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Amazon Prime – Brilliant way to lock customers

Customer Retention is the best way to grow your sales over period of time. Customer Retention costs less than acquiring new ones. This is the basic reason businesses try to encourage loyalty. Research shows one of the reason prospective customer do not buy is high shipping cost.

Amazon has cleverly rectified this problem with offering free delivery with minimum annual fee.Amazon’s strategy to lock-in customers with services like Amazon Prime and will help the retailer gain share in the online retail market.

“It also works because it exploits some very simple human psychology. Your best customers enjoy the pleasant, repetitive sensation of profiting from every purchase while your business still nets more money – either from the customer’s greater loyalty, or simply because the revised pricing causes them to spend more on your services overall.”
  Rory Sutherland, Campaignlive

Following Amazon prime strategy will be costly in the short run but will increase sales in a long term.

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