On July 11, 2017, with much hoopla and fanfare, Amazon held its third annual Amazon Prime Day sale. During the yearly sale, which originally was held in 2015 to celebrate Amazon’s 20th anniversary, Amazon Prime members are offered discounts on a broad range of goods, from everyday household products to fashion merchandise to high-tech devices. The promotion comes during a traditionally slow period in the retail calendar, right in the middle of the dog days of summer before the back-to-school shopping season begins.
By most accounts, this year’s Prime Day was a resounding success. Analysts estimate that Amazon generated more than $500 million in revenue, a 60% increase in sales compared to last year’s event. Over 30 hours, consumers purchased more than 3.5 million toys and 200,000 lightbulbs. While participating consumer product manufacturers reaped rewards, the biggest winner was Amazon, which set a one-day sales record for Amazon products like Echo, Kindle e-readers and Fire tablets. Amazon also sold a record number of prime memberships.
Meanwhile, traditional brick-and-mortar retail competitors once again took it on the chin. A survey by Sense360 reported a 32% decline in foot traffic at retailers during the 30-hour Amazon sale with consumers who have the Amazon app installed on their smartphones.
B-to-C companies have taken notice of Amazon’s strategy, and other retailers have introduced similar “Black Friday in July” promotions. Meanwhile, consumer product manufacturers have taken steps to plan for the Amazon-led spike in demand and avoid stock-outs.
B-to-B companies also have an opportunity to learn from Amazon’s success. Like their B-to-C counterparts, many providers of business products and services struggle to grow their established customer base, motivate fickle prospects to buy, and counter intense price competition at key times during the year. Prime Day provides a great example of how Amazon addresses these challenges.
Here are three best practices from Amazon Prime Day that B-to-B companies should consider incorporating into their marketing strategy:
1. Monetize customer loyalty. Amazon Prime members are notoriously loyal and are prolific buyers, and one of the primary goals of Prime Day is to attract and sign up new Amazon Prime members (who pay $99 in the U.S. in exchange for certain benefits, such as free shipping). Morgan Stanley recently estimated that Prime members spend 4.6 times as much on Amazon as non-members. With Prime Day, Amazon has created an effective way to identify and market to its best customers. B-to-B companies should look for similar opportunities to encourage loyal customers to self-identify and proactively indicate their product or service preferences.
2. Use counter-seasonal promotions. Many B-to-B companies struggle with uneven sales and margin erosion at critical points during the year. Customers and channel partners have learned to wait until the end of the quarter or end of the year to ask for deep price exceptions. Sales teams often concede so that they can hit their sales targets, despite the inevitable hit to profit margins. Ask any enterprise software sales rep who has had to tell her spouse that she’ll be late to the New Year’s Eve party because she’s trying to close a deal: This dynamic is painful.
Amazon has deliberately scheduled Prime Day during a slow period to encourage purchases from customers at a time of year when they typically wouldn’t be shopping. B-to-B companies could create similar promotions to help break the price exception cycle and make it easier to instill more pricing discipline.
3. Create buyer urgency. Amazon motivates customers to make purchases during Prime Day in several ways. First, the company creates excitement and anticipation by promoting Prime Day in the weeks leading up to it. Second, the sale is held for only 30 hours. Customers know that they need to make decisions quickly and that some products inevitably will sell out. Third, during Prime Day, Amazon offers special lightning deals: higher discounts that are offered for a very short period of time (typically several hours) and can only be claimed once by a customer. These three tactics create the perception of scarcity and make customers believe that they have to act quickly to take advantage of the deals.
Many B-to-B sales and marketing teams struggle with “stalled” opportunities that are stuck in the pipeline. Customers have expressed interest in a product or service, and indicated that they’re able to buy and have a reason to do so, but for some unknown reason, they don’t act. Some of the tactics that Amazon uses on Prime Day can be effective ways to convince customers to pull the trigger.
It remains to be seen whether B-to-B companies will create the equivalent of Prime Day to kick-start sales and proactively manage seasonality in their businesses. Maybe the first company to take advantage of the opportunity will be Amazon itself. Is it that hard to imagine Amazon creating a day when it offers deep discounts on AWS cloud services in an attempt to grab share from Google and Microsoft? Stay tuned for some interesting lightning deals.