A few weeks ago, Jeff Bezos revealed in his annual shareholder letter that Amazon Prime now has over 100 million members, but even more noteworthy than its size is its revenue impact. In 2017, Amazon shipped more than $5 billion worth of items through Prime.
Now, Amazon Prime isn’t like other loyalty programs you see in the marketplace. For one, customers have to shell out $99 (soon to be $120) a year to be part of it. And anyone willing to pay gets access to the same benefits, products, and services. There aren’t any points, redemption options, tiers, or statuses. But it doesn’t really matter what you call Amazon Prime, because its effect on loyalty outcomes is staggering.
From a behavioral standpoint, Amazon Prime increases all of the transactional metrics that traditional retailers care about, like frequency, recency (on average, Prime members shop on Amazon once every six days), lifetime value, etc. The bulk of Prime members say that Amazon is the “first place” they look when shopping online. It also materially changes shopper behavior at a time when consumers are excruciatingly fickle: The longer Prime members stay in the program, the less likely they are to research and comparison shop with other retailers. Behavioral loyalty? Check.
Now what about emotional loyalty, you ask? Prime has that covered pretty well, too. Over 80% of Prime customers who have been a part of the program for at least three years “trust Amazon to treat me like a valued customer.”
We can’t all be Amazon, but we can all learn from Amazon. Prime works because it isn’t just a marketing program that sits alongside and competes with myriad promotional marketing programs. Rather, the program represents the best experience Amazon has to offer, from products and services to content and, yes, shipping and returns. Amazon also continuously refines the benefits — whether that means adding new products, services, content, or categories — to ensure that it’s relevant and valuable to consumers.
If you want to start thinking more about loyalty as an outcome than a program, let’s talk. I’m working on some research that will help companies shake their tactical mindset and orchestrate more effective loyalty strategies. Clients can set up an inquiry here to learn more.