{"id":81239,"date":"2017-02-21T10:28:10","date_gmt":"2017-02-21T18:28:10","guid":{"rendered":"https:\/\/thegood.com\/?post_type=insights&#038;p=81239"},"modified":"2025-05-21T08:38:08","modified_gmt":"2025-05-21T15:38:08","slug":"loyalty-program-lessons","status":"publish","type":"insights","link":"https:\/\/thegood.com\/insights\/loyalty-program-lessons\/","title":{"rendered":"The Top 3 Loyalty Program Lessons from Amazon Prime"},"content":{"rendered":"\n<p>Take up the topic of loyalty programs with any ecommerce marketer, and you\u2019ll hear the same questions and observations come up every time:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Are ecommerce loyalty programs worth the effort or not?<\/li><li>Isn\u2019t Amazon actually losing money on Prime?<\/li><li>If so, why would I want to emulate that in my ecommerce business?<\/li><\/ul>\n\n\n\n<p>Are you looking for ways to get better leverage from your own loyalty program? Or are you still on the fence about whether or not you should launch a loyalty program at all?<\/p>\n\n\n\n<p>Our researchers dug deep to see what they could learn from Amazon Prime. In this article, we\u2019re going to share those findings with you.<\/p>\n\n\n\n<p>The results may be surprising.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-truth-about-loyalty-programs-never-forget-this\"><figure><img decoding=\"async\" class=\"aligncenter size-large wp-image-81242\" src=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-1024x220.jpg\" alt=\"loyalty-program-prime\" width=\"934\" height=\"201\" srcset=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-1024x220.jpg 1024w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-300x64.jpg 300w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-768x165.jpg 768w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-1536x330.jpg 1536w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-610x131.jpg 610w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-100x21.jpg 100w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime-934x200.jpg 934w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-prime.jpg 1710w\" sizes=\"(max-width: 934px) 100vw, 934px\" \/><\/figure><br>\nThe Truth About Loyalty Programs \u2013 Never Forget This<\/h2>\n\n\n\n<p>It seems like every business you come across has a loyalty program. From the grocery checkout to the drive-through coffee stand, you get reward points, free products, and various discounts for being a member.<\/p>\n\n\n\n<p>If you made a stack of all your loyalty cards, it would resemble a deck of playing cards\u2026 right? In some ways, the entire loyalty program concept is becoming more of a hassle than a benefit. They\u2019re just another way to waste the customer\u2019s time.<\/p>\n\n\n\n<p>The truth is that most loyalty programs are really \u201cGive us your information\u201d programs. They exist for the company\u2019s benefit, not for the consumer\u2019s benefit. Armed with your shopping habits and your email address, the grocery store can lure you back in with a never-ending stream of discounts and special offers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-ecommerce-difference-an-essential-consideration\">The ecommerce difference \u2013 an essential consideration<\/h3>\n\n\n\n<p>Ecommerce loyalty programs differ in one huge way. When consumers buy from you online, they\u2019re giving you their contact information. You can already tie them to the purchase.<\/p>\n\n\n\n<p>And once they establish profiles and accounts at your ecommerce store, you can begin building a portfolio of data that will allow you to predict what they\u2019ll need next and when they\u2019ll need it.<\/p>\n\n\n\n<p>Why bother with a loyalty program, then? Should your ecommerce site worry about providing one at all? What advantage is there to your business?<\/p>\n\n\n\n<span class='bctt-click-to-tweet'><span class='bctt-ctt-text'><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fthegood.com%2Finsights%2Floyalty-program-lessons%2F&#038;text=%20Store%20loyalty%20programs%20vs.%20%23ecommerce%20loyalty%20%E2%80%93%20Huge%20difference.&#038;via=thegood&#038;related=thegood' target='_blank'rel=\"noopener noreferrer\"> Store loyalty programs vs. #ecommerce loyalty \u2013 Huge difference. <\/a><\/span><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fthegood.com%2Finsights%2Floyalty-program-lessons%2F&#038;text=%20Store%20loyalty%20programs%20vs.