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Amazon Prime’s Special Offer: A Primer On Loyalty Don’ts

When Amazon celebrated its Golden Globe win by reducing annual rates for new Prime members, full-priced Prime subscribers wondered why they weren’t getting a thank you. Such conquests to acquire new customers risk turning Prime advocates into “madvocates.”


 

It takes Amazon Prime two days to deliver preferred products to its millions of members. It took about three days for it to turn some of those members into potential “madvocates.”

"Madvocates" can be very damaging to a brand.

“Madvocates” can be very damaging to a brand.

On the weekend of Jan. 15, Amazon celebrated the Golden Globe win of its Prime network program “Mozart in the Jungle” by offering 25 percent off a one-year Amazon Prime subscription – for new members. “Unfortunately,” as BGR.com put it, “existing Prime subscribers won’t qualify for the special offer since Amazon is targeting new customers with this special deal.”

This got me, and some of Prime’s estimated 80 million subscribers, asking: Hey, why are you thanking the non-subscribers?

“Why not offer it to all of us, especially when we’ve been loyal Prime members?” one Amazon customer asked on its Facebook page.

“I totally agree,” another followed. “Why are they only rewarding new members?” To which another subscriber, named Rob, responded: “amazon sucks.”

Madvocates: An Advocate Spurned

Behold the fury of the madvocate. Few customers can be as damaging to a brand as those who feel their steadfast loyalty has been ignored, or unreciprocated.

Indeed, madvocates are more damaging to a brand than customers who never used it at all, because with their firsthand stories comes personal influence, and credibility. Almost one-third of those who have a large network of family and friends and who are likely to recommend their favorite brands are also far more prone to share information about a bad experience, according to a survey by loyalty research firm COLLOQUY.

This survey, of more than 3,000 consumers, revealed the extent to which the socially connected, digital world can altar a brand’s reputation. If your friends and family are apt to take your word on a good product or service, they are more likely to believe your criticism of a bad one.

“They Will Trample Over Your Dead Body”

Amazon is not the only company to place customer acquisition over retention, even as a short-term growth strategy. Telecommunications and cable companies have been honing this practice for years.

Nor is this the first time Amazon cut its subscription rate to attract new members. It reduced the fee to $67 in September to celebrate the Emmy nods for its series “Transparent.” As one commenter to a CNN story in September quipped:

“Phone company, cable company, Amazon – same story. You can be a loyal customer for decades but they will trample over your dead body to try to pick up a new customer. Meh, get used to it. The days where Big Companies look at you as a real human being are long over.”

The comparison should not sit well with Amazon. However it, and other retailers, can learn a few things from the telecommunication and cable industries’ conquest mentality – chiefly, that it does not earn trust.   

Telecommunications and cable companies took eight of the last 10 spots in the 2015 Temkin Customer Service Ratings and six of the last 10 in its Trust Ratings. It should not be surprising, then, that seven companies in these industries ranked at the bottom of the Temkin’s Forgiveness Ratings.

Retention Over Conquest

Amazon, meanwhile, is enjoying increased loyalty among its customer base due to the Prime service, which explains its conquest strategy.

The percentage of Amazon customers who are Prime members rose to 40 percent in 2015 from 25 percent in 2013, according to research by RBC Capital. Almost three-quarters of those members (73 percent) said they shop Amazon at least two or three times a month, compared with 22 percent of non-Prime members. Almost half of those members spend more than $800 a year.

It does not take advanced math to deduce that these numbers call for capitalizing. New-member campaigns are a logical choice, but a retailer can find ways of doing so while sharing its successes with existing costumers.

After all, there is little risk in a merchant spreading the love with its brand advocates. Three of four consumers are fine with businesses giving preferential treatment to customers who spend more money, according to 2014 research by LoyaltyOne.

Amazon does give its Prime members special deals – it recently offered them 20 percent off the preorder price of new games. But this kind of one-size-fits-all offer does not carry the attention-getting flair of exclusive recognition. Here are a few ways Amazon could generate the sense of appreciation among its advocates.

Coded events: An invitation-only sale of new items for Amazon Prime members, kind of like the exclusive sales Nordstrom offers its loyalty members, delivers preferential treatment while also serving as a vehicle for thanks. Amazon could enhance the feel of exclusivity by sending different segments of members different codes to enter the sale (for varying times of day, for example).

Service as incentive: Consumers respond well to special offers and preferential treatment, which is understood. But incentives, like the expiration dates on coupons, will have limited effect if not backed by consistently nurtured customer service. Once a retailer understands why its customers love the brand, it can shape all service and touch points to answer to those reasons.

Let them in: Retailers are nothing without their customers, so why not make them a regular part of the communication? Webinar-like events, which invite a select group of shoppers, can enable a retailer to float concepts or product ideas while making its customers an important (and valued) part of the decision process. Similarly, online social sharing communities, panels and co-development platforms engage customers to be part of the brand, and the brand to better reflect its best customers.

Sure, efforts like these take more than two or three days to take effect, but the payoff will last months and years.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

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