Global retailer giant Amazon is an unforgettable name in the eCommerce world. In less than 16 years, the company grew from a book and DVD retailer to a $1.14 trillion business. Its success has been largely credited to its loyalty subscription program, Amazon Prime, and the Amazon Prime Referral program.
Although the company halted the Prime referral program in October 2017, there are valuable lessons businesses can learn from its implementation. This post will address how the referral program worked, what made it successful, and some of the drawbacks that could have been improved to make it better.
How did the program work?
Amazon Prime’s referral program allowed users to earn $5 referral credits for inviting their friends to sign up to become Prime members. To receive these credits, you must have a valid customer account on the Amazon.com website. As a member of either Amazon.com or Amazon Prime, you can share your referral link with your friends and family through email or social media. The person you refer must click on your unique link, complete their Amazon Prime signup process, and be accepted into the program before you can be eligible to earn credits. Amazon determines at their discretion whether it was your link that was eventually used in creating that account. The Amazon Prime Student program, a variant, rewarded students a $10 credit for inviting friends to sign up.
Again, the friend you referred must be a new Amazon customer. They must not be an existing or returning Amazon Prime or Student member, but a brand new user. Within 90 days of registering their account, the referred person must place an order via Amazon.com without canceling it before shipment.
Once these requirements are adhered to, users receive their referral credit seven days after the referral’s order is shipped. Referral credits are valid for a year and are automatically applied at checkout on Amazon purchases.
What were the good things about the program?
Now that we know how the Amazon Prime referral program worked, let’s take a look at some of the features that made it a success.
To run an effective referral program, a large customer base willing to become advocates of your brand is a necessity. Amazon, fully aware of this strategy, made its referral program accessible to all its customers, including those who are not Amazon Prime members. By not limiting the program to Prime subscribers, the brand drastically increased the number of advocates, maximizing the possibility of reaching potential Prime referrals each day. The referral program was extremely beneficial for casual shoppers because they could invite their friends who were more frequent buyers and earn credits for their next purchase.
Easy Navigation and Timely Calls-to-Action
Another great thing about this program is how easy it is to navigate through the portal. The company showed its users the next steps to take through every email, landing page, and pop-up. These clear calls-to-action are rightly placed with fitting instructions that remove any guesswork so the user can freely progress in the referral process. For instance, on the explainer page, the brand uses contrasting colors and glaring CTA buttons customers cannot miss. Eventually, these resulted in higher conversion rates.
Referral programs work because most people would only try a product or service recommended by their close friends and loved ones. With this knowledge, Amazon ensured that they emphasized who is inviting you to try Prime in their invitation email. Thus, when an advocate sends a referral email to a friend, Amazon shows this person’s name in the email as social proof to convince that friend that Prime is worth trying.
How could they have made the program more attractive for customers?
Amazon Prime’s referral program was undoubtedly well-crafted and well presented. However, certain improvements could have made the program more attractive to more of its customers.
Unclear Value Proposition
After signing up and logging in to Amazon’s referral program, you are welcomed with a bolder header captioned, “One more benefit of friendship.” For the average customer who joins this program, it is easy to assume that this statement means that you and your friend will enjoy some benefits. However, after prancing through the site, you will notice that the only person enjoying the $5 referral discount is you. This means that the friend you referred would not benefit immediately as opposed to the claim. This can cause a sense of disappointment for a customer expecting that their referred friends would earn some referral reward. Amazon could have clarified the vague claims and been upfront with their referral program’s value to make it more attractive. There should be no confusion whatsoever in the minds of customers after signing up and referring others.
As seen in the previous point, the value of the referral program seems diminished because of its one-sidedness. For a strong brand like Amazon, it would have been much better if they offered a double-sided referral program, i.e., when both brand advocates and their friends are rewarded in the process. Already, a good number of Amazon Prime customers are not price-sensitive; hence they’d rather appreciate it if part or all of their $5 credit went to their friends so they can feel good about inviting them.
Amazon Prime’s referral portal allowed its users to send their friends a referral email by filling in that person’s email address. Unfortunately, the brand made the mistake of maintaining “Amazon Prime” as the email subject instead of using the advocate’s name. If this person knows nothing of Amazon Prime before this, the chances of opening the email are quite slim. While the company does a good job at including the advocate’s name in the subject line, it would be better if the email looks like it is coming from the advocate rather than the entity. In that manner, the referred friend will be more likely to open and join.
Succinctly put, the Amazon Prime referral program was effective because they had a valuable offer, which is the Amazon Prime loyalty program. So incentivizing customers to promote a program they were already benefiting from was a great move for the brand and well worth it for shoppers.