The What Behind Amazon Prime and Why Every Business Should Care

According to new estimates from Consumer Intelligence Research Partners (CIRP), Amazon.com Inc. has 105 million members in its Prime loyalty program. That is 4 million more U.S. consumers than CIRP’s membership estimate in January. Prime members are roughly 57% of Amazon shoppers, according to CIRP. By 2022 there will be 56 million Amazon Prime subscribers in the U.S., and 122 million worldwide.

Factoring in the number of the households in the U.S. (approximately 127.59 million, according to the U.S. Census Bureau) and the 105 million members suggests that 82% of households have a Prime account. 

What does it mean for Amazon?

To put things in perspective, Amazon Prime customers pay 119 U.S. dollars per year; that is close to twelve billion dollars ($12B) in membership fees per year alone.

Morgan Stanley estimates that the average Amazon Prime customer spent $2,486 over the last twelve months compared to $544 for non-Prime Amazon customers. That means that Amazon Prime customers spend over 200 billion ($200B) dollars more per year on Amazon compared to non-Prime customers.

The most recent move on the Amazon Prime strategic execution: Amazon is offering Prime Student subscribers a solid deal on a Music Unlimited plan. Members can gain access to the music streaming service for an extra 99 cents per month.

There is no doubt that Amazon Prime is an all-time example of successful marketing, innovation, and customer loyalty. Amazon Prime's success is not limited to the U.S. After introducing its Prime program in India, Amazon was able to quickly grow in popularity, surpassing homegrown Flipkart in shopper preference and eventually in gross sales.

That prompted giant Walmart to launch a new video streaming service from its Flipkart subsidiary in India as part of its battle with Amazon, according to a report from Bloomberg.

Even CVS is going national with its CarePass subscription program, which offers free delivery on prescription medicines, over-the-counter remedies and other products sold by the chain with no minimum order, for an annual fee of $48 or $5 a month.

That is why I would like to share with you three lessons from Amazon Prime's success story.

Lesson #1–Increase customer loyalty by removing friction. 

Looking at the seamless integration between 1-click ordering, Super Saver shipping, and now Alexa, it is clear that Amazon Prime customers want to simplify their daily lives. 

The question here is:

In your overall strategy, are you including a customer loyalty component that would reduce friction and improve the customer experience?

Lesson # 2–Invest time and resources to get to know your customers. 

Compared to its peers, Amazon develops the most comprehensive demographic profile on each one of their customers. With each interaction, whether web, mobile, or voice-based, Amazon always enhances what it knows about its customer base.

The question for you is:

Are you capturing and leveraging the "what and why" behind each interaction you have with your customers?

Lesson # 3–There are no shortcuts; always take the long-term approach.

Jeff Besos once said, "... companies that don't embrace failure and continue to experiment eventually get in the desperate position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence."

Of course, you do not want to be in that spot ever. The key question for you:

Is your organization using Jeff Besos's perspective, leveraging marketing and innovation, and willing to take moderate risks for long-term benefits?

I encourage you to watch my video on this topic. 

Until next time, cheers!

Josué Batista is a business technology and strategist, solutions architect, international speaker, and writer with a concentration on digital health and emerging technologies, in particular, distributed ledger technologies (blockchain), artificial intelligence, and the internet-of-things. Schedule time with Josué to create and execute a strategic plan that takes advantage of Digital Business Transformation, improves the business value from your technology investments, and unleashed innovation for your organization, employees, customers.?