%20%23ecommerce%20loyalty%20%E2%80%93%20Huge%20difference.&#038;via=thegood&#038;related=thegood' target='_blank' class='bctt-ctt-btn'rel=\"noopener noreferrer\">Share on X<\/a><\/span>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-jeff-bezos-revelation-can-help-your-ecommerce-loyalty-program-decision\">How Jeff Bezos\u2019 Revelation Can Help Your Ecommerce Loyalty Program Decision<\/h3>\n\n\n\n<p>In 2004, Jeff Bezos knew one thing stood in the way of Amazon growth: Why order from his online store when every Walmart location probably has the same kind of merchandise\u2026 maybe even for a better price?<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-walmart-s-weakness\">Walmart\u2019s weakness<\/h4>\n\n\n\n<p>It can be frustrating to drive to Walmart, navigate the crowd to search for what you want, stand in line at checkout, and then fight traffic on the way back home.<\/p>\n\n\n\n<p>Going to a big-box store on your weekend shopping expedition can be an enjoyable outing, but running there every time you need a birthday present for Aunt Sally or a set of wipers for your Subaru can be a major hassle. Those trips to Walmart cost a chunk of something more valuable than money: they eat up your time.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-bezos-solution\">Bezos\u2019 solution<\/h4>\n\n\n\n<p>In 2004, Amazon was already making it easy for customers to shop without leaving home. If they could figure out a way to deliver orders from warehouse to door in lightning fast time, shopping with Amazon would be even better.<\/p>\n\n\n\n<p>In 2005, Amazon offered a way to close that gap. Their Prime membership option offered unlimited two-day shipping on a million items.<\/p>\n\n\n\n<p>Would it work?<\/p>\n\n\n\n<p>There were plenty of naysayers and critics at the time, but that simple beginning was the catalyst for a growth spurt that took Amazon from under $7B sales revenue in 2004 to over $107B in 2015.<\/p>\n\n\n\n<p>In Bezos\u2019 own words, \u201cWe didn\u2019t think of [Amazon Prime] as a shipping program, but as a convenience program.\u201d<\/p>\n\n\n\n<p>That\u2019s a critical statement.<\/p>\n\n\n\n<span class='bctt-click-to-tweet'><span class='bctt-ctt-text'><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fthegood.com%2Finsights%2Floyalty-program-lessons%2F&#038;text=We%20didn%E2%80%99t%20think%20of%20Amazon%20Prime%20as%20a%20shipping%20program%2C%20but%20as%20a%20convenience%20program.%20-%20%40jeffbezos&#038;via=thegood&#038;related=thegood' target='_blank'rel=\"noopener noreferrer\">We didn\u2019t think of Amazon Prime as a shipping program, but as a convenience program. - @jeffbezos <\/a><\/span><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fthegood.com%2Finsights%2Floyalty-program-lessons%2F&#038;text=We%20didn%E2%80%99t%20think%20of%20Amazon%20Prime%20as%20a%20shipping%20program%2C%20but%20as%20a%20convenience%20program.%20-%20%40jeffbezos&#038;via=thegood&#038;related=thegood' target='_blank' class='bctt-ctt-btn'rel=\"noopener noreferrer\">Share on X<\/a><\/span>\n\n\n\n<p><strong>TIP #1:<\/strong> When considering the primary value of your loyalty program, go beyond the process to establish the effect. Critics say Amazon Prime is simply a <a href=\"https:\/\/thegood.com\/insights\/free-shipping-incentives\/\">free shipping<\/a> scheme. Amazon doesn\u2019t see it that way, though. To them, it\u2019s all about customer convenience. Until you and your marketing team fully understand the impact of wearing customer-focused glasses, your marketing messages will be weak and ineffective.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter wp-image-81240 size-full\"><img decoding=\"async\" width=\"1000\" height=\"716\" src=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-amz-sales.png\" alt=\"loyalty-program-amz-sales\" class=\"wp-image-81240\" srcset=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-amz-sales.png 1000w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-amz-sales-300x215.png 300w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-amz-sales-768x550.png 768w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-amz-sales-610x437.png 610w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-amz-sales-100x72.png 100w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-amz-sales-934x669.png 934w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><figcaption>Amazon Prime pushed sales revenue consistently upward.