Once upon a time, there was this guy called Jeffrey Preston Jorgensen. He was a good guy, a smart guy. He spent his childhood summers on his grandfather’s ranch and went on to graduate summa cum laude from Princeton with a Bachelors in Computer science and Electrical Engineering.
Jeffrey was just like you and me, if you and I had gone to Princeton, that is.
He worked at a bunch of companies and dabbled primarily in computer science, because he loved computers.
However, unlike you and me, he came up with an idea that would change his life, and of everyone around him. Jeffrey quit his cushy, well-paid job at a New York hedge fund to start an online bookstore called Cadabra in his garage.
A bookstore? Online? You can imagine how people must have looked at him then.
Today, Cadabra is a company worth 90 billion dollars. And that smart guy from Princeton, Jeffrey? He’s one of the richest people in the world, his personal wealth estimated to be about 22 billion dollars. That’s just an estimate.
The guy is now known as Jeff Bezos. And Cadabra is Amazon.
When people read about Amazon’s meteoric rise from its humble beginnings, the question that begs to be answered is how. How did he do it? How did he convert a nondescript online bookstore into the world’s largest online retailer, an entity that now threatens to change the way books have been read for hundreds of years? How did Cadabra go from selling books to become the behemoth it is today?
This is how we dance..
A lot of people credit Amazon’s meteoric rise to Bezos’ initial business plan, one that ignored short term benefits and focused on long term goals. It didn’t expect to make a profit for the first five years or so. However, Amazon pulled through just like Bezos envisioned it would.
And the key component that enabled Amazon to grow so much is the focus on what Bezos thought was the most important cog in the wheel – the customer. Amazon’s entire approach was, and remains, put together with just one goal in mind – to make the customer happy.
This strategy is implemented in three ways – the largest selection ever, every possible convenient method of purchase, and the lowest prices on the planet. Amazon has an unlimited online inventory of nearly everything under the sun. However, just a large selection isn’t enough to bring customers. The low prices take care of that, cutting out the competition, who just cannot operate on such economies of scale. And then they throw in things like free shipping, tracking orders to make it as convenient as possible for the customer.
It’s an irresistible combo for a customer, the biggest temptation since a beautiful young lady got tricked by a snake into taking a bite out of a mysterious apple.
Customer love and marketing strategies
Well, then how is free shipping and low prices helping Amazon make a profit, if its competitors are foundering? The simple answer is, well, it isn’t. They could be making a lot of money by charging for shipping but they’ve chosen not to. In a presentation to analysts in 2009, Thomas J. Szkutak, Amazon’s Chief Financial Officer, claimed that they lose 600 million dollars a year as foregone shipping revenue.
There was quite a furore when Bezos slashed the advertising budget to bring about the free shipping feature, essentially pouring ad money into customer satisfaction. People called the move foolish and cited inexperience. How in the world was Amazon going to survive without marketing?
“If you build a great experience, customers tell each other about that”, said Bezos. “Word of mouth is very powerful.”
Point was, he wasn’t taking away money from marketing at all, he was just diverting it into what was really another marketing channel. And it was a masterstroke. He’d focused all of Amazon’s strength into building a great customer experience. He made his customers the marketers.
And it worked. Amazon became Amazon.
However for everything to work out as it has, Bezos had to put in a lot of work to make the customer experience become what is today – legendary.
Everything I do, I do it for you
Amazon came up with a lot of firsts in the industry, innovating its way to an unparalleled buying experience.
The famous super saver shipping is a customer’s dream come true, converting millions over to the Amazon way of doing things, where’s my stuff allows a customer to track his order’s location, one click ordering removes the sequence of steps from viewing product to cart to actual purchase and makes it just one click, and so on.
Then there’s Amazon’s customer reviews, the reviews feature on the product page which became a staple of every e-commerce company on the planet. But the feature that represents Amazonian innovation at its best is the related recommendations. Using your browsing and buying history and using big data to profile and recommend products, Amazon gives you a personally curated shelf full of things you are interested in.
Enough about the buying experience. Let’s talk about borrowing stuff. It started out as a free two-day shipping service for a flat annual fee, but Amazon Prime is so much more now. It has now expanded to include Amazon Instant Video that lets Prime members stream their favorite movies and TV shows. It also lets them borrow books off the Kindle Owner’s Lending Library. Sounds too good to be true, doesn’t it ?
Amazon structured the entire process of purchase such that nine times out of ten, a customer can complete his transaction without interacting with an Amazon employee. Employees step in only for unusual circumstances like defective products or order problems, the department of customer service.
Like the strategy to provide the best experience possible, Bezos has a unique strategy for customer service. Unlike most companies where the customer puts in a call to support, Amazon has a policy of asking its customers to fill out a form declaring their phone number and the hours during which they’d like to be contacted. And most times, a call is patched through to the customer within the same day, sometimes the same hour! The representatives undergo extensive training to make sure that they’re able to be of maximum use to the customer. It’s a little known fact that it’s mandatory for all Amazon employees to man the phones for two days, every two years. Even Jeff Bezos isn’t exempted from this.
The rule is enforced to make sure that no employee loses sight of the thing that is most important to the company: the customer.
Rumors and Legends apart..
All of these strategies that Amazon has put so much thought into has paid off. The Internet is full of stories of Amazon’s magnaminity.
One great story is about a man who ordered a PS3 for his son from Amazon.com. He intended it to be a Christmas present and ordered it to arrive early. However the 21st of December arrived before the present and he was surprised to realize that he still hadn’t received it. He got in touch with Customer Service and explained his predicament. The representative checked on the order’s status and together, they pieced together the whole story. One of his neighbours had apparently signed for the order and he realized that the neighbour must have placed it on the doorstep. A check with the neighbour confirmed the whole story and he was distraught to realize that it was four days to Christmas and his son’s present was now missing. This was when Amazon’s customer-first culture kicked in. The rep reassured the man that they were convinced that he’d never gotten the package and agreed to send out a replacement. Not only did it arrive in time for Christmas, they didn’t even charge him for shipping.
This happy customer went on to tell his story to millions through an article in the New York Times. Amazon had no way of knowing that he was a New York Times columnist or that he’d be so touched with the gesture. They were just doing what they do best: making customers happy.
Was it just great customer support or a marketing strategy that is out to prove that Bezos is a genius? Either way, it doesn’t matter to Amazon because it’s somehow both things at once.
Are you on the same road?
It isn’t easy to do what Jeff Bezos has done; he’s built an enterprise which has dedicated its every action to making the customer as happy as possible.
These days there are support tools that help you provide incredible customer support through not just the traditional channels like Amazon does, but even through social media or communities. Of course, Amazon had on its side sheer numbers and its super efficient processes, but with just a little bit of effort, every company can aspire to do what Amazon has done for the world of business – making the customer feel important again.