• Simon Zryd

Do you have a billion-dollar business hiding inside your company?



Amazon's Jeff Bezos. Photo by Amazon.

Download our FREE eBook on the 8 Key Drivers of Value for your business here: https://www.denverbusinesscoach.com/8vdebook

Do you have a billion-dollar business hiding inside your company?

Asking customers to pay to join a special group of your best patrons can increase your revenue, encourage customers to buy new products and services from you, and provide a healthy boost to your cash flow. Just ask Jeff Bezos, the founder of Amazon.com and the chief architect behind Amazon Prime.

In exchange for $119 (up from $79) a year, Amazon Prime customers get:

 Free two-day shipping on millions of items

Exclusive shopping deals

 Unlimited streaming videos and TV shows

Unlimited reading

It’s a compelling offer, which is why, according to TIME Magazine, more than 10 million people have signed up. If you do the math, that makes Prime close to a billion-dollar business for Amazon. And like most programs, members pay upfront, giving Amazon a big injection of positive cash flow.

But what is even more interesting is what being a member of Prime does to the buying behavior of the average Amazon customer. Prime customers pay their $119 upfront and therefore are eager to ‘get their money back’ by purchasing a bigger and broader array of products from Amazon. With free shipping and a $119 nut to recover, Prime customers go well beyond buying books from Amazon and now get everything from tires to turtlenecks from the e-tailer.

According to TIME, the average Prime customer now spends around $1,300 per year with Amazon vs. the average non-Prime customer who spends just $1,000. In other words, Prime customers spend almost three times more per year than non-members.

Most businesses have some sort of loyalty program (buy nine sandwiches and the

tenth is on us or get five hairs cuts and the sixth is free). The difference with Amazon

Prime is they are charging customers to sign up for their special club and the fact

that customers pay to join changes their buying behavior to want to recover their

membership fee.

Amazon did not invent the pay-to-join-our-club business model. Private members

clubs have been doing it for years. To join an elite golf club, you pay an initiation fee

of tens of thousands of dollars, which then acts as a barrier to ever leaving. But as

with Amazon Prime customers, becoming a member also changes a member’s

buying behavior regarding other items. When compared to someone shooting 18

holes at a public course, the average golf club member is much more likely to buy

balls from the shop, lessons from the pro, and dinner from the dining room.

The “AMC Stubs” loyalty program charges moviegoers to join the club. In return,

customers get free upgrades on the size of popcorn and drink orders, along with $10

of Stubs rewards to spend on anything in the theatre in return for every $100 spent.

AMC’s best customers become even better customers by going to the movies even

more often and filling up with goodies while they’re there.

Look at the spending patterns of people who pay a premium to join a credit card

company’s loyalty program. Customers who pay upfront for a premium card charge

a much broader and deeper set of services to their card than people using a freebie

card.

Getting your customers to pay to join your elite customer club requires that you

design a compelling offer as Amazon Prime and AMC Stubs have done. But if you

build it right, not only will the club itself turn a profit; it will also provide a quick

boost to your cash flow and create a legion of sticky customers who buy more

because they paid to become a member.

To learn more about these 8 key drivers of company value, download our free eBook now. It outlines all eight areas right here at this link. https://www.denverbusinesscoach.com/8vdebook

#Growth #Advice #Marketing

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