Why customer-obsessed Amazon is our most important business force

Why customer-obsessed Amazon is our most important business force

Summary: "As long as they keep making it easier and faster to get my stuff, that’s all the customer service I need." Paul Greenberg and Brent Leary explain why Amazon.com wins CRM Watchlist's Lifetime Achievement Award.

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CRM Watchlist winners:

And the Winners of the CRM Watchlist 2014 are....

CRM Watchlist 2014: For the 1st time ever: The Watchlist Elite, Part I

CRM Watchlist 2014: For the 1st time ever: The Watchlist Elite, Part II

CRM Watchlist 2014: For the 1st time ever: The Watchlist Elite, Part III

Why customer-obsessed Amazon is our most important business force

"Lifetime achievement" -- when it comes to the Oscars or some other popular awards -- usually goes to someone who hasn’t won any other awards but has built up a body of work that is so substantial that those the institution represents have to recognize it.

I kind of feel the same way about this year’s Lifetime Achievement winner:

Amazon.com

I have never given them any awards nor have they ever submitted any questionnaires to me, but how I can possibly ignore what is likely the most disruptive organization in the 21st century – or at least the most disruptive business of this century? 

Think about it. Since their launch 20 years ago (1994) they have turned how business is done on its head.  Who doesn’t know who they are?  This is a company that has radically altered how business is done, how customers interact with business, what customers expect of business, how products are handled, how catalogs are created, how shipping is done, and how delivery is affected.

They’ve transformed the experience of the customer into something that can be personalized but is actually never really personal. They’ve given their customers a dizzying but still manageable set of services in an ecosystem that allows the customers to choose which they want, when they want them and how they use them. They are continually innovating yet, also incrementally improving. They are a marketplace unto themselves and the facilitators of a marketplace and these marketplaces are both digital and analog. They provide an ecosystem that customers buy into willingly. 

The best examples of Amazon are two:  Amazon Prime and Mayday. Amazon Prime, if you remember, started out as a service that was there to not just save you money on shipping but to provide you with better service – two day shipping – in return.  Now it is a basket of benefits that include the shipping but also includes tens of thousands, maybe hundreds of thousands of videos free to watch and in many cases download as part of the benefits.  The business value, Amazon found that customers of Amazon Prime spent 40% percent more than they did prior to their memberships.  HUGE returns.

The potential for disruption is strong enough that a major CRM vendor told me how they are planning their Mayday for customer service. 

Mayday is another example of how Amazon disrupts – or at least sets up the potential for disruption.  It's a simple premise. On their new tablet – the Amazon Kindle HDX series – there is a button. Click on that button and within 15 seconds a live customer service rep in a small video window with the ability to take over your “machine” with your permission is up and on the screen to handle your customer service questions. Twenty four hours a day, seven days a week. 

This is a paradigm for effective digital customer service that also is a benchmark for other companies in how they handle their “online” service. Suddenly chat doesn’t seem so contemporary.   The potential for disruption is strong enough that a major CRM vendor told me how they are planning their Mayday for customer service. Already paradigmatic.

But it isn’t just these consumer-related efforts that are disruptive. Amazon found they had a lot of capacity left over on their servers and the Amazon Web Services were born. They are now the cloud infrastructure provider to beat.

This doesn’t stop with Mayday -- as all of us watching 60 Minutes a bit more than a month ago saw. Jeff Bezos in an interview showed his early prototype delivery drone which set the social nets a-buzzing.  It led to a lot of speculation and doomsday thinking but all in all, once again, an innovation -- albeit far down the road -- that shows what Amazon can do.

What makes this tiny little sampling of what they do even more remarkable is that they do it at scale, they do it well and they pay attention to “at scale” customer feedback, and fix what they don’t do as well.  For example, they sold 4.26 items per second during the 2013 run up to Christmas (over 27 million items), with an inordinate number being Kindles and Kindle Fires but, even with that volume, when the Mayday button was pushed, the average time to a live video chat was 9 seconds. Whenever it was done.

The key to the longevity of Amazon’s disruption and the continuous innovation was best expressed by Jeff Bezos at a 2011 shareholder’s meeting. When asked why Amazon wasn’t taking more chances (an unusual question) He spoke of why Amazon has been successful. He said it’s because “we are stubborn on the vision and flexible on the details.”  Here’s the quote more fleshed out:

“If you invent frequently and are willing to fail, then you never get to that point where you really need to bet the whole company. AWS also started about six or seven years ago. We are planting more seeds right now, and it is too early to talk about them, but we are going to continue to plant seeds. And I can guarantee you that everything we do will not work. And, I am never concerned about that. We are stubborn on vision. We are flexible on details.

