Brands, manufacturers, retailers and distributors are all very mindful of the Amazon effect. The e-commerce giant controls almost half of all e-commerce sales in the US. Further to this concern is the fact that most people use Amazon to search and find products. The search engines such as Bing, Yahoo or Google are still being used to some degree but far less than Amazon.
Right now, 57% of them find that Amazon is a major barrier and almost just as many of them feel that Amazon is making the market worse. Brands, manufactures and retailers need to find much better ways to compete with Amazon and most leaders are banking on advanced loyalty solutions to do just this. According to Wunderman Thompson, “27% of digital leaders believe loyalty is one area that Amazon does not do well.”
They’re probably thinking this because the cost for a Amazon Prime membership is $119 per year. The program is very transactional in nature and does little to provide the type of customer experience that creates real customer advocacy. For Amazon, it doesn’t really matter because they have perfected the customer experience which they (customers) value tremendously. Other brands, manufactures and retailers can leverage emotional loyalty to better engage with their customers and win shoppers away from Amazon.
Amazon’s eCommerce shop generates significant sales, and Amazon Prime has the hallmarks of loyalty while operating as a subscription service. Because of this, it fails to really capture the hearts and minds of customers.This is because Amazon Prime provides a transactional and convenience benefit, not an emotional bond with the company. Coupled with the fact that Amazon Prime provides no real incentive to continue purchasing on Amazon other than to take advantage of your monthly payment and one-day shipping, loyalty is definitely the way for eCommerce retailers to go to compete with Amazon.
Loyalty programs help companies by giving customers goals to strive for. Emotionally engaging loyalty programs activate the customer’s desire to be part of a community. Loyalty programs lift revenues – Sugarfina, the boutique candy company, saw their revenue increase by 15% and repeat transaction frequency increase by 57%. We encourage you to learn more about the Sugarfina Rewards program powered by Annex Cloud here.
Mackenzie-Childs, an artisan furniture supplier, also saw similar lift from their “truly MC” loyalty program powered by Annex Cloud. Using advanced loyalty techniques such as Surprise & Delight techniques and the advanced loyalty features, Mackenzie-Childs saw a 20%+ Average Order Value (AOV) and a 42% increase in repeat purchase frequency.
These loyalty performance metrics are compelling, significant and very meaningful. With these types of results, it’s no wonder that many seasoned and experienced digital leaders are looking to add loyalty to help them compete with Amazon. A well thought out loyalty strategy is the great equalizer in the Amazon era. We certainly expect more and more brands and retailers to rely on loyalty as we enter the new decade.