The secret to Amazon’s customer loyalty success

The secret to Amazon’s customer loyalty success

Looking at the insane effort customers went through to lay their hands on the iPhone 6, it’s easy to see why many thought Apple would win the customer loyalty game. However, a study conducted in 2011 by research company Brand Keys revealed that while Apple was doing a great job in keeping customers loyal, online retailer Amazon beat them and stole first place. In 2014, Amazon continues to impress with a 93% level of customer engagement vis a vis expectations.

What does Amazon do so well that keeps customers coming back?

A 0.16 cent marketing strategy
When you purchase an item on Amazon and its price happens to fall, the difference is immediately credited back into your account—even if it’s a meagre 0.16 cents. Isn’t this a financially unsound strategy? The time taken to reach out to customers, calculate the price difference, and transfer the money back into their accounts supersedes the financial benefit of the customer receiving it.

But that’s what makes Amazon different from everyone else. With the 0.16 cents transfer, Amazon tells customers that it runs an honest business built on integrity, and that it always puts the customer first. Similarly, while the minute refund might not make a big disparity in the bank accounts of your customers, it can mean a big difference in terms of the place you have in their hearts.

Amazon Prime
Amazon also has a killer program that not only promotes loyalty, but also has customers paying for it. According to a press release by Amazon in late 2013, Prime has tens of millions of members worldwide. However, looking back at its history, Amazon Prime originally started out as a “discount” program that was based on a simple promise—pay $79 a month to get free 2-day shipping. Notice that the shipping isn’t actually free, because customers pay for it. But somehow, Amazon managed to increase satisfaction by allowing customers to feel as though they’ve been rewarded with free shipping (and who doesn’t like free stuff, right?)

Another reason for the success of Amazon Prime is that it targets the customer’s pain points (shipping rates) and soothes it for them. Furthermore, the free shipping rate actually promotes expenditure and a survey reveals that Prime members spend twice as much as non-members.The option to gift Prime memberships to others is also an ingenious plan in getting current loyal customers to pay for and spread the good word of using Prime.

If there’s ever a need for your business to create a loyalty program, Amazon Prime should be your benchmark.

Traditional values
As the customer service game increases in competitiveness, some businesses might find themselves losing a sense of direction. Innovation works, and creative methods of lending your customers a helping hand might just help you win them over. However, sometimes it’s important to pay attention to the core of your customer service. Amazon does this by ensuring that the customer service they provide stays true to the original needs of the customer. When they clinched first place in the National Retail Federation Customers’ Choice Awards, customers used words like “efficient”, “fast”, “no hassle”, and “easy” to describe the level of service they received.

Notice the absence of creative tricks? Sometimes meeting the real needs of your customers means that you provide consistently great service that won’t become the topic at the dinner table, but pleases your customer endlessly. Check out this book, which explains how the “wow” factor in customer service is increasingly becoming less relevant.

All that glitters is not gold
While customer loyalty may seem like a sure-win game, there are some potential drawbacks (unbelievable, we know) of having loyal customers. As the saying goes, there’s no hate without love. Loyal customers may love your business, but sometimes all it takes is one disappointing interaction to turn your biggest fans into your most vocal haters. Although loyal customers tend to give second chances to companies when they make mistakes, that’s only one opportunity to make things right.

Customers that are loyal to a brand often have higher standards because they know exactly what the business is capable of providing—they’ve personally experienced great service and amazing products, which is why they’re always expecting better. It can escalate to a point where the costs of keeping customers loyal are greater than the profits they generate. The business then has to decide if it’s worth upsetting its most loyal customers in order to cut costs and increase revenue.

One way to combat this is to identify the loyal customers that are good for business. Typically, loyal customers are not extremely profitable (only 20% are), but holding on to the ones that matter and attracting similar customers can help benefit the business.

Customer loyalty and satisfaction might seem like a tough goal to achieve, but it doesn’t have to be. Think of them as a common end point—doing your best to make your customers happy. It requires commitment and consistent hard worth, but the rewards are worth the effort.

This post was originally published by Zopim. Since joining Zendesk, Zopim has been welcomed into our product family as Zendesk Chat, along with a number of treasured belongings.