Brad Stone of BusinessWeek takes note of Amazon Prime, the loyalty program’s loyalty program.
Amazon Prime may be the most ingenious and effective customer loyalty program in all of e-commerce, if not retail in general. It converts casual shoppers who gorge on the gratification of having purchases reliably appear two days after they order, into Amazon addicts. Analysts describe Prime as one of the main factors driving Amazon’s stock price–up 296 percent in the last two years–and the main reason Amazon’s sales grew 30 percent during the recession while other retailers flailed.
Amazon relentlessly promotes Prime in press releases and on its home page, and this year started offering free Prime trials to students and parents. The company declines to disclose specifics about the program, though analysts estimate it has more than 4 million members in the U.S., a small slice of Amazon’s 121 million active buyers worldwide. Analysts say Prime members increase their purchases on the site by about 150 percent after they join and may be responsible for as much as 20 percent of Amazon’s overall sales in the U.S.
Interestingly, Amazon already ships for free on most orders over $25. Which tells me that Amazon Prime isn’t about the savings on shipping–it’s about immediacy and receiving special treatment. Customer service from many companies truly underwhelms. It’s this fact that provokes people to pay for customer service that doesn’t suck.