Customer Loyalty of Amazon
How to build a long lasting relationship?
Written by Z. Lin, S. Yan
Bachelor Thesis Amazon Amazon.com, Inc. (NASDAQ: AMZN), a Fortune 500 company located in Seattle, is one of the first e-commerce companies to start. It opened on the World Wide Web in July 1995 and today offers the largest selection on the planet. It also includes three subsidiaries, they are Alexa Internet, a9.com and Internet Movie Database, IMDB. Amazon.com and other sellers offer millions of unique new, refurbished, and second-hand products (Amazon, 2011). Amazon Bookstore (amazon.com) is one of the largest bookstores in the world. It provides 310 million book catalogs, which is more than 15 times more than the book storage capacity of any bookstore in the world. Operating a special business does not require huge buildings, nor does it require a large number of employees. Although Amazon Bookstore has only 1,600 employees. Per capita sales reached 37.5 million US dollars, three times that of Bames & Noble, the world's largest bookstore, with 27.000 employees (Hamiton, 2008). The business activities of Amazon Bookstore focus on marketing and after-sales service. In other words, their goal is to attract customers and at the same time establish a good image for the company. It is Amazon's mission to become a customer-oriented company (He&Zhang, 2003). The largest online bookstore, Amazon, became profitable in 2002. This is good news for the development of global e-commerce. However, in the following years, e-commerce suffered losses. A survey conducted by Temkin Group shows that Amazon's customer loyalty has always been the highest in the United States. The customer loyalty chart considers three factors, including hesitation to switch to another company, preparation to buy more products from that company, and preparation to recommend it to others. The survey shows that customer loyalty has dropped to a new low, with only 17% of companies achieving "very strong" loyalty. Because of its ability to attract repeat customers, Amazon ranks high on the customer loyalty list with 68%. Customers choose Amazon again because it can provide them with the right results. When most online companies receive significantly lower ratings, Amazon's performance in customer loyalty is particularly prominent (Grant, 2011). 1.1.2 Customer Relationship CRM is a combination of hardware, software, processes, applications and management, dedicated to improving customer service, retaining customers and providing analytical capabilities (Romano & Fjermestad, 2002). The dynamic process of managing the customer-company relationship enables customers to choose to continue mutually beneficial business exchanges and discourages participation in unprofitable exchanges with the company (Wiley, 2002). 1.1.3 Customer loyalty Customer loyalty is often seen as the strength of the relationship between personal kinship attitudes and repeated visits. Customer loyalty is one of the most overused phrases in business today (Shaw, 2000). In a business environment, the concept of customer loyalty is important because it is considered a profitable link. Loyalty is an economic necessity as well as a competitive necessity (Reichheld, 2001). Customer loyalty means attracting target customers to make them repurchase products. Loyalty is mainly an attitude, which sometimes leads to establishing a relationship with the brand, so that it is very important to understand the customer's consumption behavior and satisfaction. The key result of customer behavior and satisfaction is customer loyalty (Nykamp, 2001). With the intensification of market competition, customer loyalty has become a determinant of long-term corporate profits. As a sign of market share, customer loyalty is more meaningful than the market share measured by customers. Therefore, business managers are more willing to pay more attention to improving customer loyalty, so that companies can gain key competitive advantages in fierce competition. Services to save advertising and publicity costs, while also recommending products or services to relatives and friends. In other words, this behavior becomes the company's personnel resources. It is the main profit of the company (Li, 2004). Customer loyalty is an important factor in corporate marketing and customer cooperation, and managers must pay more attention to it. Customer loyalty helps companies have long-term and stable sales growth methods, reduce marketing costs, and increase profits. 1.2 Research motives Taking into account the development of global business, the rapid development of Internet technology and the expansion of Internet users have brought new life styles and new business models to human society. E-commerce is a new business model that relies on the development of the Internet. In a sense, it is an Internet innovation based on traditional business models. The increase in the number of business-to-consumer (B2C) e-commerce is mainly due to the increasing number of people using the Internet at home. In addition, broadband and changes in customer consumption patterns have also contributed to growth. The main reason people want to shop online is the low price, which is very convenient for them (Roper, 2004). Read Less