Forget sales, Prime Day is about loyalty

Prime Day strengthens Amazon's bond with its customers. (Marco Verch/CC BY 2.0)

Prime Day may have been a huge sales day for Amazon, but it was also an important day for building consumer loyalty. The annual Black Friday-like shopping spree in July achieves three major goals for Amazon, according to Lindsay Bloom, senior marketing manager at SessionM, a leading customer engagement platform. First, it encourages new customers to sign up for Prime. Second, it strengthens the brand's bond with its customers. And third, it increases a consumer's frequency of purchase. 

According to SessionM, 73% of new shoppers that try Prime become paid members, and retention rates stay in the 90% range each year after that. This is because Amazon follows up on its customer acquisitions with unmatched service and relevant content that keep shoppers coming back again and again.

FierceRetail sat down with Bloom to find out if Prime Day 2017 achieved its loyalty goals. 

FierceRetail (FR): What is unique about Amazon's loyalty to its members that other retailers should strive for?

Lindsay Bloom (LB): Amazon is incredibly advanced in the way it captures its customer data and converts it into something actionable. It not only delivers personalized recommendations for shoppers, but also it uses artificial intelligence to anticipate what customers will need down the road. Many retailers have data, many are working to apply AI, but few are succeeding to use it to impact the shopper journey the way Amazon has. Other retailers are contending with disparate, siloed data sources, which is a big part of what’s holding them back.

FR: Is there anything you think Amazon's program is lacking in the way of loyalty?

LB: Amazon has struggled to find a way out of pure e-commerce and into a brick-and-mortar play. While online shopping is undeniably on the rise, there is still a large market for in-store shopping—be it grocery or apparel—that Amazon is missing out on. We’ve seen them try to overcome that physical world barrier with announcements of Amazon Go and more recently the acquisition of Whole Foods. In-store isn’t going away anytime soon, and it will be interesting to see how Amazon continues to work on that front.

FR: What was unique about this year's Prime Day?

LB: This year’s Prime Day was bigger than each of the years prior. Amazon rolled out new discounts more frequently than in the previous year. This is not just a tactic reserved for big brands; smaller retailers are increasingly able to spin up new offers in minutes, leveraging an individual customer’s preferences, previous purchase history and other behaviors to algorithmically determine the right offer and deliver it at the right time on the right channel.

FR: Are there other brands out there that you think are mimicking Amazon's loyalty? 

LB: As far as subscription-based loyalty models go, Amazon is unparalleled. But it also has vast resources at its disposal that most other brands, subscription-based or not, don’t have access to. Besides sharing the desire to increase incremental sales and customer lifetime value, successful loyalty programs for companies as large as Amazon or as small as Chicken Salad Chick, a fast-casual chain with 69 locations in the South, both leverage liberated, actionable customer data to identify the best offers and engagement opportunities. For example, through its CravingCredits app, Chicken Salad Chick collects item-level transaction and guest historical data, which it then uses to deliver a unique guest offer or discount, verify the guest’s eligibility and seamlessly discount the transaction at the register. This real-time, data-centric approach has helped the chain to increase check size, visit frequency and the percentage of revenue coming from loyalty program members.  

FR: What else can you tell us about the significance of loyalty and Prime Day?

LB: One significant evolution with Prime Day that we saw this year was that other retailers were getting involved as well. Not only are more retailers offering deals through Amazon for the “holiday," but outside brands are offering discounts to try and capture the increased online shopping traffic as well. Google, Best Buy, Sears, Macy’s, Walmart—all are trying to grab shoppers with Black Friday-style deals of their own. The question is, will those other retailers be able to follow up on those deals with the service and content that Amazon has used to create its loyalty dominance?