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Getting what you pay for: How Amazon’s membership fee retains customer loyalty

Amazon’s $20 increase for Prime members certainly drew a lot of derogatory hoopla this past week with social media and forums all buzzing with criticism about the 25% hike. In fact, according to Brand Key, a loyalty consulting agency, Amazon’s ratings dropped from 93% to 83% two days following the hike.

“Based on immediate Prime member reactions, they may have underestimated the negative effects of the increase,” stated Brand Key.

For anyone not familiar with the Amazon loyalty program, there are estimated to be about 20 million Prime members in the United States. These are the people who spend twice as much as non-Prime members annually, and it’s all about convenience, selection, and price comparisons. And why does this happen? Say it anyway you want, but the best part of any kind of loyalty program is the money a customer saves versus the cost of the rewards’ programs. Now Amazon has never raised the price of their premier rewards incentives since its conception in 2005, and the “thinkers” threatened members with a $40 increase, and then magnanimously acquiesced to only a $20 increase.

My formal declaration arrived yesterday:

Dear Cheryl:

We are writing to provide you advance notice that the price of your Prime membership will be increasing. The annual rate will be $99 when your membership renews on August 1, 2014.

Even as fuel and transportation costs have increased, the price of Prime has remained the same for nine years. Since 2005, the number of items eligible for unlimited free Two-Day Shipping has grown from one million to over 20 million. We also added unlimited access to over 40,000 movies and TV episodes with Prime Instant Video and a selection of over 500,000 books to borrow from the Kindle Owners’ Lending Library.

For more information about your Prime membership, visit our Prime membership page.


The Amazon Prime Team

So what am I getting for the extra money? Amazon has promised to maintain the free two-day shipping, although there have been lots of complaints about delivery in that time period. Amazon has promised access to their digital library also, but I haven’t read where my customer service is going to increase with the higher dues, but I’m still going to renew my subscription.

And so all of that brings some ideas to promote customer loyalty in smaller businesses. All loyalty programs seek to turn consumers into loyal customers. Thoughts are that even though some customers are going to leave Amazon because of the “principle,” but let’s face it – Prime customers spend an average of 150% more than non-Prime consumers because they want to get their money’s worth.

For many of us with a small business that might benefit from a reward’s program, can we be a bit more innovative than just showing a card after spending a ton of money? No doubt the free reward cards are an incentive to customers returning, but why not give the Amazon Prime idea a turn? For instance, a local restaurant might offer a membership fee which then entitles patrons to preferred seating, preferred reservations, a bottle of wine or special appetizers. Perhaps a retail establishment could offer prepaid bonus cards where an initial fee is paid, and then the customer enjoys a constant discount on merchandise and special incentives during holidays and peak shopping hours.

In the Jacksonville, Fla. area, a beachwear boutique offers their customers a subscription to newsletters and special promotions. Many ardent swimsuit devotees take advantage of the latest styles, health, beauty hints, and private promotions which always includes two-day free shipping.

Not everyone is going to be a disciple of reward programs, but the whole structure of the idea is just a motivating factor into customers buying more and staying loyal; we all want to get our money’s worth!

Brick and mortar stores can still outdo Amazon with ‘Amazon Can’t Do That’

Hurried ShoppersIn a study titled “Amazon Can’t Do That” polling 1,500 consumers spanning the three generations of Millennial, Gen X, and Boomers research group, WD Partners concluded that shoppers still prefer feeling, walking around, and gathering with friends and families during the holiday shopping season. Whereas Amazon is no longer just a store for books, the grand giant now sells everything that can be sold or delivered, so how do local stores compete, and what needs to be done to gain customer loyalty even after the last ornaments have been neatly tucked away?

As convenient as it was to shop on Cyber Monday, the news media burst  with headlines displaying throngs of shoppers postponing their family turkey dinners to stand in line for incredible deals such as 50″ flat screen televisions for $199, kitchen appliances at hefty discounts, or the most popular toys being sold in record numbers at Toys R’Us on Black Friday. Mix that with movie stars such as Jessica Simpson, Justin Bieber, and others superimposed talking to Kris Kringle in the Macy’s Department Store advertisement, which for the first time ever, opened on Thanksgiving Day, there’s still some profound popularity for the brick and mortar experience to find good service, good sales, and the nostalgia of the Season.

