Why Amazon Doesn’t Have a Customer Loyalty Program

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If you were to take out your phone or wallet right now, chances are you have at least one loyalty rewards program app or card in the bunch. We all have brands we’re loyal to, and the best of them are wise enough to reward that loyalty with discounts, free shipping, one-day promos, points we can cash in for stuff, and the like.

Loyalty creates a golden loop of sorts for brands—it drives reliable revenue from repeat customers while also diverting their spend away from the competition.

What’s more, companies like Amazon and Apple know that loyalty is a powerful revenue-driver when releasing new products. If you love your iPhone, you’ll consider an iPad. If you’re delighted with Amazon Prime, you’ll consider Fire TV first when in-market for an over-the-top streaming box.



This is known in marketing as the “halo effect,” and it’s one of the drivers behind the success of Amazon and Apple, which have wandered far away from their original core offerings. Satisfy time and time again in one area, and you’ll have saved up enough of the customer’s loyalty currency to spend on expansion into new sectors.

In this article, we’ll explore a few easy ways brands can increase customer loyalty and answer a common question: why doesn’t Amazon have a loyalty rewards program?

Easy Steps to Customer Loyalty

Loyalty flows both ways. Customers receive it from brands as well as spend on them.

Harvard Business Review tells us that the cost to acquire a new customer is five to 25 times higher than keeping a current one, and that increasing retention rates by just 5 percent increases profits by 25 to 95 percent. Little things that don’t cost a company much can go far toward rewarding a customer for her business.

A great place to start is with the time currency. A dedicated line at a check-in/checkout counter for loyalty program members, for example, sends a clear message of value. I absolutely love this at the airline, hotel, and rental car programs I’ve joined.

Other perks like free downloads and birthday discounts are also inexpensive ways to say thanks and build up that loyalty level, which you’re going to need as an insurance policy the next time you screw up (and you will).

That love generates dopamine, and as I associate that happiness with the brand, I’m much more likely to return so I can get my fix of “pleasure chemicals.” Instead of paying enormous sums to acquire new customers, companies should issue these little love notes to keep the ones they have and increase their base through word of mouth.

However, keep in mind that efforts to increase loyalty are only effective after you’ve invested heavily in customer service, a.k.a., “the new marketing.” If you’re not listening to your customers and tending to their needs, I can promise you they’re on the way out the door (and telling friends on the way).

Why Doesn’t Amazon Have a Loyalty Program?

Amazon doesn’t have a loyalty rewards program, yet most people aren’t surprised when it routinely tops brand loyalty surveys. How does that happen?

When I first started working at Amazon, I wanted to know the answer, so I asked my boss why Amazon doesn’t have one.



His succinct response: “Because Amazon is a loyalty program.”

In other words, the company’s leadership principles, goals, programs, customer service in all its forms, and a total commitment to fulfilling promises is what it takes, not necessarily miles or points. Those help, sure, but you can’t buy your way to the top of the loyalty mountain if basecamp is a dumpster fire.

That speaks to why, inside Amazon, landing the number one spot on a brand equity or trust survey was rarely observed or even discussed. When every conversation, every hire, every action is done on behalf of the customer, then only total success is the expectation.

I saw this akin to Hall of Fame Detroit Lions running back Barry Sanders, who calmly handed the ball to the referee after scoring one of his 1,991 touchdowns and never, ever celebrated. Hold aggressively high intentions for your performance and, once they’re fulfilled, act like you’ve been there before. Move on to the next TD.

What’s It All Mean to You?

Customer loyalty takes years to build and a moment to lose. Consumers have so much choice in today’s marketplace where every player jockeys hard for their dollar.

Despite what many brand owners believe, customers have every right to be promiscuous and don’t owe you a second chance. You have to earn forgiveness in the currency of loyalty well before you let them down.

Where you work, is the customer experience the first thing on the meeting agenda, or does it start with the bottom line and pleasing shareholders? Is loyalty a “first dollar in” notion or does it sit somewhere behind legal and lobbying?

Try this: listen closely to the verb tenses people use when discussing priorities. Is it past (reactive) or future (proactive) tense?

Next, listen for the pronouns your colleagues use in important business discussions. Are they first-person plural (“we,” inward, self-obsessed) or third-person plural (“they,” outward, customer-obsessed)?



