Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
After the retailer raised the annual fee for its free, two-day shipping program by $20 last week, Prime members are rating the brand significantly lower in terms of value and loyalty, a survey says. "This is the classic example of when you delight someone and then that delight becomes an expectation,” says Brand Keys president Robert Passikoff. “When you don’t meet the expectations you disappoint them.”
79, it turns out, might be prime in more ways than one to certain consumers.
Since Amazon.com Inc. raised the price of its annual Prime membership fee from $79 to $99 last week, member satisfaction with the brand declined 10 percentage points, according to a new survey by customer loyalty and engagement research firm Brand Keys Inc. While the higher price isn’t affecting all aspects of how Prime members respond to the brand—for instance, Amazon continues to rate high in terms of its merchandising and selection—it is putting a damper on the value customers attribute to the retailer, says Robert Passikoff, Brand Keys founder and president.
Brand Keys surveyed 1,050 self-identified Amazon Prime members online between March 14 and 16. It compared the results to those logged for Amazon in Brand Keys' annual Customer Loyalty Engagement Index, prepared each January, Passikoff says.
In January, Brand Keys rated Amazon at a 93 out of an ideal 100, in which a retailer meets all customer expectations. Amazon has come in first among online retailers each year over the decade Brand Keys has been analyzing brand approval, Passikoff says. This past weekend, however, responses from Amazon Prime members docked the retailer’s ranking by 10 percentage points, bringing it down to 83 out of 100. Brand Keys did not say whether that puts Amazon beneath other online retail brands.
Amazon, No. 1 in the 2013 Internet Retailer Top 500 Guide, will likely be able to come back from this temporary hit in brand performance, Passikoff says. “But it’s going to take time, because this is the classic example of when you delight someone and then that delight becomes an expectation,” he says. “When you don’t meet the expectations you disappoint them.”
Amazon did not immediately respond to a request for comment.
Even when its brand is coming in at 93 out of 100 on the Brand Keys scale, Amazon leaves 7% of room for competitors to steal away customer loyalty, Passikoff says. “This is a cutthroat business,” he says. In response to Amazon’s news, some competitors are already swooping in. For instance, two-day shipping program ShopRunner has begun offering Prime members a free one-year trial of its $79 annual membership. ShopRunner provides shipping from more than 85 e-commerce sites, including those of Toys ‘R’ Us Inc. (No. 30 in the Top 500 Guide), Blue Nile Inc. (No. 74) and eBags Inc. (No. 149).