Amazon Campaigns that explain its dominance

What comes to mind when you think of a great, convenient and easy-to-access online marketplace where you can buy almost anything, see blunt customer reviews and rely on trustworthy sellers? Amazon started off selling music and videos and acquiring book stores to become a bookseller. Since then, it has massively expanded as an online marketplace, stretching globally and serving millions of customers in a score of different countries. Amazon needs no description when it comes to its convenience, promotions, logistics and branding. There is, however, an area that’s lesser known and that’s Amazon’s campaigns main target: not sales, but retention rates. Amazon believes in the customer lifetime value of their customers, seeing a whopping 94% retention, followed by 98% in the subsequent year. If you’re wondering why: it’s because Amazon loyalists spend TWICE as much as the casual customer.

Amazon Prime and Customer Lifetime Value

The statistics on loyalty are unbound. In fact, 95% of Amazon Prime members, when interviewed, said they were extremely happy with their membership and the platform and that they would definitely renew their membership. Over 30% of Prime members visit the Amazon website DAILY – that’s millions of users visiting the website on a daily basis, browsing items and looking at the latest and greatest offers. Sooner or later, they’re bound to end up buying something. There is also a reported 30% to 46% increase (1.5 times) in weekly orderers from 2017 to 2018. This collides with one more statistic, this being that 94% users say their first time visiting an e-commerce site was just to browse around with no real intention of buying. What, then, did Amazon do to retain these customers? How did it promote so much loyalty for what is simply an e-commerce marketplace and an aggregator of different sellers and goods? How did an aggregator and e-commerce platform make an annual subscription worth people’s while and at the same time, manage to make profits? This ties into several things, the most important of which will be mentioned below.

Amazon has a few tricks up its sleeve; the regular email, offers and update incentives that every brand offers to its customers. A mandatory exit pop-up is created for a customer to try and quickly capture them before they leave, reminding them not to abandon their cart when shopping, and asking customers to create an account if they’ve visited the site without one. Digitally, Amazon is a pro at retargeting customers with attractive offers.

Discount Days

What's so incredible about some run-of-the-mill sales promotion? Brands have been doing it for ages. Yet, Amazon does something special and intuitive. Their greatest campaigns, which can be grouped under one big idea, is their Prime Day or Great Indian Sale (in India) coupled with an Amazon Prime membership. While this may come off as a “happy hour” of e-commerce where customers avail goods at serious discounts, it has long-term thought and direction behind it. Prime is hugely loss making, coming in at $1 to 2 billion dollars a year.

These great big sales are used as bait to draw in customers. People who browse the website every now and then, or those that have heard of it but are wary to try it because they don’t trust e-commerce marketplaces (this usually comprises of middle aged and non-tech savvy people) are bound to have Amazon in their consideration set as a customer when these offers show up. These sales are often talked about too, and influencers in the household, which are usually millennials, end up convincing their parents to try Amazon. Keeping in mind the word of mouth and genuinely outstanding offers that seem almost too good to be true…. When you couple the discounts these sales offer with a Prime membership (which in India costs less than a thousand, some partner brands like Airtel even offering a whole year free), it makes sense to become a member. Once these sales are over, prime members are left with a membership and feel the urge to make use of it, availing the free delivery and quick timings that come with it.

Let's get statistical. Members that join Prime shop a lot more (46% versus the usual 22%,). They shop more on Amazon than they previously would (85% versus the usual 56% more than once a week) and purchase from Amazon versus other e-commerce websites (46% versus 13%). The real goal of Prime Day is not to boost sales, but to retain those fickle customers and visitors until they turn into loyalists. Amazon does not capture sales - it captures customers.