The verbal cues you pick up in meetings will give you an idea of where your brand stands with respect to your customer—and just how far its owners have to go before it earns “brain bookmark” status.

For more perspective on customer loyalty, you can find the book Brand Currency: A Former Amazon Exec on Money, Information, Loyalty, and Time at Amazon.

5 COMMENTS

  1. Hi Steve,

    I agree that “Amazon was a loyalty program” and won’t deny that Jeff Bezos was “putting the customer at the center of everything Amazon does”. Amazon had delivered its promise – they were no doubt a customer-centric company, or even the earth’s most customer-centric company.

    I’m afraid, however, all are PAST tense.

    A few months ago, I forgot my Amazon login password and my primary credit card was expired. I contacted their CS. To cut a long story short, their service agents are bureaucratic and don’t ‘listen’. Their priority is to follow their standard procedures but not to solve my problem. It took me 10 rounds of emails and seven days to log in again. It’s one of the worst service experiences in my life.

    I thought I was just unlucky, until I read the article of a management consultant, Maz Iqbal. In Customer Experience: Is Amazon Going Downhill?, Iqbal narrated his ‘ugly’ service experiences with Amazon:
    http://customerthink.com/customer-experience-is-amazon-going-downhill/

    Global customer service expert Shaun Belding responded, “I am seeing a rapidly increasing number of articles and posts indicating a growing disenchantment with Amazon…. there are very clear signs, as Maz points out, that they are obsessing over cost control.”

    Amazon is also listed as one of The Top 10 BAD Customer Service Stories of 2018. “Imagine that you’ve ordered three cartons of toilet paper from Amazon. The cost: $88.77. Then imagine that you are charged $7,455 for the shipping costs…. She (the customer) complained to Amazon six times. She wrote a letter to CEO Jeff Bezos…. It wasn’t until she took the matter to a local television station and the story went viral for Amazon to take action. Two-and-a-half months later, she was finally reimbursed.”
    http://customerthink.com/the-top-10-bad-customer-service-stories-of-2018/

    The above aren’t just rare occurrences. You can uncover many more of Amazon’s poor service experiences as shared by numerous customers on the web: https://bit.ly/2ZSIDEI.

    You may, nevertheless, argue that the above evidence is insufficient to deduce that Amazon isn’t customer-centric. Please take a good look at Amazon accused of treating UK warehouse staff like robots:
    https://www.theguardian.com/business/2018/may/31/amazon-accused-of-treating-uk-warehouse-staff-like-robots

    and

    Amazon Working Conditions: Urinating in Trash Cans, Shamed to Work Injured, List of Employee Complaints:
    https://www.newsweek.com/amazon-drivers-warehouse-conditions-workers-complains-jeff-bezos-bernie-1118849

    reported by The Guardian and Newsweek respectively.

    One of the core components of customer-centricity is employee engagement or experience. Happy employees lead to happy customers. Makes perfect sense. What would you say about Amazon’s employee experience?

    “Customer loyalty takes years to build and a moment to lose.” I couldn’t agree more. Don’t you think that Amazon is NOT customer-centric, not to say the earth’s most customer-centric company anymore?

    I’d love to hear your thoughts.

  2. It’s true that Amazon’s very high customer satisfaction ratings have declined, and more stories are circulating about incidents involving customers or employees.

    I’m personally concerned more about Amazon’s “bigness” and using its leverage excessively. I’m shopping more with other retailers and brands.

    That said, Amazon still earns very high customer satisfaction ratings, and I’ve experienced consistently excellent service.

    ACSI, known for its rigorous approach to measurement for decades, ranked the top 20 companies based on 3 years of data. Amazon came in No. 4. See this article for details.
    https://www.forbes.com/sites/christopherelliott/2018/07/11/these-companies-have-the-best-customer-service-heres-why/#a0ef2fcb80a7

    Amazon has fallen from its peak, but is still is one of the top brands in the world, as perceived by customers. The gap is narrowing, though, between Amazon and other retailers. In 2018 Amazon was rated 82 by ACSI, down from high to mid 80s in the past decade. That’s just 2 points above the average of internet retail and some major retails like Macy’s, Target, and Wayfair.
    https://www.theacsi.org/?option=com_content&view=article&id=149&catid=&Itemid=214&c=Amazon

    I would also like to add that Amazon *does* have a loyalty program of sorts. Sign up for the Amazon credit card and you earn points on purchases (Amazon and elsewhere) that can be applied to Amazon purchases.