<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-succeeding-with-an-ecommerce-loyalty-program-establish-the-base\">Succeeding with an ecommerce loyalty program: Establish the base<\/h3>\n\n\n\n<p>Bezos knew the main difference between buying a toaster online and driving to the big-box store to get it yourself centered on convenience. Given similar pricing, many consumers would choose to order online rather than get in the car. There was just one wildcard: Time.<\/p>\n\n\n\n<p>In 2005, one could expect to wait at least a week (4-6 business days) to get delivery on their orders from an ecommerce website. A week is a long time. There would have to be a deep discount to make the wait worthwhile. The only option was to pay a stiff upgrade fee for overnight or two-day shipping.<\/p>\n\n\n\n<p>What if Amazon could offer two-day shipping as a regular feature? Would that tip the already-heavy convenience scale far enough in the direction of ecommerce to swing more consumers over to computer-based instead of car-based shopping?<\/p>\n\n\n\n<p>Bezos and his team reasoned correctly, but it took years for their gamble to pay off.<\/p>\n\n\n\n<p>Amazon\u2019s based its strategy for Prime on three ideas:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Speed up the shipping process<\/strong> to make the wait for delivery for online shopping seem not too long. Make it two days instead of a week.<\/li><li><strong>Take the guesswork out of shipping.<\/strong> Amazon Prime customers soon became used to quick delivery. Why <a href=\"https:\/\/thegood.com\/insights\/drive-and-convert-selling-on-amazon-fight-or-join\/\">drive to Walmart on Monday when Amazon<\/a> will make sure the package is at your door by Wednesday?<\/li><li><strong>Make the offer unlimited.<\/strong> A one-pay shipping fee covered an entire year. Customers could buy all they wanted and not have to worry about waiting too long or paying too much.<\/li><\/ol>\n\n\n\n<p>Amazon admits they \u201cgave up many millions of dollars in shipping revenue\u201d in the first year. They won\u2019t tell you when and if Prime broke even, though. The company is characteristically tight-lipped about internal numbers. What we do know is the stock analysts have only recently begun to applaud Amazon\u2019s genius. And many still remain skeptical.<\/p>\n\n\n\n<p>One headline (2012) proclaimed \u201cFor Amazon Shareholders, Prime Boosts Costs and Trashes Profits.\u201d<\/p>\n\n\n\n<p>That article went on to say this about Prime:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>\u201cAt its most extreme it\u2019s a market share grab on which Amazon is willing to not only suffer reduced margins, but actually lose money on additional sales. Otherwise, it seems, Amazon\u2019s profit in dollars wouldn\u2019t be shrinking. And with its after-tax margins so thin, Prime, if it\u2019s much more successful, could render Amazon a money-losing company. Now that\u2019s customer-friendly.\u201d<\/p><\/blockquote>\n\n\n\n<p>Notice the dig? Prime looked like a perfect way for losses to outpace gains. Bezos knew he could bring shipping costs down if he could increase volume. He needed to scale, and he was going to have to put up the earnest money to do it.<\/p>\n\n\n\n<p><strong>TIP #2:<\/strong> Make sure your loyalty program is established on principles providing significant benefits to the customer. The more outrageous those benefits the better. Then be willing to give more than you get until the economies of scale deliver a return on your investment.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter wp-image-81243 size-large\"><img decoding=\"async\" width=\"1024\" height=\"675\" src=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits-1024x675.png\" alt=\"loyalty-program-profits\" class=\"wp-image-81243\" srcset=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits-1024x675.png 1024w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits-300x198.png 300w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits-768x506.png 768w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits-610x402.png 610w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits-100x66.png 100w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits-934x615.png 934w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-profits.png 1029w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption>Sales up. Profits down. Amazon had the stock analysts screaming.