3 tips from Amazon Prime to run a killer customer loyalty program
Jun 27, 2014
A survey by RBC Capital Markets suggests that Prime members spend almost twice as much as non-prime customers. A clear indicator of how well it has worked is the huge revenue it’s been generating from its base of more than 25 million members. They manage to run a great customer loyalty program and charge customers for it!
Reduce barriers between shoppers and shopping
According to Baymard, the average shopping cart abandonment rate for eCommerce websites is 67.91%, which is actually quite high. It’s a great opportunity for any online store to increase cart conversions from 32.9%. What are the pain-points for the customers that make them invest their time to select their products and then not make the purchase?
After the entire selection, shoppers get disappointed on seeing high taxes and delivery charges added to their purchase. What if they came after careful research and chose the best-priced item and then realized that they’ll have to pay a high delivery charge for it?
Amazon understood this part of shopper psyche way back in 2005 and came up with a solution called Prime. By charging a standard fee upfront Amazon saved shoppers from “sticker shock”. The program provides a good return to frequent shoppers, and Amazon makes up for them through the increased number of purchases.
Businesses that thrive on frequent purchases can follow this model, which is the case with most eCommerce websites. Even B2B businesses, where customers need regular supplies can follow such practice to gain maximum benefits of customer lifetime.
Provide customers with valuable non-monetary benefits
Realizing what a customer value is is critical for running any loyalty program. Amazon partnered with other companies to provide non-monetary benefits to customers in the form of free books, TV shows, movies and now even music.
It’s not that they want to compete with the likes of Netflix, Hulu, and Spotify, at least not yet, that market is already crowded. The intention was to provide customers with benefits that they can’t resist and make them spend more time on the website. The more time a shopper spends on a website, the more chances marketers get to convert them.
Whatever business you are in, you don’t have to be a mammoth like Amazon to provide your customers with valuable benefits. Smaller firms can also work on this model. DeliciousKarma, a gourmet food seller has created a really cool interactive program, where a shopper gets to take part in quizzes, connect through their entire social network like Facebook, Twitter, Pinterest, invite friends to earn credits, which they can use to shop in their store. Connecting with the customers on social networks help them with better targeting and personalization, and it keeps driving the shoppers back to their website.
Create a full-fledged loyalty program that also helps to acquire new customers
Not just customer loyalty, there is a feature to boost customer acquisitions on Prime as well. We’re talking about giftable Prime memberships. Furthermore, it also comes free with Amazon Student and Amazon Mom. These are targeted towards customers who did not decide to take up Prime membership by themselves. This strategy to promote the loyalty program brings in new signups as well.
None of these services are particularly interesting enough on their own, to make customers shell out a hundred dollars a year, but as a package, it seems like a pretty good deal to the buyers.
Similarly, Delicious Karma acquires new customers by giving their shoppers free credit on each referral. Having such a “wholesome” loyalty program isn’t a bad idea after all, even for smaller firms, as long as you can lure your customers with irresistible benefits.
We hope you can now think of new ideas for your own CLPs, the key is, keep it exciting! Keep watching this space for more on what you can learn from Amazon. If there’s something you want us to cover, just leave a comment below.