Amazon are in their Prime when it comes to Loyalty

08 August 2017

In light of the recent Amazon Prime Day it seems appropriate to talk about what is potentially one of the best and most profitable loyalty schemes available to consumers; Amazon Prime.

Amazon is an e-commerce giant, accounting for around 37% of all online shopping [1] and they are the curators of a loyalty programme that has nearly 80 million members in the US alone.[2] What is even more staggering is that the actual number of people who use the platform is much higher due to there being thousands of shared accounts all over the world.

However the significant difference between Amazon Prime and so many other retail initiatives is that it’s a paid-for loyalty programme. For a monthly fee of £7.99 you become a member and receive the benefits Prime offers, and trust me there are plenty of them. They also offer customised accounts – for example, if you’re a student you can receive a 50% discount on the monthly fee without sacrificing any benefits and family accounts also allow several people to order from one central account (I feel sorry for whoever has their card registered to it). Through this Amazon are ensuring that they can demonstrate an understanding of all generations, building longer-term loyalty with people of any age.

When Amazon Prime first started you were simply paying for the guaranteed delivery of the products within two days of ordering them and that’s nothing drastically different to what other retailers offer. Now they have gone above and beyond that: offering same-day delivery slots and early access to “lightning deals”, giving you the ability to stream TV shows and films onto any device through the app, and allowing you to download e-books, listen to music, store photos on your account.. All these benefits make the small investment in the company extremely worthwhile and the membership structure to the programme that has been creating loyal customers since the day it launched. Amazon Prime offers its members a really personalised service, recognising them for their investment and rewarding them by taking time to understand them which as a result builds loyalty and prevents customers straying to competitors. This is proven by the fact that on average, Prime members spend $1,300 annually which is nearly double what non-members spend ($700).[3]

So why is Amazon Prime so successful? In simple terms it offers customers everything they want from a retail experience; the things that make their lives that little bit easier. Firstly they are a multi-channel company, giving their customers the convenience of being able to access the site and shop on any device, at any time. They offer personalisation to each of their customers on each of those devices through the use of their advanced technology. Amazon tracks previous purchases and aligns them with the likes and dislikes of a person to try and predict what the next purchase will be and then shows customers the most suitable products.

Secondly they offer a truly seamless experience. In-store shopping, especially on a weekend, can only be described as a nightmare for some shoppers; clothes piled up all over the floor, people pushing and shoving and nine times out of ten whatever you went to the shop to get has either gone or isn’t in your size anymore and it all just seems like a lot of unrewarded effort. However on Amazon all you have to do is type in a few keywords and up pops several different version of what you were looking for, most of the time it’s available but if it’s not then you can get a reminder when it comes back in stock, simple. It can then be delivered to you wherever is easiest; whether that be home, work or any of the city lockers all next-day. Amazon Prime is “paid for convenience” and is exactly what a lot of consumers are looking for.  

Now I can’t really talk about Amazon Prime without mentioning Prime Day. It began as a one-off, 24-hour event to celebrate the company’s 20th anniversary and has grown into something that rivals the anticipation and success of Black Friday. The day involves thousands and thousands of heavily discounted products across all the departments Amazon covers (which is pretty much everything, including your food shopping) and customers have a 24-hour window to buy as much as they want and still receive it within two days; the only catch is you have to be an Amazon Prime member to join in.

The primary goal of the day is to boost prime memberships but just as importantly, to celebrate those that are already “part of the club”. This was the third year the event has run and it was the biggest yet, expanding into 13 countries and extending the shopping time from 24 to 30 hours to make sure that every region had maximum purchasing time. The success was obvious - with Amazon seeing more single day sign ups on July 11th than any other day in the company’s history. This significantly expanded Amazon’s loyal customer base, growing sales by 60%[4] and securing year on year growth that proves Amazon are onto a winner with their loyalty programme.

With their Prime loyalty programme, Amazon are expanding year on year and building an ecosystem that people can’t help but want to be a part of. So is this the future of loyalty? Customers paying for the benefits a company offers and then it becoming a reflex for them to go back to them time and time again to make purchases. Amazon has given the industry an amazing example to follow, but the real test for them will be how many of their new customers remain loyal and renew their subscriptions once the dust settles and Prime Day is over and done.







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