Still stores can’t depend on that warm and toasty experience shoppers love as they purchase gifts for their families and friends. Stores need to give customers what they want and make the experience pleasant if they want to see these same people post holiday time. If the shoppers’ experiences wind up with poor customer service, it’s apt to show up quite quickly on social media, and that could end up in a long run to recovery. It’s about making the experience stand out; some bonuses the shopper may not experience if they chose the online shopping path can also help build loyalty. For instance:

  • Offer free attractive gift wrapping and have numerous employees there to keep line waiting time to a minimum.
  • Offer free shipping for more expensive and luxury items with insurance.
  • Make customer assistance convenient and quick for shoppers. Use email, telephone calls, and live chats to help with service.
  • Use loyalty cards and give one out to every customer during the holiday shopping season that can quickly add up and provide a benefit or discount after the season. Make it an attractive offer and build customer loyalty at the same time.
  • Make sure to thank every customer, apologize for any oversight, correct the problems, and ask how you can be of any further assistance.
  • Offer discounts for multiple purchases. Everyone likes “buy one get one free.

According to WD Partners, however the brick and mortar store should be ” a place of inspiration and ideas that leaves shoppers with a high or sense of euphoria. The in-store shopping experience must offer more than a warehouse does. Retailers who provide this type of shopping experience will be successful this holiday shopping season.

“The store should be a place of inspiration and ideas that leaves shoppers with a high or sense of euphoria,” Lee Paterson, executive vice president of creative services of WD Partners, said in the study. “The in-store shopping experience must offer more than a warehouse does. Retailers who provide this type of shopping experience will be successful this holiday shopping season.” – See more here.

Amazon.com still a leader in customer service

IMG_4777Amazon.com’s newest customer service facility opened on Friday with a fanfare of speeches and a ribbon-cutting ceremony. The new 70,000 square-foot center in Kinetic Park, West Virginia was described as a “perfect fit” by Vice President of Amazon customer service Tom Weiland. The new site will provide the company with more flexibility to train workers and take care of customers.

There are approximately 500 employees, and Amazon is planning through a job fair to immediately hire 200 more innovators and problem solvers. The company states they look for candidates that know what needs to be done and then acts upon those tasks. Products sold and supported at the Huntington facility will be Amazon’s retail Kindle, Amazon Instant Video, and Amazon Prime. Service representatives will be handling phones, emails, and chat contacts.

Customer service representatives are recognized as valuable partners in the company’s success also. Creature comforts such as a quiet reading areas, game room with television, pool tables and ping-pong tables are available for some downtime.

So what makes Amazon so successful? After all the company is rated as one of the favorite online businesses customers want to use. The answers are obvious – Amazon makes everything easy. The company offers low prices, vast selections, fast delivery, and convenient buying and returning. The focus is on the customer experience and having everything the customer wants.

Amazon’s innovative ideas have resulted in price guarantees, alerts to rising and dropping prices, and through this builds consumer confidence – enough to be labeled as one of the “most reputable” businesses. Their product reviews have surpassed most other sites, and more people continue to use Amazon as a research tool. Even the company’s technological advances such as the Kindle e-reader, the Android app store and movie streaming service has set them apart from their competition.

In my own experience, my son just purchased a Kindle for my birthday recently, and not more than two-weeks later, the Kindle Fire was announced. I had already thrown most of the packaging away, but wrapped up the original one, sent it back, no questions asked and I am eagerly awaiting the new one when it is released on November 15.

When once asked what founder of Amazon Jeff Bezos thought about on his own time, he responded he was obsessed with customers and felt driven to become the most customer-centric company on the planet.  It looks as if that might be happening.

photo credit: Chrysaora

Amazon.com takes first place in customer satisfaction

A Christmas Customer Satisfaction Index survey showed Amazon as the top online retailer to best satisfy consumers during the busy holiday shopping season. The study, done by Fore See Results stated that Amazon offered the safest and best online opportunities, but also showed the lesser e-commerce sites slipping and failing to meet the improving standards of the larger companies.

