rapidly setting up a Funko POP! Vinyl club. So, we are confident we will see better growth in the U.S. at holiday this year.”
On the physical gaming front, the Switch has been a massive success, leading to hardware growth of 14.8 percent for the quarter.
“The Switch launch is one of the keys we have been watching all year to gauge the consumer’s appetite for gaming,” Raines added. “Based on the results so far, the consumer’s appetite for gaming is healthy and we believe that all consoles have opportunities for growth.”
Digital receipts grew 17.4 percent during the second quarter, led by downloadable content growth and strong levels of full game download sales of Mario Kart 8.
Inventory levels, a key driver of performance in this category, are stronger at plus 8 percent year-over-year.
Collectibles recorded a strong quarter with 36.1 percent growth and good margins.
“We believe we have a great opportunity to grow in this fragmented industry, and we have already become the top share distributor of several brands,” Raines said.
Regarding Technology Brands, GameStop is focused on transitioning over to selling entertainment products and capitalizing on the iPhone launch.
“The investments we’ve made in the Technology Brands segment since 2013 position us well to participate in a new category of exciting product launches,” Raines said. “We believe this business has great upside for us and we continue to push our own rate of change to match that of our partners, AT&T and Apple.”
Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, told Loyalty360 that paid loyalty programs can absolutely be impactful.
“No matter what kind of program is implemented, in the end, customers need to see that the program provides value for them,” Magliocca explained. “GameStop is a great example, and clearly its customer base sees the value of the paid membership in easier points accrual and evergreen discounts on various products. For many gamers, those added benefits of a paid program pay off in the end, but they’re mutually beneficial to GameStop as they increase overall spend and give the obvious bump from paid subscription.”
Howard Schneider, senior consultant at Kobie Marketing, told Loyalty360 that GameStop has long been a leader in retail loyalty.
“Its program structure, with paid and non-paid levels, is a good model that enables it to gain customer insights with its free program, while partially subsidizing richer benefits with the fee-based program,” he explained. “And, while many companies try fee-based programs–they may not have experienced the same success that GameStop, Amazon Prime, and AMC Stubs Premiere have.”
Schneider said Kobie officials believe in enrolling broadly and rewarding on a targeted basis.
“If well-designed, a fee program can deliver a higher perceived value, enhanced self-identification, and offer more financial success,” he added. “It is critical, however, that customers perceive they are receiving a greater value than the fee they paid; and even more important, to ensure the value proposition makes sense over time for generating renewals.”
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