Last week Amazon released Jeff Bezos’ letter to shareholders and for the first time announced the size of its Prime membership: 100 Million. That’s right, 100 Million customers who contribute nearly $10 Billion annually to Amazon solely in membership fees.
For a long time, we have admired Amazon and studied the company, especially its impact on customers and the marketplace. It’s an ongoing topic of our proprietary research study and also served as part of the inspiration and recognition that it’s time for something very different in terms of loyalty marketing.
We interchangeably refer to this next evolution in customer loyalty marketing as Loyalty 3.0, Amazonification and Loyalty-Infused CX (customer experience). In a sentence, we define this simply: pay attention to customers and act accordingly.
Amazonification is directly reflective of the company’s influence on customers. Given that there are 100 million of them that pay to do business with Amazon, it conveys the relativity that is important for nearly every other brand in the US and the rest of the world. Our research underscores this influence and reveals that Prime members have higher expectations, higher levels of engagement and higher value. They also have higher levels of loyalty, as the Prime retention rate has hovered around 95%.
If you are a brand leader, an aspiring challenger or anything other than an intentional laggard (those do exist!), it is essential that you understand what has made Amazon great. While the lessons are many (more to come in subsequent writings), here are the fundamentals:
- Leadership matters. Bezos has been unwavering in Amazon’s commitment (loyalty) to customers. Since Day 1. And as he closes this year’s letter, “It remains Day 1.”
- Obsess about Customers. From Day 1, and the company’s first letter to shareholders in 1997, this has been the case. This unwavering commitment is exemplified in this, one of our favorite Bezos quotes: “If you're competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.”
- Complacency is death. It is essential to be fundamentally disenchanted with the status quo, and the current state. Customers feel this way (I certainly do!) and if you as a brand leader fail to recognize this, then you will lose.
- High standards. Quality matters, in general and to customers, who consider quality, along with price, table stakes. If you don’t hold yourself and your team and your business to such standards, customers will disengage.
- Maintain a long-term focus. Amazon did not become among the most valuable companies in the world overnight, but rather over more than two decades. It has made decisions that prioritized long-term value over short-term gains and that steadfastness, coupled with the factors above and others, make it great, consistently.
It's easy to pretend that Amazon is not relevant to your business. We hear it all the time, usually in the form of people being “human focus groups” and lamenting that they “don’t shop there”, aren’t in retail, or aren’t a digital brand. This myopic perspective increasingly means you will fail to be relevant, engaging or valuable for your customers.
In true Amazon form, Bezos’ letter to shareholders is as transparent as always. It is Day 1 for Amazon. What day is it for your business?