Are Loyalty Programs Worth It? Ask Amazon - eMarketer

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Are Loyalty Programs Worth It? Ask Amazon

Amazon Prime members spend far more than non-Prime customers

December 15, 2014

One-off deals and low prices are great, but customer loyalty is better. As many as 50 million people consider themselves Amazon Prime members, an RBC analyst told investors earlier this year. Amazon Prime is’s loyalty program, which guarantees free two-day shipping on most orders with no purchase minimum and streamed access to tens of thousands of TV shows and movies. And though the price of membership has increased more than 25% since the same time last holiday season, from $79 to $99, its members remain engaged—and purchasing more than non-Prime members.

Share of US Amazon Users Who Are Members of Amazon Prime, Sep 2014 (% of respondents)

In September 2014, RBC Capital Markets surveyed more than 4,000 Amazon customers in the US and found that 37% were Prime members. How important are loyalty programs to regular customers of the ecommerce giant?

If their purchasing habits are any indication, then very. Prime members are more likely to order items from because they know the items will be shipped quickly.

Prime members also spend more. While non-Prime customers said they had purchased items with prices below $25 and between $25 and $100, Prime members were throwing down money for bigger ticket values. The disparity between the two groups’ purchasing habits showed most starkly beginning at the $201 mark, where 18% of Prime members compared with only 8% of non-Prime customers.

In November 2014, Amazon declared that it would apply Amazon Prime members’ benefits to purchases made on other retail sites, including AllSaints, among others. All customers have to do is click “Log in and Pay with Amazon.” Amazon’s expansion plans indicate its posturing to consolidate shoppers’ involvement in several loyalty programs—a 2012 study said the average consumer belongs to around seven at once—into one that stretches across brands.

While most ecommerce sites preoccupy themselves with customer acquisition, works toward its goal of getting every customer to become a Prime member. Free shipping is an important part of the online consumer experience, often trumping discount offers as a preferred incentive among shoppers over 45. Membership in US retail loyalty programs has grown to more than 1 billion, based on data released in a June 2014 Bond Brand Loyalty survey. For some brands, building out those programs means building better personalization engines; that is, linking customer information data with membership benefits and offers to avoid blanket discounts.

Either way, what shoppers want are monetary rewards for their loyalty, whether they’re shopping for books, electronics or clothing—and whether they’re purchasing online or in-store. In well-developed loyalty programs, both parties win.

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