In Businessweek’s November 24, 2010 story, “What’s in Amazon’s Box? Instant Gratification,” BW reporter, Brad Stone, writes that “Amazon Prime may be the most ingenious and effective customer loyalty program in all of e-commerce, if not retail in general.”
For an annual fee of $79, Amazon.com customers can get free two-day guaranteed delivery on any product it sells. Customers who sign up for the Prime program tend to increase their purchases on Amazon. One customer cited by Stone increased her Amazon buying from 82 items in 2009 to 150 items in 2010 as a result of the Prime program. Even if she finds an item on a competitor’s web site, she’ll come back to Amazon to purchase it so she gets the free delivery.
Analysts point to the Prime program as one of the main factors for Amazon’s 30 percent increase in sales during the recession, while other retailers suffered. That’s why competitors like Wal-Mart, Best Buy, and Target have recently followed suit with their own free shipping promotions.
So you’re probably thinking that it was some high-priced management or marketing consulting firm, which helped Amazon come up with its best-in-class loyalty program. Au contraire.
In fact, it was Amazon software engineer, Charlie Ward, who first cooked up the free shipping idea via an internal web-based corporate suggestion box. Credit then goes to CEO Jeffrey Bezos and Amazon board member, Bing Gordon, for taking the idea and running with it.
In numerous blog posts over the last two years, we have made the point here at New Lantern that a company’s own employees are its single best resource. Your employees possess the talent and creativity that could in fact lead to your organization’s next blockbuster product or service.
I bet there are dozens of Charlie Wards who sit in your company at this very moment. And most likely, they are getting paid for doing a specific task, like writing software code, but are given no incentive for thinking up creative approaches that fall either inside or outside their bailiwicks.
This is an opportunity lost indeed. You owe it to your shareholders to leverage every bit of talent and creativity that exists within your company. Promote creativity and innovation across every part of the company, and at every level.
Incentivize your employees to not only think outside the box, but to forget there is a box in the first place. And seek to identify and nurture these talents via innovative training and other cost-effective, cutting-edge methods.
In doing so, I predict you’ll soon create a shareholder loyalty program that will be second to none.