"But if you hold back and you say, ‘No, we believe in this vision,’ then you just stay heads down, stay focused and you build out your vision.”

This is the true north for success in the 21st century. Another company that has been successful at scale too has the same exact outlook – that would be our Watchlist Elite winner – salesforce.com.  While they equate themselves more often with Facebook, in thinking and practice they are far more like Amazon than Facebook.  But Amazon.com is the one that sets the standard and is the paradigm.

Not totally convinced yet?  Well, I’m just a small town guy here.  I’m bringing in the heavy hitters from Atlanta on this one to show you why Amazon.com should be the 2014 Watchlist Lifetime Achievement Winner. I’m going to ask my BFAM, key CRM influencer and partner in CRM Playaz, Brent Leary to tell you why Amazon.com deserves this award. He’s writing a book about Amazon called  “The Amazon Effect: How a New Customer Culture is Creating Crazy New Business Opportunities and Killing Companies That Won't Adapt” which is due to be published by Information Today this summer. I think he confirms my choice here.

Take it away, Mr. Leary. 

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I’ve been a fan of Amazon.com since 1997, when I took a chance and ordered Adobe Photoshop Classroom in a Book for $30.95…on June 3 of that year.  I know this because I can go into my Amazon account and see my complete order history, which is why I know I’ve spent about $10,000 buying everything from books to movies to music, sneakers and computers, and just about everything else I want.  I’ve bought books in print form and in digital form.  I bought a MacBook Air on a Thursday and had it in my hands that Friday.

But I hadn’t really thought about all this until late 2008 when I was asked about what company most fascinated me. 

At the time I was just coming off of the Barack 2.0 project where I partnered with business development specialist (and fellow University of Delaware alum) David Bullock to track how the Obama campaign was using social and mobile technologies to eventually win the presidency.  So with all time spent on Facebook, Twitter (still have a screen shot of when Obama’s Twitter followership was under 40,000, compared to 41+ Million today), YouTube and other media darlings, it would’ve been pretty logical of me to pick one of them to be fascinated by.

But that day I had just got a package in the mail from Amazon, and for some reason it caused me to think about how much I had bought from the company over the years.  And it was then that I realized that for close to ten years I had continually bought stuff from Amazon, without ever speaking to anybody from the company.  And that, to me, was fascinating – especially from a CRM perspective.

Since that moment, Amazon.com has been a company I’ve watched from a variety of perspectives – as a small business guy, a CRM industry guy, a technology writer, a gadget geek, and most importantly as a customer who likes to get the stuff I order as quick and easy as possible.  And back in 2010 when I wrote about four “non-CRM” CRM companies, Amazon was one I thought would have a biggest impact on customer engagement.

Their expertise in order and fulfillment has forced companies (and industries) to deal with growing customer expectations for faster delivery at low prices.

Everybody knows how they’ve changed the way we shop, and read.  They’ve also changed the way businesses are created with Amazon Web Services - allowing businesses of all sizes to focus more on core competencies and customer-centric models, and less on maintaining servers and software. 

Their expertise in order and fulfillment has forced companies (and industries) to deal with growing customer expectations for faster delivery at low prices. 

Amazon Prime is not only a fabulously successful membership program that provides customers with fast delivery, steaming videos, and book sharing, it’s a poster child for subscription businesses.  They keep adding on valuable services, and haven’t changed the price since the program began.  I’m guessing this is a main reason why over 20 million people are Prime members. 

Their continual use of information to remove friction and create better shopping experiences for their customers is legendary, and has raised the bar for expectations for every business website.  Terry Jones, founder of Travelocity and Chairman of Kayak.com, put it like this in a conversation I had with him last year:

"Constantly innovating is so important to keep up with today’s customers. Twenty percent of Americans have a tablet device. We are constantly moving forward, and we expect from every website – what we get from the very, very best website. 'So why isn’t Larry’s Insurance company site as good as Amazon?' We get frustrated when it isn't".

They are the driving force behind not only ecommerce but also mobile commerce.  According to the company, the entire 2013 holiday season was the best ever for Amazon, with more than 36.8M items ordered worldwide on Cyber Monday, which was a record-breaking 426 items per second.  And, according to a BusinessInsider.com study, Amazon leads the “Big Three” of mobile retail commerce, which also includes Ebay and Walmart.

