For the latest installment of Digiday Media’s Amazon U series, experts zoomed in on a topic many brands are struggling to get right: retention. Brands desperately want to convert every first-time customer into a lifelong fan, first by coaxing the consumer into becoming a repeat customer and gradually cultivating enduring loyalty to the brand.
Of course, this is easier said than done. Marketers and their bosses are often too busy or distracted chasing new customers, and retention is frequently overlooked. It’s also often misunderstood, which is why we invited two experts in the retention game to share their insights and best practices with us at Amazon U.
This guide focuses specifically on best practices for retention, as well as how top Amazon experts use the tools at their disposal. It requires a mixture of know-how and creativity, as well as an openness to use the bevy of new tools Amazon is rolling out. Here, you’ll learn best practices for retention — which involves crafting the best content to engage customers, as well as knowing and understanding all the reporting tools at your disposal.
For most Amazon brands, the name of the game is finding that new customer. According to Alex Brandstetter, Director of Strategy at Wunderman Thompson Commerce, acquisition is about “scoring a shopper,” in comparison with retention, which he said is more like “winning a customer.”
This is an important nuance. Retention puts the emphasis on cutting churn rates, increasing repeat purchases, decreasing the cost to serve and increasing lifetime value. “Customer retention is very much defense,” Brandstetter said.
It’s seductive to pursue customer acquisition at all costs, but brands who focus excessively on acquisition aren’t positioning themselves for the greater returns driven by repeat customers and loyal brand advocates. Brandstetter said research shows brands who invest in retention will see the return in enhanced profits. “By increasing our customer retention rates by as little as 5%, it’s been shown to increase profitability by 25% to 95%,” he said.
Wunderman Thompson Commerce advises brands on strategies for success on Amazon and on other marketplaces. Brandstetter pinpointed four key areas of customer experience:
- How consumers discover the brand
- The volume and quality of traffic that the brand can drive to its pages
- The content that drives conversions
- Amazon user reviews — the social proof that reflects the brand’s success in delivering a great customer experience.
Those four areas bring about an important guide for finding and retaining customers.
But it’s also helpful to understand how Amazon itself retains customers. Brandstetter said the e-commerce giant’s retention efforts are all about its flywheel; this includes Amazon Prime and the company’s mastery of vertical integration. Amazon uses a membership program like Prime to lock customers in, encouraging them to use Amazon for many products and services outside of retail.
Convenience is the key. What’s most important is that customers are given a promise and provided a service. “Prime members are actually price insensitive, as long as that promise is being met,” Brandstetter said.
The biggest issue most brands face is having a customer acquisition program in place, but not a solid business behind it. Brandstetter said that some clients tend to fixate on top of funnel investments rather than making sure the wheels are turning behind the scenes. “Your products are not profitable if they’re not in stock,” Brandstetter said.
Brandstetter’s team works hard at persuading those brands to change course. The first things every successful brand must do is think about the products they sell and whether that process is friendly and frictionless enough to keep customers coming back. “We focus on really building those fundamentals first in order to get the most out of the investments we put back into the top of the business,” he said.
The trick is to peel the buying process apart and identify areas for improvement. For example, investing in sturdier packaging will reduce return rates, while managing item availability well is just one factor that will send your products soaring up the search rankings.
Listening and responding to consumers is a critical component of building a brand’s Amazon operation. Brandstetter said it’s vital to be proactive about managing the various touchpoints on your PDPs — from user reviews to FAQs and content. “Responding to frequently asked questions, getting ahead of negative experiences by mining consumer sentiment and then building that back into your content so that you’re managing expectations and avoiding that churn is incredibly important,” he said.
It’s also not enough to solely measure consumer sentiment on your own products. Brandstetter recommends that brands mine feedback on competitor items to identify needs that you can build into your own products or content.
Mark Power, founder and CEO of the consultancy Podean, emphasized that content on Amazon powers a retention strategy. Getting traffic to an Amazon listing is one task. Once the customer arrives on the page, the content they engage with can be the difference between a conversion and a missed opportunity. “Content will always be king because content is what brings people back they want to see new products they want to see things that are fresh,” Power said.
Brandstetter talked about building a great brand store with helpful, detailed information on each of your products. “Dynamic, great informational content that helps them make decisions, reinforces the brand promise and maintains consistency across your entire catalog,” he said. Power echoed that, saying a brand store should be a “dynamic, living and breathing micro-site.”
Constantly updating the content on the page boosts customer retention. What’s more, brands should always be testing out new Amazon services to engage with customers.
- Power said including content originally posted to other platforms like Instagram or YouTube keeps things fresh and interesting.
