While reading the marketing and sales blog of Hubspot, I stumbled upon a very interest article regarding the top 5 tools a company can use to retain its customers for the long term, written by Sophia Bernazzani. Hubspot is a company that develops and markets software products for inbound marketing and sales. One idea I found interesting in this blog post was that a brand should try and make sure that once a customer does a purchase with them, it should become much more difficult for the customer to choose a competitor for the next purchase. One way to do this, as stated in the blog post, was to develop a customer loyalty program, which is usually a system in which customers accumulate points or rewards for repeated purchases or leaving reviews for the company. However, Amazon has changed the way customer loyalty programs work through the development of Amazon Prime.
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Amazon prime is a customer loyalty program developed by Amazon, so that customers can receive their orders within two days. Customers pay an annual fee of $99 to upgrade their Amazon account to a prime account. This is one of the first customer loyalty programs in which customers pay in order to receive extra rewards. Usually customers do not have to pay anything for loyalty programs, however Amazon charges people for this service. This is a great example of a customer loyalty program because frequent shoppers feel like Amazon prime is really benefiting and rewarding them.
Sucharita Mulpuru, an analyst at Forrester Research, has estimated that due to Amazon prime, the company is losing around 1-2 million dollars every year. However the company is still continuing with the loyalty program, as customers are making more frequent purchases. An investigation done by the CIRP shows that Amazon.com customers spend around $625/year, while prime members spend around $1500/year.
Amazon Prime is making it hard for customers to do their next purchase with a competitor. Customers are getting quick service from Amazon and they are also paying for the service, so they want to make sure that they take full advantage of what they are paying for. With these two factors together, prime customers keep on making repeated purchases. This is a possible reason to why Amazon isn’t removing its prime service even though they are losing money.
https://blog.hubspot.com
Amazon prime is an excellent example of the idea mentioned in the Hubspot blog. Customers are forced to continue to make repeated purchases. The ideas in this blog will be valuable for companies as Hubspot is a marketing and sales software, and thus is has a lot of knowledge and date regarding brand and customer management.
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