<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-succeeding-with-an-ecommerce-loyalty-program-keep-stacking-on-benefits\">Succeeding with an ecommerce loyalty program: Keep stacking on benefits<\/h3>\n\n\n\n<p>Amazon\u2019s original three-pronged plan is still at the core of Prime. But they didn\u2019t stop there. Since the 2005 launch, the company has consistently added features and improved their processes, making Prime membership increasingly more valuable.<\/p>\n\n\n\n<p>In many instances, Amazon is even achieving next-day delivery for Prime customers\u2026 at no extra charge. Some are even getting delivery within an hour or two of the order. It\u2019s almost as if Amazon is waiting at the doorstep for you to need something. It\u2019s that fast.<\/p>\n\n\n\n<p>Prime Instant Video, Prime Music, Prime Now, Prime Photos, Prime Pantry, Prime Early Access, Prime Reading\u2026 the list goes on. A Socratic Technologies study (see the graph below) found that 71% of Millennial respondents and more than one-third of Baby Boomers who shop online are Amazon Prime members.<\/p>\n\n\n\n<p>After shooting for the moon, Bezos and crew didn\u2019t sit back and hope to hit their target. They went to work on ways to up the ante even further.<\/p>\n\n\n\n<p><strong>TIP #3:<\/strong> After you\u2019ve made that outrageous promise, immediately start working on plans to make it even more valuable. Add on so many benefits your customers would be crazy not to take advantage of your plan.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter\"><img decoding=\"async\" width=\"1000\" height=\"716\" src=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-membership.png\" alt=\"loyalty-program-membership\" class=\"wp-image-81241\" srcset=\"https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-membership.png 1000w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-membership-300x215.png 300w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-membership-768x550.png 768w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-membership-610x437.png 610w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-membership-100x72.png 100w, https:\/\/thegood.com\/wp-content\/uploads\/loyalty-program-membership-934x669.png 934w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-starting-your-loyalty-program\">Starting Your Loyalty Program<\/h2>\n\n\n\n<p>Yes, there are more than three bases you\u2019ll want to cover in your loyalty program. Here are some more to think about:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Don\u2019t create barriers.<\/strong> Make your loyalty program easy to join and simple to understand.<\/li><li><strong>Occasionally surprise your members<\/strong> with a special and unexpected benefit or offer.<\/li><li><strong>Give customers a stair-step path to more rewards.<\/strong> The more they participate, the better it gets.<\/li><li><strong>Give special recognition to customers<\/strong> at each step along the way. Don\u2019t just give them specials, make them feel special.<\/li><li><strong>Send out quarterly statements<\/strong> to show members how much they\u2019ve saved\/earned\/benefitted from membership (or how much they could have benefited, had they been more active).<\/li><\/ul>\n\n\n\n<p>If you don\u2019t get serious about the big three, though, the rest may not matter. You could find yourself putting a ton of work into something that\u2019s only delivering a minimal benefit.<\/p>\n\n\n\n<p>And what is the main benefit an ecommerce website can hope to gain from a loyalty program? It\u2019s loyalty, of course: Repeat purchases. Higher orders. Customers-turned-evangelists.<\/p>\n\n\n\n<p>Amazon Prime members are five times more likely than non-members to complete an order during any given visit to the site. They produce the lion\u2019s share of sales revenue for the company. They spend more with Amazon, and they spend it more often.<\/p>\n\n\n\n<p>That is the definition of loyalty.<\/p>\n\n\n\n<p><strong>CHALLENGE:<\/strong> If your ecommerce website has a loyalty program now, evaluate it by comparing your current strategy to the three tips given in this article. If you\u2019re planning to launch an ecommerce loyalty program, go over your proposal in light of the three tips.<\/p>\n\n\n\n<p>If you want to brainstorm about possibilities, contact The Good. Our team loves to talk about Amazon Prime and how you benefit from their example.