  3. Hi @Sampson,

    Thank you so much for your post, and I hope you had a fantastic holiday weekend (assuming you’re in the US). Also, grave apologies for the delayed response. My travel schedule has prevented me from offering you the response you deserve.

    Your experience with Amazon is hardly isolated, and far be it from me to dispute anything you’ve written. I myself have seen Amazon’s response times lengthening, though fortunately, I’ve faced nothing like your headaches with customer service. As a former leader, I know Amazon senior leadership would be first in line to agree with you.

    But yes, now from the sidelines, it appears the company’s growth may have outstripped its ability to quality-control its front line with the customer. I personally cannot fathom what it might take to maintain tight reins around such a sprawling service enterprise, but if any company has the smarts to fix it, it’s Amazon.

    That said, no excuses—certainly not from me anyway.

    In the book, I express three points with the reader that I’d like to share with you: 1) the experiences and views therein are mine alone and are not necessarily those of the company or its subsidiaries; 2) everyone—the employee, management, internal and external business partner, fulfillment center worker, and yes, the shopper (and on and on), is your customer, and the most critical leadership principle of the 14, Customer Obsession, is required to be demonstrated with every touchpoint, whether direct or indirect; and 3) Amazon would do well to address its record of employee dissatisfaction and perceived “tax-dodging” openly and honestly in language the average person can understand (i.e., not from the Legal department).

    Then add ancillary headwinds like the Queens, NY HQ2 debacle to the mix—which came about well after the manuscript was locked, so I was unable to include that kerfuffle—and we see all-new challenges ahead.

    In short, for more customers than I can recount, the halo is apparently dimming, and you have every right to be disappointed in what has heretofore been a relatively bright service story over 25 years. Certainly, high expectations set over the long term, when dashed, are particularly memorable and feel even more hurtful than they might otherwise. In “Brand Currency,” loyalty is the “amplifier currency,” meaning that when one demonstrates authentic fealty toward a brand and it’s abused, the pain is considerably greater than where there is little or no loyalty at all. (In contrast, high loyalty requited by the brand has an outsize effect in the other direction.) When mistreated loyalty is combined with any of the other three currencies, the blast radius is in orders of magnitude greater. That’s why it’s the amplifier.

    This is what has drawn the ire of the press in the past few years. These failures feel like an aberration at least, willful disregard at worst. You rarely see news reports of low customer satisfaction with, say, the wireless and telecom industries anymore, simply because that runway is decades old. Amazon has borne extremely high expectations, so this new spate of low rankings feels to some like the alabaster is at last crumbling.

    “Customer loyalty is the ultimate outmanoeuvre at Amazon,” I write in “Currency.” Everyone all the way up to the Steam (pronounced “s-team”) is held to relentless standards, and believe me, they must be keenly aware of a fading allegiance. I have confidence they can right the ship.

    But they’d better starting making tangible corrections immediately or the amplifier currency—combined with time, the most valuable—will take a mighty toll.

    I’d love to hear your thoughts, and thanks so much again for taking the time to read the article and write with candor.

    Cheers,

    Steve

  4. Thanks, @Bob, for responding with your thoughts on the article and state of Amazon customer service.

    First, however, let me apologize for my inability to reply with the appropriate attention until today due to travel obligations. I appreciate your patience.

    Now I’ll be perfectly honest with you: I find it remarkable that it’s taken *this* long for stories of customer service dissatisfaction to gain the level of traction with the media and industry surveys that we see today. For a company of Amazon’s size (~600K employees) operating in so many countries, cultures, and business sectors, to have “kept it together” as it were for 20+ years borders on the impressive.

    That said, while we do see more and more column-inches dedicated to poor customer service stories—and they are no trivial matter, to be sure—I’m inclined to believe that a much larger segment feels unease not in their personal customer experience with Amazon’s offerings, but with the sheer scope of the company. We saw it for years with Walmart, but the operative word there is “saw.” Your average small-town American street was littered with mom-and-pop shops shuttered just blocks away from a Superstore, and news cameras lined up to capture the direct ramifications of its “Save Money. Live Better.” tagline for the world to see.

