Stop Calling Amazon Prime A Loyalty Program – It’s Not!

consumer loyalty programs

Last week Skift posted an article, Business of Loyalty: What the Travel Industry Could Learn From Amazon Prime, suggesting travel brands could learn a lot from Amazon’s famous Prime Service. Nothing could be further from the truth… here’s why.

Amazon Prime Isn’t a Loyalty Program

According to Webster’s Dictionary, loyalty is an act of “faith” disconnected from reward.

Amazon-Prime-Isn't-Loyalty-Program

Amazon Prime members aren’t loyal… they’re cheap. That’s right… they didn’t sign up for the original $79 service and now the current $99 service because they love Amazon or are faithful to Amazon… they did it because they save a ton of money. In fact, the more you buy the more you save. And you don’t just save money, more importantly (and I’d argue the number one reason folks continue to use Prime) you save TIME. So while you could certainly call them Social Agents for Amazon, I think calling them loyal ones is a stretch.

Amazon Prime Changes Your Buying Patterns

Once you become a Prime member, you change how you buy. Before you had Prime you weighed the cost of shipping vs the cost of time to go to a store and purchase something. The really analytical of humans might even factor in delayed vs instant gratification factors… but hey, I flunked college Calculus twice, so guess who probably wasn’t getting that complicated in his decision making. But I digress.

Once you have Amazon Prime you no longer have that calculation. There is no shipping cost so now you simply decide “do I want to waste my time going to a store or would I rather watch another episode of House of Cards?” And House of Cards wins…regardless of what you’re buying.

And when you extend that mental buying mindset to everyday items like paper, socks, consumer packaged goods, etc., guess what… you don’t even bother doing the “do I want to…” comparison. The answer is simple… unless I need it within the next 48 hours, I’m buying via Prime.

At the highest end of Bezo’s Hierarchy of Buying you don’t even wait until you need something. See that you’re running low on coffee filters… that’s right, just open the Amazon app on your phone, scan the barcode and presto – reorder via Prime so you’ll have those new filters before you run out of the current supply. Store????? Who needs a store…. besides, there’s another episode of House of Cards that I can watch instead.

Don’t Confuse Loyalty With Reward

The Skiff article went on to discuss various travel loyalty programs, but again, those weren’t customer loyalty programs, they were customer reward programs. Spend more, use more, get more points or credits type of programs. Save up all those rewards and then redeem them for free stuff or upgraded service. This is no different than Amazon Prime where the value of membership increases as you buy more things that get shipped to you free.

Again, that’s not loyalty — I’m not loyal to Southwest Airlines because I like them better, I’m loyal because if I give them most, if not all, of my flight travel, I can get free trips. The same goes for every other reward program I’m in… and brands need to understand the difference.

Reward programs don’t generate loyalty. Reward programs just allow brands to buy their customers’ continued preference. And as long as you’re offering something better than your competition, all will be well in your world.

BUT, the moment someone else matches or betters your offer? Then what happens to all that customer loyalty you’ve been buying all these years?

Case in point — I’m a Hilton Gold Member. Originally I achieved the status on my own during the launch of my book, The Invisible Sale, where I did a 10 day, 10 city launch tour and DoubleTree Hotels (a Hilton brand) sponsored it. So I racked up a lot of points really, really quickly.

Fast forward a few years and I’m still a Gold Member but not because I give Hilton all of my hotel nights, but because I’m an American Express Platinum holder. It’s a loyalty benefit of being a Platinum Card holder. One that I don’t pay any extra to have, but certainly influences my decision to continue paying that rather large platinum fee every year.

Fast forward another year and Marriott and Starwood merge and then American Express offers it’s Platinum Card holders the same Marriott benefit that they offer with Hilton. Link your AMEX to the Marriott program and presto – instant Gold Member. Yet another reason to keep that Platinum Card and yet another reason to feel like the fee is more valuable.

So now when I travel, where do I stay? I mean, I’m Gold on both programs so in terms of loyalty benefits, it’s kind of even. And guess what, I now find that I’m far more willing to leave the Hilton family to get a better deal or more convenient location when Marriot offers it.

NOTE: because DoubleTree sponsored my tour and I believe you do business with folks that do business with you, I still go out of my way to book Hilton properties whenever I travel, but the above story points out that even I, someone who is actually truly loyal to Hilton, can be swayed by reward.

A True Customer Loyalty Program

If you want to build a true customer loyalty program, then get ready to work hard. It’s not as easy as just creating a reward structure and promoting it.

If you want true loyalty you have to earn it every day.

It’s going to start with creating a great product or service. I don’t mean good or better, I mean something that feels like it changes the game completely.

Then you’re going to have to open your eyes and ears to see and hear who your fans are and what they’re saying.

Then you have to start engaging with those fans. Let them know you see and hear them. More importantly, let them know that you care about them.

If you’re looking for models to follow, look no further than music. My buddy Mack Collier has a ton of really good case studies in his book, Think Like a Rockstar.

Musicians have known the secrets of loyalty forever because they’ve had no choice. They couldn’t really create reward based programs because they didn’t control the sale of their music. But they and they alone could form bonds with their fans. And the ones that did the best job of forming those bonds enjoyed more successful and longer careers than their counterparts.

So act like the rockstar and build your customer loyalty program on authentic loyalty vs reward addiction. You’ll be more successful.

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About Tom Martin

Tom is 20+ year veteran of the marketing and advertising industry with a penchant for stiff drinks, good debates and digital gadgets that helps digitally challenged companies create innovative and effective digital marketing strategies. He is the founder of Converse Digital , author of The Invisible Sale and a contributing writer for Advertising Age. Tom guides clients through the digital marketing maze and helps companies teach their sales force how to Painlessly Prospect their way to more sales. Connect with him on Google+ or follow him on Twitter or connect with him on LinkedIn.

Comments

  1. Great analysis, Tom. Most ‘loyalty’ programs like this fail because they build loyalty to the OFFER, not the brand. I was on Amazon Prime for a few years, and now I’ve been off for a few years. When I had Prime I ordered from Amazon almost weekly, now that I don’t have it, I almost never order from Amazon. If Prime was a program that built loyalty toward the Amazon BRAND for me, my behavior wouldn’t have changed when I stopped getting the offer. .

    But the offer went away, and so did my business with Amazon. I still order there sometimes, but about the same now as I did before getting on Prime.

    On the other hand, I am loyal to Publix because I love the brand, the associates are always cheerful and helpful, and the prices are decent. They don’t need a loyalty program to get me to buy there, I’m already doing it.

    Great write-up, off to share!

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