<\/p>\n\n\n\n<div class=\"wp-block-stackable-columns stk-block-columns stk-block stk-c842da9 reusable-block-2-column good-question-block\" data-block-id=\"c842da9\"><style>.stk-c842da9{max-width:1500px !important;margin-top:30px !important;margin-bottom:30px !important}.stk-c842da9-column{max-width:941px !important}@media screen and (max-width:767px){.stk-c842da9{--stk-col-order-1:2 !important;--stk-col-order-2:1 !important}}<\/style><div class=\"stk-row stk-inner-blocks stk-block-content stk-content-align stk-c842da9-column\">\n<div class=\"wp-block-stackable-column stk-block-column stk-column stk-block stk-8993c44 horizontal-form-container\" data-v=\"4\" data-block-id=\"8993c44\"><style>.stk-8993c44-container{margin-top:0px !important;margin-right:0px !important;margin-bottom:0px !important;margin-left:0px !important;background-color:#c3ddf0 !important;border-top-left-radius:12px !important;border-top-right-radius:12px !important;border-bottom-right-radius:12px !important;border-bottom-left-radius:12px !important;overflow:hidden !important;max-width:701px !important;padding-top:40px !important;padding-right:35px !important;padding-bottom:40px !important;padding-left:35px !important}.stk-8993c44{margin-top:0px !important}.stk-8993c44-container:before{background-color:#c3ddf0 !important}@media screen and (max-width:1023px){.stk-8993c44-container{padding-bottom:60px !important}}@media screen and (max-width:767px){.stk-8993c44-container{padding-bottom:60px !important}}<\/style><style class=\"stk-custom-css\">.stk-8993c44 figure{margin:0 !important}<\/style><div class=\"stk-column-wrapper stk-block-column__content stk-container stk-8993c44-container stk-hover-parent\"><div class=\"stk-block-content stk-inner-blocks stk-8993c44-inner-blocks\">\n<div class=\"wp-block-stackable-heading stk-block-heading stk-block-heading--v2 stk-block stk-791f1b3\" id=\"span-style-color-0277-c-0-class-stk-highlight-enjoying-this-article-span\" data-block-id=\"791f1b3\"><style>.stk-791f1b3{margin-bottom:12px !important}.stk-791f1b3 .stk-block-heading__text{font-size:36px !important;color:#ffffff !important}@media screen and (max-width:1023px){.stk-791f1b3 .stk-block-heading__text{font-size:36px !important}}@media screen and (max-width:767px){.stk-791f1b3 .stk-block-heading__text{font-size:24px !important}}<\/style><h3 class=\"stk-block-heading__text has-text-color has-text-align-center\"><span style=\"color: #0277c0;\" class=\"stk-highlight\">Enjoying this article?<\/span><\/h3><\/div>\n\n\n\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-30f99ae\" data-block-id=\"30f99ae\"><style>.stk-30f99ae{margin-bottom:20px !important}.stk-30f99ae .stk-block-text__text{color:#ffffff !important}<\/style><p class=\"stk-block-text__text has-text-color has-text-align-center\"><span style=\"color: #000000;\" class=\"stk-highlight\">Subscribe to our newsletter, Good Question, to get insights like this sent straight to your inbox every week.<\/span><\/p><\/div>\n\n\n\n\t\t\t\t\t\t<script>\n\t\t\t\t\t\t\twindow.hsFormsOnReady = window.hsFormsOnReady || [];\n\t\t\t\t\t\t\twindow.hsFormsOnReady.push(()=>{\n\t\t\t\t\t\t\t\thbspt.forms.create({\n\t\t\t\t\t\t\t\t\tportalId: 5834619,\n\t\t\t\t\t\t\t\t\tformId: \"64ede74e-e88f-44c7-996f-78859799755a\",\n\t\t\t\t\t\t\t\t\ttarget: \"#hbspt-form-1768314517000-7635265233\",\n\t\t\t\t\t\t\t\t\tregion: \"na2\",\n\t\t\t\t\t\t\t\t\tcssRequired: \".submitted-message { overflow: auto; 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Are you looking for ways to get better leverage from your own loyalty program? Or are you still on the fence about whether or not you should launch a loyalty program at all? Our researchers dug deep to see what they could learn from Amazon Prime. In this article, we\u2019re&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"David Hoos","url":"https:\/\/thegood.com\/author\/davidhoos\/"},"comments_num_v2":"0 comments","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.7 (Yoast SEO v26.7) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Loyalty Programs | The Top 3 Lessons from Amazon Prime - The Good<\/title>\n<meta name=\"description\" content=\"If you\u2019re planning to launch an ecommerce loyalty program, go over your proposal in light of these three tips inspired by Amazon Prime.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thegood.com\/insights\/loyalty-program-lessons\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Top 3 Loyalty Program Lessons 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