Although some firms truly get the value of strong customer loyalty programs, there are others that still don’t. The current king of customer loyalty programs is Amazon with its Amazon Prime.
The effectiveness of Amazon Prime is noted below. But let us first describe why the program works so well:
- There are multiple options: Amazon Prime, Amazon Prime for Students, and Amazon Prime for Moms.
- There is a charge to participate in the program, which means that members will patronize Amazon to be sure they receive benefits for which they pay.
- The benefits are numerous and desirable:
- Free two-day shipping for many items with no minimum purchase amount — and the possibility of free Sunday deliveries through the U.S. Postal Service
- Kindle Lending Library — one free monthly download on select E-books
- Prime Instant Videos, many of which can be viewed for free
- Prime Music — many songs available for free streaming
- Prime Photos — free unlimited photo storage on the Amazon Cloud
How effective is Amazon Prime for the retailer? According to eMarketer:
“In September 2014, RBC Capital Markets surveyed more than 4,000 Amazon customers in the US and found that 37% were Prime members. How important are loyalty programs to regular customers of the E-commerce giant? If their purchasing habits are any indication, then very.”
“Prime members are more likely to order items from Amazon.com because they know the items will be shipped quickly. Prime members also spend more. While non-Prime customers said they had purchased items with prices below $25 and between $25 and $100, Prime members were throwing down money for bigger ticket values. The disparity between the two groups’ purchasing habits showed most starkly beginning at the $201 mark, where 18% of Prime members compared with only 8% of non-Prime customers.”
Click the chart to read more from eMarketer.