    Not so with an online operation though, where “bigness” is less visual and more visceral, sneakily sowing unease and, if misappropriated, customer attrition. (Not to mention landing on political candidates’ stump speeches.) I’ve heard many people over the past couple of years express concern that “Amazon’s taking over everything.” I remind them that the company that worries you is the same one you jump up and down clapping for when your daughter’s swimming goggles arrive at your door in 45 minutes. Nothing in business these days, it seems, is cut and dry.

    (In full transparency, “Brand Currency” is largely about, down to the individual employee level, the principles behind the company’s “operating system” driving its unprecedented growth. That’s neither a plug for the book nor an endorsement of their organizational approach, just an honest admission.)

    Knowing that Relentless.com was the company’s second potential name (after Cadabra.com was jettisoned for sounding over the phone like “cadaver”), and Bezos still has that URL auto-redirecting to Amazon.com, here’s a personal anecdote not depicted explicitly in the book which I hope adds some “insider” context. (Nothing confidential, mind you.)

    When I started in 2012, while not quite a mandate, it was strongly encouraged for all managers at my level and above to do two things within their first two years: spend two days at a customer service call center and three days at a fulfillment center (FC). The objective: ensure managers from every discipline and country see first-hand and take to heart the “front lines of the Amazon customer experience,” as my manager described it. With the company’s stratospheric growth since then, I don’t know if the program is still active due to what surely must cost millions annually, but I do hope it is. Those two experiences rank at the top of my near-six-year tenure there. Sure, the FCs were labyrinthine, steel- and sensor-laden marvels which felt like the Pentagon had been invaded by armies of boxes moving at lightning speed (or 4mph Kiva robots), and the call centers were technologically advanced stables of highly trained personnel responding to every call with the sole aim of delighting the customer.

    But what I walked away with was much more than just an awe of capitalism at bewildering scale. It was the realization that I had witnessed billions of dollars, invested over a decade-plus, in action, dedicated to offering the lowest cost to the customer (money), a swift and deferential human response to customer concerns (information) where the customer ultimately must get what she wants (loyalty), and military-grade logistics meticulously designed to move parcels to customers as rapidly as possible (time). It took a year to sink in, but I look back now and know those five days poured the foundation for the book.

    The enigmatic CEO has known this all along. Appreciate or fear it, that’s the difference between Amazon and every other company.

    Back then, those “front lines” were still growing and, perhaps more pertinent to this article (and your response), exceeding the expectations of Amazon customers. We were all gobsmacked at the novelty of low prices, wide selection, and fast delivery.

    Years on, those same expectations have grown extremely high indeed; my guess is that they have (maybe temporarily, maybe not) outpaced Amazon’s abilities. I’ve heard comparisons of Amazon to “a drug, where the high wears off and you need more to achieve the same euphoria.” Subscribe to that notion or not, we are witnessing a change.

    We’ll see what happens in the near term—not just with the Prime Day strikes I’ve read about proposed in Europe next week—but with this juggernaut that, I genuinely believe (and was held-to myself), has always had the best interest of the customer in mind.

    Thank you again, Bob, for the time (the most valuable currency) you spent reading the article, and information (most powerful) you spent when sharing your thoughts.

    If you have further ideas, I’d love to read them.

    Cheers,

    Steve

    P.S. Technically you’re right—using the Amazon credit card does offer purchase incentives. This is the sound of me splitting hairs and placing that program into the “repeat financial instrument usage award” category, narrowly avoiding the pure-play loyalty scheme, i.e., traditional airline miles.

  5. It’s definitely interesting that the brands regularly touted as best-in-class are rarely hounding people for surveys and loyalty programs. They all have this type of feedback loop and magnetic carrot more baked-in than the typical firm does.

    Digitalization is seen as the answer for most, but it seems the warts of mis-alignment are often more transparent in digital deployment.

    These facts indicate that joining the bandwagon of what everyone is doing toward loyalty may not be the ideal path. I offer numerous alternatives in my writings, for more efficient and effective ways to reach the current best-in-class level and go beyond it.

    The bottom line from the comments here and your article, Steve, seems to be that nobody should rest on their laurels. It takes ongoing reality-checks to make sure an organization is keeping up with the Joneses — which is keeping up with customers’ evolving expectations in the face of ongoing evolutions within. As you said, “Customer loyalty takes years to build and a moment to lose.”

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