For years I’ve been a faithful Amazon customer. For almost as many years, I’ve been a faithful Amazon Prime customer. I see the value in the annual $79 membership fee. I get free shipping – even on a $4 iPhone screen protector purchased on a whim, I don’t have to worry about added shipping.
Yes, I know sometimes the prices are higher than I might see at the local Walmart or Dollar General, but I choose Amazon for its convenience, ease-of-use, and the increasingly important customer experience. But that’s another topic…
This morning I opened my email inbox to find a note from the folks at Amazon. It was straight, to-the-point, no BS… they’re raising my annual fee to $99. Two things surprised me – (1) I read the entire email (2) I wasn’t upset about the cost increase.
From a marketing perspective, they went about this the right way. They gave the consumer more notice than expected. Amazon also reminded me that they haven’t had an increase in nine years – despite the insane cost increases everywhere else across the country. Plus, they kept the message simple, keeping me engaged just long enough to read the entire message (and it wasn’t filled with a bunch of other junk in side panels trying to get me to buy other stuff or remind me I had items in my wish list).
From a business perspective, I’m not sure this was the right call for Amazon. Looking at the customer survey results, the number of anticipated renewals drop significantly with increases of $20 or higher. Their stock ratings took a significant hit when they first started talking about potential increases earlier this year (AMZN). It has since recovered by about half, but since the increase doesn’t go into effect until 2015, only time will tell.
From a consumer perspective, my loyalty is still strong… for now. Rates increase on the next renewal date after April 17; in my case that means mine don’t increase until March 2015. I have never known a company to give that much notice. When my archenemy, the cable company, comes up with a new price sheet (which is about eight pages long and almost as easy to read as a credit card agreement), it’s included in the envelope with my bill one month and the new prices are reflected in the next. I’m OK paying the extra $20 next year. I might not be in the majority on this one, but let me tell you why. Is it a significant jump? Absolutely—it’s 25%. But I currently get every penny’s worth of the current Prime benefits:
- I take advantage of the free 2-day shipping (heavily… to the point where I think I’m pissing off my UPS guy)
- I get my kindle books delivered in about a second and with my short attention span, that’s a good thing
- I can also simply borrow a kindle book… for free (and these aren’t just random, useless titles either – I’ve read bestsellers, including The Hunger Games)
- I can watch loads of free movies and shows right here on my laptop or my Roku
In 12 months, the question might become Where are the new benefits? If so, I might take another look to see if I’m really saving any money. Make no mistake though, I won’t stop using Amazon; I would only reevaluate the cost/benefit.
Bottom line: I get my money’s worth out of my $79 membership fee and I have little doubt I will continue to see the value of Amazon Prime next year when that increases. I would lose the $20 renting one movie from Redbox because I’d forget to return it.
How about you? What do you think about increasing rates? Do you get your money’s worth?