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Priming Customer Loyalty: Lessons from Amazon

Amazon shoppers are so loyal that they’re less inclined to make purchases from competitors at all, says a 2016 report. While the e-commerce giant takes over every spend-stream in our lives, we ask what’s their secret, and why is Prime still so popular after more than a decade?

The Prime Proposition

"We want Prime to be such good value you'd be irresponsible not to be a member," says Amazon’s Jeff Buzos.

Amazon Prime originally started out as a “discount” program based on a simple promise—pay £79 a year to get free 2-day shipping. Customers pay for the shipping, yet Amazon has managed to increase satisfaction by making customers feel like they’re being rewarded. Using the one-day delivery charge of £5.99, you would have to buy 13 items a year to make the £79 annual membership worthwhile. 

Members now get a wider range of benefits, ranging from free next day delivery and returns, to unlimited streaming of videos and music, as well as access to 500,000 Kindle titles to borrow for free. The option to gift Prime memberships to others is also a cunning way to get loyal customers to create new loyal customers on behalf of the brand. 

Amazon Prime’s success is grounded in the soothing of customer pain points (namely delivery rates). In investing in Prime, the customer is committing to Amazon and also committing to getting value from their membership. All in all, Prime members tend to spend twice as much as the rest of Amazon’s customers, according to research by the Consumer Intelligence Research Partners. But why?

The weighted bond

Many Prime members initially joined on the promise of free next-day delivery. But this initial hook paves the way for Amazon to promote its other categories and services and increase customer lifetime value. In the upselling of other services and products, such as Amazon Echo, the weight of purchase is increased and the customer is bonded more strongly to Amazon.

As Bezos puts it:
"[Amazon Prime Video] shows are great for customers, and they feed the Prime flywheel – Prime members who watch Prime Video are more likely to convert from a free trial to a paid membership, and more likely to renew their annual subscriptions."

But what’s the secret behind Amazon’s promotions?

The secret lies in Customer Data

“Retailers need to move towards a more Amazon-like relationship with customers, and to do that they need data,” says loyalty expert, Air Miles and Nectar founder Sir Keith Mills. “Companies that don’t know who their customers are, or what their customers are buying, are at a competitive disadvantage.”

But how exactly do you collect customer data? One method is through card-based loyalty schemes, and those built with Eagle Eye Reward allow you to track purchase history and reward redemption in real-time through data integration at the till. 99% of customers will also share personal information in exchange for rewards, says a Microsoft survey.

Offline retailers need to be able to compete with Amazon’s online service, and a way to do that is through data-driven insights. In utilising customer data you can create personalised promotions and create experiences specific to individual customer needs.

With Eagle Eye AIR you can collect customer data to create a single customer view and distribute digital promotions tailored to individual customer behaviours in real-time. Find out more and contact us for tailored ways to improve loyalty in your business.