Finally, their customer-obsessed culture has them topping the first annual ForeSee Experience Index of 100 top brands across seven industries.  Foresee says about the survey of 75,000 people, “The FXI quantifies customer experience by calculating satisfaction scores for each of the 100 brands on a 100-point scale, as well as three key measurements that are predictive of future behavior – Retention, Upsell and Recommend”.

So it is no surprise at all that Mr. G chose Mr. B and the folks at Amazon for this very prestigious distinction.  As I interview CEOs of companies of all sizes for the book, every one of them has said the impact Bezos/Amazon had on development of their companies has been significant – either from a standpoint of using AWS to build their technology foundation/business model, to attempting to replicate their approach to customer obsession.  And as fascinating as that is, maybe the most fascinating thing is that Bezos laid the company’s approach out in the historic first letter Bezos wrote to shareholders written in 1997 that has been attached to every annual report since.  Below are the first three bullet points he used to describe the company’s fundamental management and decision-making approach:

  • We will continue to focus relentlessly on our customers.
  • We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.
  • We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up our investment in those that work best. We will continue to learn from both our successes and our failures.

It’s easy to see that these same principles are still guiding the company, which also makes the focus Bezos has as fascinating as everything else Amazon has done to date.  Now of course not everybody is taken with how Amazon and Bezos operates.  But from a customer engagement perspective, it’s hard to deny the impact both the man and the company has had on what customers expect from the organizations they patronize. 

And with the Kindle Mayday button that connect you to a rep in 15 seconds anytime of the day, the promise of Sunday delivery, or the prospect of drones dropping off packages at your front door, it appears that we only be at the tip of the iceberg with the impact Amazon will have on customer engagement. 

In the immortal words of Terrell Owens, it may be time to get your popcorn...and buy it from Amazon – they deliver groceries in certain areas now too.  And maybe one day I’ll have to call customer service, although at 17 years and counting, I’m not holding my breath.  As long as they keep making it easier and faster to get my stuff, that’s all the customer service I need.

-----------------------------------------------------------

Thank you, sir.  

There is no question about the disruption credentials of Amazon.com.  As you can see with both Brent and my brief looks at the company, they are the most important business force in the 21st century and worthy recipients in the tradition of Peppers and Rogers and the IBM Institute for Business Value of the 3rd CRM Watchlist Lifetime Achievement Award. Congratulations to Amazon.com!! 

But we aren't stopping here. Tomorrow at 2pm Eastern Time Brent and I are going to talk "things Amazon" in a special episode of CRM Playaz if you're interested. Click here to make sure you're notified of when its going to start.

Next up: The 2014 Watchlist Elite: Technology Vendors - Salesforce.com, Microsoft, Blackbaud, Infusionsoft and Xactly. 

Topics: Amazon, Consumerization, E-Commerce, Social Enterprise

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18 comments
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  • Amazon deserves to be #1

    Jeff Bezos' three bullet points sum up everything. Amazon.com is one of the few companies that I genuinely feel loyalty toward. In the past decade, I have only had to return a few items, and customer service couldn't have been better. The most memorable was a first-generation Kindle Touch, which I decided was too clunky, and returned for a Kindle keyboard. I contacted Amazon, got a RMA, dropped it off at a UPS store by 2:00 p.m., and the replacement Kindle was delivered by 10:00 the following morning.

    I may even sign up for Prime...
    S_Deemer
  • Nobody's perfect...

    I've been a loyal Amazon customer for many years, but have had to live with more and more flaws in Amazon over the last few years:

    1. Third party vendors often get away with murder, often abetted by Amazon. One example is where when you search for a product and get a list and pick the cheapest alternative, it can sometimes be a product offered by a third-party vendor who tacks on an outrageously high s&h, such as selling a $12 item for $5 plus $9.95 s&h (for a lightweight item) -- per quantity ordered, but the search page usually does not show the s&h. Another: I bought what I thought was a pair of stereo speakers (it was pictured as such) and received one. With the inflated s&h, it would have cost too much too return it and eat the shipping, so I ordered the 2nd one, also at the inflated s&h. Another time I ordered a textbook and was suspicious of the cheap price, so I said not to fill the order if it was not the latest edition. It was about a 20-year-old edition, the order went through, and Amazon refused to help.

    2. Speaking of searching for a product, the Amazon search function is horrible. For example, search android apps for "spades card game" and you get two pages of hits, supposedly "sorted by relevance", yet half of them (or more) are not spades games and one of the best spades games (5 stars) is at the bottom of the 2nd page.