The survey was based on five main categories:

  • Quality of service
  • Functionality
  • Price
  • Merchandise
  • Quality of content

What is of real significance is the more satisfied a customer was with their online retail experience, the more likely they were to purchase online and recommend the site to friends and relatives. When customers have a good experience, they return and stay loyal.

Smaller online companies are going to be eaten like the small fish in the big bowl if they don’t use additional resources to continue to improve their services. They need to rethink what the larger companies are doing to compete in the ever improving market. So what are customers getting from Amazon that they find they are not getting from smaller online retailers?

Besides the most obvious, consumers want to be sure their purchasers are secure and are looking for an engaging and satisfying experience. What that means is that customers are actively comparing prices between different websites and looking for the best deals. With that comes the search for discounts and vouchers prior to their purchases. Customers are looking for a complete experience which shows them the product description, customer reviews, manufacturer specifications, guarantees, and of course, the best prices of all the online competition. Then the customer moves on to the quality of the customer service experience, ease of checkout, security measures, and the significance of the entire online experience becomes the buyer’s reality.

Interestingly enough, the survey also asked how shoppers ended up at specific websites. Primarily 46% were influenced by the familiarity of the brand, 13% used search engine trawls, 10% went to a site because of a promotional email, and oddly only 4% were influenced by social media. People using mobile and smart phones rarely made purchases that way, and mainly used the devices to research prices, compare product specifications, or do product research. Companies might be reconsidering the heavy financial investments they have been making in promoting the mobile advantages.

So the questions and answers remain – half of the visitors who come to websites come to research and not to buy. Only one-fifth of those shoppers purchase online, so online retailers need to figure out exactly what customers want, and convert all of these browsers to buyers by offering best product selections, best prices, and the best service.

photo credit: hospi-table

Simple Returns with Amazon.com

Amazon_com_200I know this is my second pro-Amazon post in a week or so (the first was this one: Amazon Thinks Ahead), but that’s just a coincidence that resulted from me using Amazon a lot over the last three weeks or so.

One thing I noticed after I ordered something I didn’t actually need was that Amazon has what is probably the simplest return process I’ve ever seen from any online company. Here’s the said process as I experienced it:

  1. Login to Amazon.
  2. Locate the order that contains the item you want to return.
  3. Click “Need to return an item?” (or something like that) and select the item you want to return.
  4. Pick from a drop down box about why you want to return the item (I chose “No longer needed”). Enter in any optional comments about why you’re returning the item.
  5. Click next. Decide if you want to print out a USPS postage label from Amazon (they deduct the postage from the refund amount) or mail it yourself and deal with the postage yourself. (If you’re returning the product for something that is Amazon’s fault (defective product, wrong item, etc.), they cover the postage for you.)
  6. I chose deal with it myself and was then able to print out a nice RMA form, along with a pre-addressed shipping label.
  7. Include the form in the package with the product you’re returning, mail it off, and then wait for the refund.

It was very simple. I didn’t have to call anyone, I didn’t have to hunt down anything on their website, and I didn’t have to wait for approval or explain my situation to anyone. It’s all very automated and very simple. This isn’t surprising given how Amazon works in general, but it’s an excellent return process that any company could learn from.

Amazon Thinks Ahead

I like Amazon.com and I’ve never been ashamed to admit that. I buy pretty much everything I can on Amazon, compare prices using the site, and have had nothing but good experiences with the company. I agree with most of the ways they do things and I like using the site. Given all this, I wasn’t surprise when I found out something that Amazon does that’s pretty cool; they think ahead.

I had to have something I bought on Amazon sent to a PO Box. With some companies, this is a painful experience at best. Carriers like FedEx, UPS, and DHL can’t deliver to PO Boxes because they’re run by the US Post Office (obviously, a competitor to the aforementioned companies). Only the US Postal Service (USPS) can deliver to PO boxes. A lot of big product companies use different algorithms to decide which carrier to use based on pricing, distance, delivery time, etc. I believe that Amazon does this, but for customers with a PO box, they do something better.

