Amazon Prime members will renew despite price hike, survey finds

A survey from CIRP finds almost all Prime members will renew their subscriptions despite the recent bump to $99 a year.

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CNET

Most Amazon Prime subscribers aren't sweating the recent $20 price increase, at least among those questioned in a recent poll.

Surveying 500 shoppers who recently made a purchase at the site, research firm Consumer Intelligence Research Partners found that 44 percent subscribed Amazon's $99 Prime shipping and content services. Extrapolating that percentage led CIRP to come up with a figure of 27 million Prime members in total. Among the Prime subscribers polled, a full 95 percent said they would "definitely" or "probably" renew their membership.

Amazon Prime is a mixed but appealing bag of features that the Seattle-based company often tries to enhance. The service offers free two-day shipping on most products, an online selection of more than 40,000 streaming videos, and a Kindle e-book lending library. Amazon also recently added access to streaming songs via Prime Music. The program is a central part of Amazon's strategy, which asserts that customers will spend more with unfettered access to products and content.

In March, Amazon upped the annual price of its Prime subscription from $79 to $99. Trying to justify the increase, the company said at the time that it had never raised prices on the service despite higher fuel and transportation costs to ship its goods to members.

Prime is a key financial driver for the online retailer as it locks in customers with the yearly fee. In light of their membership and free shipping, Amazon contends that Prime subscribers are more than likely to turn to the site first and foremost for their online purchases. Increasing the annual cost of the service could've proved a risky game for Amazon to play. But if the results of CIRP's poll are on the money, then most subscribers will grin and bear the price jump.

"Amazon Prime enjoys solid loyalty," CIRP partner and co-founder Josh Lowitz said in a statement. "While renewal intent is not the same as actual renewal, our data on length of membership and lapsed membership generally confirms that Amazon Prime members do renew their membership at rates that resemble the intended renewal."

Among the current Prime members polled by CIRP, 85 percent were aware of the price increase. Among the 15 percent who were in the dark, the percentage that said they would "definitely" or "probably" renew their membership dropped to 71 percent.

Upon hearing of a price increase, a customer's initial reaction is often to threaten not to renew. But based on CIRP's data, renewal rates tend to recover after that customer considers the benefits of the service.

"It's a testament to how well Amazon rolled out the price increase, as well as the relative costs and benefits of Amazon Prime" Lowitz added. "More than 8 out of 10 Amazon Prime members are aware of the increase, and even in light of that increase, over 90 percent intend to renew. Amazon undoubtedly helped by improving the benefits of Prime membership, including adding HBO programs to the Prime Instant Video library and the launch of Prime Music streaming audio service."

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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