Prime movers
By Retail Technology | Tuesday July 25 2017
Hot off another big Prime Day, ICLP general manager Jason De Winne looks at how Amazon uses their latest consumer technology to build a deeper bond with customers
It’s official – this year’s Amazon Prime Day was the biggest day yet for the online retailer, surpassing sales made on Black Friday and Cyber Monday last year in the UK and around the world. Amazon absolutely smashed their own records, growing 60% when compared to their last Prime Day in 2016.
Launching Prime Day was always a bold move from the ecommerce giant. After all, it comes linked to no particular date in the calendar and doesn’t coincide with any existing global holidays. It also falls during the middle of the working week and when the majority of consumers are usually still a couple of weeks away from their next pay cheque. However, its success is no accident and is the culmination of an increasingly sophisticated strategy for deepening loyalty with their customers using the latest technology.
Of course, one of the main reasons behind the success of Prime Day is that it isn’t seen to be offering just another sale. Instead, it’s framed as a celebration of their customers and a time to reward their Prime members. Amazon now has the data and insight to provide targeted and effective messages that build excitement and good will ahead of Prime Day. By giving their best deals to Prime subscribers, Amazon also helps to create a sense of satisfaction for those on the inside, while those on the outside must contend with a fear of missing out. It clearly worked too, as Prime Day 2017 saw more new members join Prime than on any other single day in Amazon’s history.
Additionally, given Amazon provides these offers just to their ‘paid up’ members, they’ve essentially taken a segmented approach to their loyalty strategy – rewarding their most committed customers. The success that Amazon has had with this approach has caused many other brands, including retailers, airlines and even retail banks to look into the subscribed loyalty model.
Sophisticated
More interesting though is how Amazon is using its increasingly sophisticated technology ecosystem, along with discounts and rewards to encourage customers to deepen their relationship with the brand. Most commentators can’t decide if Amazon is a retailer or a technology company anymore (although realistically it’s both), with the last few years seeing the launch of Amazon’s industry leading voice assistant Alexa, connected one-push ordering Dash Buttons, and an ever expanding range of eReaders, tablets and streaming sticks.
One of the key features of Prime Day this year was the deep discounts on Amazon’s own technologies. In fact, the most popular purchase amongst Prime members this year was Amazon’s Echo Dot, the cheapest way to integrate Alexa into the home. While these are interesting and useful pieces of technology, they are also part of a wider strategy to integrate shoppers more deeply into the Amazon ecosystem. Not only do these devices make shopping simpler by taking as much friction out of the online ordering process as possible, but they also allow Amazon to deliver more deals and discounts to Prime members, that other customers don’t receive.
Owning one piece of technology affords Amazon Prime customers the opportunity to open up new offers and deals. For example, this year Amazon offered exclusive voice-only deals and discounts to customers who ordered through Alexa. Amazon has made the ownership of technology a key identifier of how integrated someone is with the brand, and will then use this information to offer incentives that integrate them one step further. Prime subscribers are offered cheaper Amazon Echos, with which they can order cheaper Dash Buttons, and so on.
Loyalty
Anyone looking to improve their loyalty strategy should be sitting up and taking notes from Amazon’s example. It’s crucial that brands deliver offers and rewards that are not only personalised to what their customers will like, but also personalised so as to encourage desired behaviours, including that crucial ‘next best’ purchase.
So for example, how can a clothing retailer appeal to a customer that only buys work shirts with them to consider them for their next purchase of a tie or even their next suit? The theory is the same as what Amazon is doing with their Prime model. Make sure that you know what your customers want, how they are behaving, and deliver interesting and exciting rewards that encourage the behaviour you’d like to see.
Amazon managed to successfully appeal therefore to two different audiences. They were able to energise and deepen the relationships with their existing loyal customers, but they also managed to draw in many new shoppers who joined specifically for the great offers available on the day. The question will of course be how Amazon keeps these shoppers interested and engaged. After all, they can’t just wait until the next Prime Day comes along in a year’s time.
Not every retailer can or should be like Amazon. Indeed, creating your own mini-holiday for your customers is perhaps a little unrealistic even for some of the UK’s biggest and most established brands. However it does show how the concept of loyalty has evolved in retail. Amazon is able to build such strong and loyal ties with their customers because they are seen as useful, exciting, and able to deliver them their next purchase faster, easier, and cheaper if you are a Prime subscriber, than anyone else. Other retailers need to consider whether their loyalty strategies are really improving customer experiences and deepening the relationship between shopper and brand. Amazon is on the march, it’s time to keep up.