With Amazon, every customer who puts the words “PO Box” in their shipping address will automatically get their package shipped via USPS. It’s as simple as that. No worrying about returned packages, no lack of delivery guarantees because it’s a PO box, etc.

This isn’t a complicated thing to make work behind the scenes. It might cost Amazon a little bit more than their “optimal” carriers for regular home delivery, but it saves their customers a lot of hassle. Companies that act this way and think ahead about what sort of problems certain types of customers can run into and then work to address those problems quickly and efficiently tend to do well when it comes to customer service and the customer service experience. I thought this was a great example of how Amazon handled the situation.

photo credit: thisisbossi

Amazon Gets Call Backs Right

I talk about click to call/call backs every now and then. Recently, I saw a post on the GetHuman blog about how well Amazon did with their click to call/call back solution. Amazon seems to have used the click to call technology to their advantage. eStara provided their thoughts as well.

The technology was able to tell that Lorna was logged in and automatically verify her identity. By checking out who you are logged in as, they can skip account verification, and answer questions right away. I believe that when companies use click to call for reasons like that, they are using it effectively. It seems to be a powerful technology and like many technologies, when it’s used correctly, it can be a lot of help.

By doing this, Amazon can avoid a lot of frustrations. It saves time on the call and subsequently, saves the company money. Lorna was connected to a representative right away, which is a lot better than being connected to just a hold queue. That seems to be what a lot of companies do with click to call – they just connect the company to the hold queue.

Lorna pointed out that the represenatives sounded foreign and the company was having some technical problems. She also pointed out that the prompts talked a bit much, but weren’t too bad.

I don’t like how Amazon forces you to use click to call – they should allow you to just call a number as well. However, since they do click to call right, it isn’t so bad.

I wonder if GetHuman is going to start including click to call in their ratings? Should be interesting.

A well handled situation by Amazon

I talk about Amazon fairly often at Service Untitled. As I’ve mentioned, I do a vast majority of my online shopping on Amazon (in fact, I bought an SD card for my new phone from Amazon on Friday) and have had very few problems with them.

I’m not sure if you are aware of it, but Amazon has a 30 day price matching guarantee. It works like this: say you buy item X for $35 on January 1st. Then, on January 9th, item X is marked down to $20. Amazon’s policy would let you get a credit/refund for the difference ($15) as long as the price is lowered within 30 days. I use a free service called Refund Please that watches the price of the items I enter into it (each Amazon item has an easy to find product ID) and notifies me of when the price drops.

A week or so ago, I got an email from Refund Please telling me that an item I had bought for about $40 about two weeks earlier had dropped by about $10 on Amazon. I went to Amazon’s customer service page, gave them the order information, and asked for the credit.

A day or so later, I got a reply from them saying they couldn’t issue the refund because it was from a marketplace seller. I didn’t quite understand why (it said the item was sold by Amazon) and asked if they still had the policy and such. About a day after I sent that email, I got a reply from another representative at Amazon telling me that she looked into the issue and though Amazon does not provide refunds for marketplace items (which apparently it was, though I’m still not 100% sure as to why/how), but since I was a good customer, she would give it to me anyway. The credit was applied to my account and I was set.

Was this a smart move on Amazon’s decision? It sure was. They could have looked at my account in two seconds and see a few things:

  • I frequently shop on Amazon.
  • I spend a fairly good amount of money on Amazon.
  • I buy lots of different things from them (books, DVDs, computer stuff, etc.).
  • I bought a lot of stuff over the holidays from them.
  • I have about 70 items on my wish list of things to get at Amazon.
  • I have bought quite a few books about customer service from them.

Just one of those would probably be enough to convince them to give me the benefit of the doubt and simply give me the credit. Amazon did thing right by empowering their representative to credit me without having to go through some long and drawn out process. It was definitely the right move and made the customer service experience a great one. It is another motivation for me to keep shopping on and referring Amazon.

Amazon is also pretty good about following up. Though their survey is by no means advanced (it asks if your issue is resolved and if you want to provide more information. If you say you want to provide more information, you are taken to a standard email form).

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