💥 The Secret Psychology Behind Amazon’s Prime Success (Not What You Think)
Read time: 3 mins, 50 seconds
Amazon made $134 billion this year.
Out of this, $25 billion was made from Prime alone!
The average Prime customer spends $1,400 every year.
So, how does Amazon keep getting people to spend their money?
The secret behind their success is a clever mix of marketing and behavioral science.
A technique that led Amazon to make billions and that can boost your own business as well.
If there’s ever a brand we need to study, it’s Amazon…
And It all starts with understanding the loss aversion technique 👇
What is the loss aversion technique?
Imagine that you have $100 in your pocket. How would you feel if I gave you another $100?
You would probably feel happy and grateful, right?
Now imagine if I took away $100 from your pocket. How would you feel then?
You would probably feel angry and frustrated, right?
That’s Loss Aversion.
Simply put, humans hate losing stuff more than the pleasure of gaining something.
Now, Amazon is aware of this and hires the best marketers to tap into this.
How Amazon uses Loss Aversion so you keep paying them:
If you’ve been living under a rock for the last decades, Amazon offers a service called Prime, which gives customers access to free shipping, video streaming, music streaming, and other benefits for a yearly or monthly fee.
Prime is designed to make customers feel like they are getting a lot of value from their subscriptions.
But what happens when customers want to cancel their Prime membership?
That’s where Amazon makes ALL the money.
(P.S. Some of these screenshots might be outdated but the core takeaways are still valuable)
Firstly, to cancel their membership they need to click “End Membership and Benefits”
This message is designed to trigger loss aversion in customers, who are reminded of all the things that they will lose if they cancel their Prime membership.
You’re then taken to this:
Keeping the loss aversion in mind, here’s what we’re met with:
Mentions the amount of money you’ve saved since they’ve become a Prime member.
All the benefits you lose if you cancel your subscription
Mentioning all the items that are tied to your membership will be affected
The message makes them feel like they are giving up something valuable and beneficial, rather than saving money or simplifying their lives.
The result?
93% of Amazon Prime members renewed their membership for a year, and 98% renewed it for a second year over the first three months of 2021. (Source)
This tells us that many customers decide to keep their Prime membership, even if they don’t use it very often or need it very much.
“All of this sounds good but Amazon is a billion-dollar company, has millions of customers, and top class marketers. How will this work for me?”
Now, can you replicate Amazon’s success?
I don’t know, but you can apply the loss aversion technique in your own marketing to boost your growth.
Here are some tips and examples of how you can do it:
Copywriting ✏
Use words and phrases that focus on the losses rather than gains. For example, instead of saying “Save 50% on your purchase”, say “Don’t miss this 50% off deal”.
Sell the benefits that a customer loses out
So, if you don’t want to blend in with the crowd, get left behind, and lose out on building a brand, then subscribe below!
See what I did there?
Design 🎨
Use visuals and colors that convey urgency and scarcity.
For example, use red or orange colors, countdown timers, limited stock indicators, or comparison charts to create a sense of urgency and scarcity.
Make your customers feel like they need to act fast or they will miss out on something valuable.
Authority 👑
Use testimonials and social proof that show what others have gained or lost by using or not using your product or service.
For example, use customer reviews, ratings, case studies, or stories that show how your product or service has helped others achieve their goals or solve their problems.
Alternatively, use testimonials or stories that show how others have regretted not using your product or service or how they have suffered from using a competitor’s product or service.
Risk reversal 🔁
Use guarantees and refunds that reduce the risk of loss for your customers.
By doing this you take on the risk from the customer side and put it on yourself
For example, offer a money-back guarantee, a free return policy, a free replacement policy, or a free cancellation policy.
Make your customers feel like they have nothing to lose and everything to gain by trying your product or service.
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Until next week 👋
Cheers,
Ashar