The Secrets To Amazon’s Wall St.-Defying Customer Experience Strategy

Michael Hinshaw
Managing Director
McorpCX
Columnist
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Earlier this month, Amazon CEO Jeff Bezos delivered his annual letter to shareholders. And what a letter it was. 

One Business Insider article said the letter “should inspire every company in America.” And that’s no exaggeration. When an incredibly successful, Fortune 100 company says customer relationships matter more than short-term profits, it should inspire us.

But Amazon’s letter has more to offer than feel-good ideology—it’s really a blueprint for customer experience improvement. (Don’t worry–it’s also a recipe for market domination and massive value creation). Simply put, it boils down to two directives: to proactively deliver great customer experiences, and to put your customer’s bottom-line ahead of your own.

Leveraging Digital Innovation To Deliver Customer Delight

My job as a consultant is to help companies improve customer experience–increasingly, that means leveraging digital innovation and technology to do it. As a result, I’m thrilled with Amazon’s letter. Why? Because Jeff Bezos delivered example after example of how Amazon exhibits customer centricity by building and using “sense-and-respond” capabilities to monitor customer experiences and proactively correct problems.

These technology-enabled capabilities are among the most important investments a company can make in customer experience improvement. Why? Because you gain an incredible advantage when you can recognize–in these examples–that an individual customer interaction has gone awry (sense), then offer a resolution to the customer and correct the source of the problem (respond). It sounds like these customer experience strategies came right out of my book. Amazon “gets it” in ways that few others do.

Of course, the benefits of sense-and-respond capabilities aren’t limited to the ability to spot the small, unreported dissatisfiers in customer experience that can erode loyalty and retention—though that’s an area Amazon has quite successfully leveraged them. Just a few of the ways they’re delivering customer delight through sense-and-respond techniques include:

  • monitoring performance on Amazon Video On-Demand and automatically issuing refunds for poor streaming quality;
  • creating an automated preorder price matching system, so customers don’t have to periodically check for price changes; and
  • building a “Trusted Advisor” tool for Amazon Web Services (AWS), its cloud-computing platform that watches customer configurations and makes recommendations that could improve cost, performance, or security.

Caring About Your Customers’ Bottom Line–And Yours

The fact is, most customers wouldn’t expect Amazon to pay attention to issues at this micro level. Heck, only a tiny fraction would probably ever notice an unmatched preorder price or suboptimal AWS configuration. But credit Amazon for seeing an opportunity to strengthen customer relationships by surpassing expectations–and successfully using technology to do so. In Bezos’ own words, “Doing [these things] proactively is more expensive for us, but it also surprises, delights, and earns trust.”

At a time when most big companies are trying to get more and more money from each customer on any given service, Amazon is basically saying, “No, you keep it. Really. We insist.” And it goes far beyond automated refunds. The idea of aligning the company’s financial interests with its customers’ is baked into its services and products.

Simply put, Amazon is offering more and more services, and doing so better and more cost effectively than many of its competitors. Using AWS initiatives such as Trusted Advisor as an example, the kind of experiences Amazon is delivering–and the higher level of expectations it is creating–will afford it a strong, differentiated position even when the red-hot Web services market is totally commoditized.

Other examples abound–from its philosophy for Kindle (“Sell premium hardware at roughly breakeven prices” and “make money when people use [their] devices–not when people buy [them]”) to Amazon Prime Instant Video, which keeps getting better and better–and doing so at a fraction of the cost of (once again) market darling Netflix.

That’s because Bezos and Amazon really understand the long-term benefits of customer experience. As a result, it wouldn’t be difficult to write a series of articles based on this shareholder letter. Instead, I’ll strongly encourage you to read it for yourself.

Read all of them, even, starting from 1997. From sense-and-respond capabilities in action to other innovative customer experience ideas, there aren’t many better examples of how far you can get with proactive, principled, and uncompromising customer centricity.

Read More

Must You Be Small To Be Customer-Centric?

Customer-Centric Companies, Rejoice! The Era Of Big Data Is Upon Us

What's A Company To Do When Its Customers Develop Superhuman Powers?

Where Customer Experience ‘Top Performers’ Turn For Outside Expertise

Six Steps To Customer Experience Improvement (Part 1)

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© 2013 Michael Hinshaw and MCorp Consulting. All rights reserved. This article was originally posted on Touchpoint Insights, the MCorp Consulting blog. Touchpoint Mapping®Brand MappingSM and Loyalty Mapping® are registered trademarks of MCorp Consulting.

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