Customer loyalty retention is about maintaining and building upon past successes in earning a customer’s loyalty of and advocacy for the brand. Loyalty isn’t static. It must be renewed and reinforced and therefore strengthened or else it will inevitably diminish.
Amazon’s investors and customers alike are enjoying the benefits of unparalleled customer loyalty retention and a reputation as “Earth’s most customer-centric company” – including the 500 percent rise of its stock price over the past five years. What started as an online bookstore is now transforming nearly all aspects of retail, not to mention content distribution and cloud computing. Amazon’s impact defines the idea of relativity, at least in terms of customer experience. Nearly every other customer experience and customer loyalty retention can be measured in terms of how well it compares to what Amazon does. What can a CMO smart enough to be focused on the customer learn from this success that will make your brand(s) more relevant and your customers more loyal over time? We see three big recurring themes that define the success customer-centric brands have created.
Sustained leadership and relevancy matter.
It’s imperative to recognize that Amazon continues to focus on raising the bar. In the words of CEO Jeff Bezos, from this year’s Letter to Shareowners, he expresses his love of customers being “divinely discontent” with expectations that are “never static – they go up.” Does your CEO recognize that? For Bezos and Amazon, it’s what drives their obsession with high standards and staying ahead of “ever rising customer expectations.” Bezos also writes of Amazon's “billions of dollars’ worth of failures along the way.” Higher and higher standards and humility, too.
The better you are at delivering customer value beyond discounts, the more you profit.
Customer obsession started with Amazon’s commitment to leveraging data to be provide more relevant suggestions to customers. The company was a pioneer in personalization and the loyalty principle of recognition, one of five keys to driving customer loyalty that we at rDialogue have identified and validated through our proprietary research. Amazon has gone far beyond recognition, clearly embodying all five loyalty drivers, including access, information, financial value and the increasingly valuable time.
Loyalty marketing is about opting-up, not just opting in. There is a difference and while it doesn’t always have to be opting in to a fee-based proposition, this is an increasingly viable proposition when you package enough value and differentiate it from the non-fee experience.
Customers will pay for a better Customer Experience.
For Amazon, much of the value in driving customer loyalty, noted above, is available for non-Prime members. However, the best comes at a price, which is now going up, from $99 per year to $119 per year. Amazon timed this right, as it added more prime members in the US and globally last year than ever. With what has traditionally been a renewal rate in the high 90s, it is easy to see Amazon realizing $15 billion in membership revenue alone in the near future.
Amazon’s business strategy and its link between customer marketing and customer loyalty retention is clear: Package the most value – the best customer experience – for the best customers. And get them to pay for it. Beautiful in its simplicity, it’s quite a lesson for loyalty leaders and aspiring ones. As the CFO at one of our clients said, “great companies get their best customers to pay more.” Indeed, Prime members are paying more, and not just in their annual fee. According to Daniel Ives of GBH Insights and quoted in Media Post, “Prime members spend roughly 2x more than non-members on average.”
Taking Action to Grow Customer Loyalty Retention
If you’re a CMO, failing to understand what drives more than 100 million Prime members (and growing) means a steeper climb, even to stand still, in a marketplace increasingly dominated and driven by Amazon. Our research confirms, illustrates and enlightens this.
We are happy to share more of our findings. It’s clearly time for more relevant dialogue.