I spent £599.82 at Amazon this Christmas. Having just added it all up, I’m a bit shocked at the total but if I found myself back at the 1st December, I would do the same all over again.
It seems Amazon has succeeded in making me a loyal customer: I choose Amazon even when I knowthat alternatives may be cheaper, faster, more convenient, or better suited to my needs. In fact, had I discovered a month ago rather than today that you can buy theatre tickets on Amazon too – they would have had an additional chunk of my Christmas wallet. There’s always next year I suppose.
So how did I become so loyal?
According to a Deloitte study, 42% of shoppers say they need more than points to shop with a brand. I didn’t earn any points on my £599.82.
If I’d bought everything at Tesco (and I’m sure there is very little I bought from Amazon that couldn’t have been bought from Tesco Direct) they would have "rewarded" me by converting points into vouchers to spend when belts are considerably tighter and I could have done with a bit of a freebie.
Amazon has never materially rewarded my custom and yet year on year my spend has exponentially increased since my first recorded Amazon purchase in 2001 (Da Gospel According to Ali G, by Ali G – apologies if that was your Christmas Present in 2001).
Loyalty it seems isn’t about material rewards (or bribes) and we usually don’t rationally decide to become loyal customers.
It happens through a combination of repeatable behaviours and attitudes. Amazon doesn’t need to bribe me with points or prizes to get me to part with my money. Amazon has cleverly trained me to behave and think in ways that make them the automatic go-to store for almost every buying opportunity. Not only that, along with tens of millions of others, I paid Amazon £79 per year for the privilege of their behavioural training!
What am I talking about? Amazon Prime.
Amazon Prime is responsible for my loyalty. Nobody thinks of it as a loyalty scheme when they sign up – there’s no card; you’re just buying instant gratification; the ability to get your stuff quicker and cheaper (free next day delivery). You post-rationalise the £79 with a vague calculation of the number of deliveries you’d have to have to make it worthwhile. Then the real loyalty building begins…
The free delivery ruse is a way of creating habit in the early days of the relationship. Once you’ve paid £79, you might as well see if Amazon has what you’re looking for. Before you know it, a shopping research habit has been created.
In Sept 2017 research by Kenshoo showed that 72% of shoppers in the US, UK, Germany and Japan use Amazon to research any product purchase and 56% of those go to Amazon first. And of course, because delivery is free, if you’ve found what you were researching, you might as well go ahead and buy it!
But loyalty is more than just habit. Amazon Prime really comes into its own beyond the initial free delivery, habit-forming Trojan horse.
Because of Amazon Prime, my relationship with the brand goes beyond shopping. It’s integral to my family life. Alexa gets us up in the morning and tells me if my train is on time. It brings us the radio, obscure musical requests (I have a couple of music geeks in the house), homework help and the occasional joke.
Dash buttons make the business of restocking boring essentials frictionless (there’s no dopamine hit to be had from shopping for dishwasher tablets and now everyone in the house is responsible for ensuring we don’t run out) and the movies, box sets and cartoons supplement our other in-home entertainment options.
Not to mention the Kindle lending library that sees us off to sleep at bedtime. None of these things on their own would be enough to keep me hooked. Amazon has built their customer relationship with me by consistently bringing me new innovations and experiences.
The thrill of the new has kept me interested and Amazon Prime has again trained me to believe there’s more to come – whether in the shopping space (drone delivery?) or, more generally, in how my connected home operates (what will be on this week’s Alexa update?). Amazon knows so much about me from the data it must hold that a failure to innovate using that data would frankly be negligent.
So if there are any other brands out there who would like my data and my money, no questions asked, the loyalty equation is clear: hook me with a habit and use my data to innovate and keep things interesting. It sounds so easy I’m amazed I have any money left at all.
Shiona McDougall is senior vice-president of strategy at Rapp UK