    3. I ordered a power tool which the description page said included a case, but no case was included. Called customer service and they said they would reship the product, I could take the case out of the box and ship back the rest. I asked why they didn't just take the case out of the box and ship that and CS said "but then we would have a box with no case." I point out: "You'll have the same after I ship back the box without the case." But they shipped the; whole, LARGE, heavy box which also didn't have a case. I shipped it back and just gave up.

    4. I ordered a software program on CD because it was actually cheaper than the downloadable version (?!?). Twice I got emails saying that shipping was being delayed because of stock shortage (which was not mentioned when I ordered it). I asked if I couldn't just have the downloadable version instead and Amazon said only if paid the higher downloadable product price.

    Note that #3 and #4 are not only NOT good customer service, but both actually cost Amazon more money to do it THEIR way!!!
    nfordzdn
    • Hmm....

      #1 is why I tend to only buy items that are at least fulfilled by Amazon, as I also then know their return policies as these can also vary by third party vendors.

      #2 I honestly have not had this issue, but to search for Android apps, I use the market place on my device and don't try to do it from the computer. Not sure if that makes a difference or not.

      #3 Amazon makes returns very easy and simple, not sure why you even bothered to contact support. All that you needed to do was go to the return items page and there would have been an option for exchange. Then you could have easily done as instructed or returned the old one, either way. And when the second one came without the case, you could have simply done a return.

      #4 This may seem odd, but Amazon actually gets charged more by the record companies for digital downloads in many cases than the physical media. They have found a way around this though by providing the Autorip service on most CDs. So now when you buy a CD, instead of having to rip it and then upload it to Amazon, they basically just say that you have essentially done this.

      So overall, their customer service is indeed good, it just depends on your viewpoint.
      cmwade1977
      • Nobody's perfect...

        #1 -- There are many products sold by 3rd parties which Amazon doesn't ship. I prefer to go through Amazon than to go directly to a 3rd party so that I don't have to give out my credit card info to others.

        #3 -- You missed the point. I didn't want to return the item. I wanted the promised case and their method of handling the problem defies logic.

        #4 -- I'm talking about software, not music. Again, it defies logic.
        nfordzdn
  • Good customer service isn't always the end all and be all.

    I'm sure a lot of heroin dealers have SUPERB customer service, that does't mean that we as a society are better off letting them sell 8-balls in the park across the street from a school. I'm not, directly, equating Amazon with narcotics distributor, but neither is Amazon the white knight of retailing. Record stores are essentially extinct. Independent booksellers aren't far behind them. Mom & Pop brick and mortar stores are an endangered species. Will the world really be a better place when the only place to buy anything is Amazon or eBay?
    matthew_maurice
    • Not really accurate.....

      Mom & Pop stores are not endangered, because they usually provide a niche market.

      Record stores are essentially extinct more due to iTunes than Amazon. I mean why go to the store to buy music, then rip it from the CD to put it on your iPod, iPhone, MP3 player, etc. when instead you can simply buy it (for the same or lower price) from iTunes. Yes, Amazon is now a major player in digital downloads and music, but the bottom line is that the record stores were in trouble long before Amazon became such a major player in digital downloads and music. That being said, there are still independent record shops that sell actual records and other such niche media that are doing quite well. Why? Because that's not Amazon's focus, their focus is on what the majority of people buy.

      Yes, big box booksellers are in trouble. Borders failed because they didn't jump on the eBook bandwagon. Barnes & Noble did and has survived so far, but now they are abandoning it, so I'm afraid that it's only a matter of time there as well. But the independent book sellers, who specialize in used books, niche books and the such are actually doing extremely well.

      Other big box stores (Best Buy, Walmart, etc.) that are competing with Amazon to sell what the majority of people buy are likely to either fail or at least have to reduce the number of their stores due to Amazon. Especially in areas where Amazon Fresh is available with same day delivery now.

      Who is likely to survive this though are the mom and pop shops and in the end they will likely do even more business than they used to because of Amazon pushing out many of the big box stores, we will likely see people going hey, Store xyz has a better version of what I need than I can get from Amazon, because they made it themselves and understood what I needed or what have you.

      So, no I don't think you are accurate that this will push mom and pop stores out, I think this will be a boon to them. I do think that it will push out a lot of big box stores though and a lot of that is a direct result of the big box stores pushing states to force Amazon to collect sales tax, as it now means that Amazon can have a presence in those states without any penalties since they have to charge sales tax anyway. So, this is an effort by big box stores to eliminate Amazon's competitive advantage of not having to charge sales tax in most states has already started to backfire on them and in the end will be the biggest problem that they will face.
      cmwade1977
      • Amazon can be an outlet FOR the moms and pops, cmwade

        One of the distinctives about Amazon, is that they encourage you to sell through them. They do have certain rules, but it's a great way for a small fry to get into big-time sales exposure. I'd estimate that about 50% of what I buy, is from mom and pops who sell through Amazon. Look closely at the 'sellers', and you'll see that.

