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Best Buy Focusing on Subscription Loyalty and Customer Experience to Win Customers

Highlights of the Q3 Earnings Call

Best Buy, the leading electronics retailer in the US, held its Q3 2025 earnings call on November 26. We offer you these highlights that illustrate the impact of the company’s customer strategy on operations and other efforts which result in the improvement of higher customer satisfaction levels.

Top Line Metrics

The retailer registered revenue of $9.4 billion and non-GAAP operating income rate of 3.7%. Despite a comparable sales decline of 2.9%, Best Buy drove strong year-over-year gross margin rate expansion of 60 basis points that management attributed “largely to improvement in membership and services offers”.

CEO Corie Barry shared that consumers remain deal focused and attracted to more predictable sales moments. Similar to prior quarters in this environment, many categories, including major appliances were very promotional in pursuit of stimulating interest in sales. Best Buy continues to be targeted and thoughtful regarding where and when it makes promotional investments, strategically balancing profitability and sales.

Paid Membership is Paying Off

Correlating to the comment about expanded gross margin percentage, Barry stated “our paid membership program continued to drive positive contributions to our results as we grew the base of members, and the impacts from the changes we made to the program last year once again drove strong gross profit rate expansion. Overall, we are managing well what we can control in what remains a volatile environment.”

The program referred to is the My Best Buy Membership program which includes a suite of paid and unpaid options. Members are allowed to move between options at any time. The initial tier of paid membership is My Best Buy Plus which bundles multiple benefits for an annual fee of $49.99. Key benefits include:

  • Free two-day shipping on online orders, though not available in all areas
  • Access to member-specific deals, sales, and events
  • Extended return window of 60 days for most products
  • Two years of warranties
  • Unlimited remote computer tune-ups through Geek Squad tech support

Employees Matter

Best Buy reported that its employee turnover rate is the lowest in over three years and that its company engagement score, as measured by employee surveys, is on par with global benchmarks.

AI Inspired Gifting

To fuel the 2024 giving season, Best Buy is using AI and social channels to build connections with customers.

  • They introduced an AI-powered gifting experience called the Best Buy Gift Finder. Customers can have an interactive exchange to help guide them to the perfect gift they might not have even considered or knew that Best Buy offered.
  • Best Buy also has a “Yes, Best Buy Sells That” section on its website, where customers can find fun and unexpected tech like electric scooters, toys and collectibles, golf tech, grills, electric outdoor power tools and more.
  • They are investing in Best Buy YouTube channel to create gift inspiration and help customers discover “must have” tech this holiday season.

Customer Experience and Mobile Apps

Best Buy is focused on improving customer experience and has initiatives targeting customer experiences across its digital and store channels. The company is tracking effectiveness of their investments in CX by measuring “relationship NPS” which tracks consumers’ likelihood to recommend Best Buy.

The company has been focused on improving and refreshing its Mobile App through “small view experiences,” including enhanced personalization, new features like digital wallet, deal alerts, and a Gift Finder. So far, Best Buy has driven both higher customer ratings for its app and growth in active users. Their data shows that customers who use the app frequent the brand more often and spend more.

Analytics and Data Management

Best Buy leverages analytics and technology to achieve operational efficiencies. For example, it employs AI to route in-home delivery installation trucks and create more efficient scheduling. It is also leveraging GenAI cogeneration and shared resources for engineers across the company to enhance its overall tech development effectiveness.

Customer Support

Customer support is another important space emphasized by the CEO. For example, the company uses an AI-powered virtual assistant that can help 60% of our chat users without the need for a live customer support person.

The results to date are positive: during the third quarter, Best Buy began rolling out this capability to the entire IVR phone system, increasing the likelihood customers can get their questions answered without having to wait for a live agent. As part of this process, they are leveraging text analytics to create real-time alerts of potential operational or promotional issues.