- “If someone comes back to your brand store and see the same store they saw last time, they’re probably going to quickly move on,” he said.
- Brands should also be looking at running tests with nascent platforms like Amazon Live, Power said. Amazon Live’s shoppable streams are likely to become one of the big trends of the near future, so get on board now.
- Currently in beta, Amazon Posts is a new tool that combines advertising with content. Posts are image-forward, shoppable and displayed in a scrollable social-like feed. “I don’t think Amazon is setting out to be a social media platform, but I think it’s setting out to be more social,” Power said. Posts are currently available only to brands who are registered on Amazon Brand Registry.
Power urges brands to think of the people who buy their products on Amazon as their own customers, rather than Amazon’s. The shoppers simply prefer to purchase on Amazon. To that end, he said brands should think of Amazon as a uniquely high-powered customer relationship management platform (CRM). “I would probably even say go as far to say that Amazon is one of the most sophisticated email marketing or CRM businesses that the planet has ever seen,” he said.
Many brands are unhappy with the data Amazon provides — especially as it relates to email marketing. Power, however, said that putting the tools the company does provides next to a few select other services can be very helpful, albeit incrementally. “Using some third party vendors for review generation and post purchase communication is useful, but we don’t believe that it moves the needle to the degree that a traditional email marketing program would,” he said. Post-purchase communications run by third-party vendors lack the “visibility and power” of a brand-owned email marketing program, Power said.
But things may be changing — especially with the introduction of Amazon’s Manage Your Customer Engagement (MYCE) program. “It’s like an email marketing program but at a very, very basic level,” Power said. The tool allows brands to send emails using “very simple templates” to customers who have followed the brand on Amazon. For example, MYCE can currently be used to announce a new product launch. But only customers that “follow” a brand’s page can be contacted.
To grow follower numbers, Power says content is once again the answer:
- Give customers something to engage with
- Surprise them
- Post content that keeps them wanting to hear more from the brand
- Power added brands that actively test the Amazon Posts program are generally seeing their follower numbers increase steadily.
Of course, reaching a critical mass of followers also calls for investing in a holistic Amazon strategy. “Not enough brands have invested in the Amazon experience to then get the followers to then be able to leverage these tools, to the degree that they may be able to,” Power said. Which is to say that many brands aren’t looking at new services to engage, and are rather focusing on other areas.
Looking ahead, Power believes brands will see Amazon expanding the range of CRM-type features available via MYCE — potentially allowing the brand to push messages to consumers based on different triggering actions as the consumer moves through the purchasing journey. Amazon knows it has competition from Shopify and other marketplaces, Power said, and brands will be the beneficiaries as these platforms begin giving up more data.
Manage Your Customer Engagement (MYCE)?
Amazon recently announced this tool, which allows brands to market directly to consumers in a way never previously possible on the platform. Brands can send emails to customers through MYCE, using easy-to-use templates featuring text and images, with clickable links. At the moment, brands can only use MYCE to announce products launched within the last six months, but there are many conceivable applications for the feature. Only brands who have signed up to Amazon Brand Reigstry and have a brand store page can access MYCE. Brands can only send messages to consumers who “follow” the brand’s store page, so marketers need to have a strategy for driving follower numbers in tandem with plans for using MYCE marketing.
“There’s no use going all in on your brand on Amazon unless you’ve got a very robust third party management strategy” – Mark Power, founder and CEO, Podean
Third party sellers can be a thorn in the side of Amazon retailers, but Power said this is changing as brands recognize the need to take control of the customer experience. Brands who have neglected Amazon strategy may find that third party sellers are undercutting them on price, and that the brand has lost control of their PDPs to these vendors. “What we’ve seen is some brands have really been hurt and the product reviews are struggling, their brand presence and their product presence have struggled because they’ve let third parties run riot on Amazon,” Power said. However, all is not lost. With what Power called a “clean up” effort, brands can push back the third party sellers and assert ownership of what is rightfully theirs.
If you peel back the curtain on the 10 most important KPIs that Amazon is concerned about, you’ll notice that 70% of them are directly tied to the experience of buying something on Amazon.” – Alex Brandstetter, Director of Strategy, Wunderman Thompson Commerce
The essence of retention is building a compelling customer experience. Brandstetter urged brands to concentrate on building out and optimizing every touchpoint of that experience before investing heavily in acquisition strategies. Use a lesson from Amazon’s founder as a blueprint for this. “Jeff Bezos has famously said that Amazon was never in the business of selling things, they are in the business of helping people buy things,” Brandstetter said.
In 2021, 56.9% (a total of 71.7 million) of all households in the United States had an Amazon Prime membership, compared to 54.8% in 2020 and only 42.4% in 2017.