What Amazon understands about loyalty

Why is Amazon rewarding an already loyal and profitable consumer base with expense perks?

In the 22 years since Amazon shipped its very first book, it has evolved to become a key source for everything from laundry soap to streaming movies. Through Amazon Prime membership, consumers receive unlimited free two-day shipping, free movies and television shows, streaming music and multiple other benefits. Membership has grown increasingly popular, with significant membership gains in the past two years.

And now that membership earns an added benefit — a credit card packed with perks, including 5-percent cash back on all Amazon purchases made with the card.

Given that an estimated 50 percent of American households are Amazon Prime members, the potential customer base for this card is substantial. Amazon Prime members spend nearly twice as much each year at Amazon as other customers, which means they’re already a profitable segment for the online retailer.

So why give an already-loyal customer base even more rewards that could eat away at profits?

continue reading »

More News