        Some of those mom and pops are my favorite vendors, and when I'm looking for something I know they sell, I look in sellers to find them and buy from them. Even though, I'm a Prime Member.

        If I were going into retail, I'd pick Amazon as my seller profile in a heartbeat, whether selling something used or new. They have a full line of services from collecting the money to doing the shipping for you, to managing your contacts, etc. I want to say they get a 30% cut, but that might be incorrect. Even if it's that high (eBay gets 40%, if I recall), it's a bargain.
        brainout
  • Interesting you feel loyalty towards it, as I'm the opposite, but then,

    I'm on the supply side of Amazon and they are definitely the 900 ton gorilla in the room in a lot of ways. It's fair for a business to work at getting the best price for what they sell, yet Amazon through their weight around and any non-giant supplier gets stomped real bad unless they obey the Amazon dictates. Amazon tell small suppliers to how to provide their products and how to market them.

    Even when you do things to suit them, they never buy anything until AFTER they've sold it at a profit to them. They get the order and money from the client and then place the order on you, and if you can't ship for delivery in the time they set, they don't pay you - even when you tell them beforehand that shipping takes longer than they want for reasons like geography and transport systems.

    Another aspect is you can NOT see your purchase in operation until AFTER you pay and it's delivered - chances of a total refund are almost zero, too.

    One aspect US Amazon customers like is the pricers are often lower than those locally, this is because Amazon avoids paying most of the non-federal taxes (ie state and county taxes) which means those civic bodies have to raise other taxes to make ends meet due to dropping sales tax revenues.
    Deadly Ernest
    • typo in the abve with through where I meant throw

      sorry, but it's 3.30 am here and I'm a bit tired
      Deadly Ernest
  • Amazon Fresh

    One item that Amazon has started in select areas that was not mentioned in this article is Amazon Fresh, which allows for free same day delivery on groceries and most Amazon items with a minimum $35 purchase. Yes, they charge $299 for the service, but you also get Amazon Prime included in it.

    But there is something to be said for being able to have groceries delivered at competitive prices and being able to have most Amazon items delivered the same day as well.
    cmwade1977
  • Amazon is good as long as...

    I can continue to buy from the third parties. I never buy from amazon (never get fullfillment via Amazon). Here is what I do:

    1) look at the lower price sellers;
    2) compare price AND Seller Feedback (how many sales vs. percentage of positive sales).
    3) never buy from a seller with less than 1,000 sales nor has less than 91% positive sales.
    4) buy from the one seller who generally has the highest number of sales (like 100,000 sales or so) and the highest positive feed back percentage, and THEN go by price.

    Using this method, I haven't been wrong yet. some were kind of chancy, but they paid off in the end.
    chaz.broam@...
  • so...

    amazon, one of the worst companies to work for, the argument has been made that it's worse than walmart, and not even a mention? horrible warehouse conditions, long hours... what, workers have to be in a foreign factory before they're worth getting all jerked out of shape over? what, doesn't have "apple" in their name it's not an issue? this has been widely reported everywhere from bbc to mother jones but not in the tech press. they only report about china and apple.
    oneleft
  • One more feature about Amazon needs listing: its interface STABILITY.

    I'm an Amazon Prime customer, and an avid fan, preferring to go to Amazon FIRST for all my purchases, since the late 1990s. They have not substantially changed the interface structure since that time, so I always know how to find things. They add stuff, but as links on the already-familiar platform, so one can immediately see the new items, links, whatever.

    The only change they've made which is bad, is on how reviews can be written and accessed. But, I could complain about that, and did. They are working on the fix.

    Microsoft, webpage writers, and a slew of other folk who depend on the customer experience can take a strong lesson here: DO NOT CHANGE THE INTERFACE. Add things to it, yeah. Change what's underneath, sure. But the customer needs stability, as does any business.

    Of course, that means your initial interface design had better be good. Amazon's, was and remains good. That's a major reason why they garner so much customer loyalty and repeat business. They understand what the customer needs for ease.

    Would that MS and webpage writers, software developers, also understand this vital fact.
    brainout
    • That was weird

      Who are you actually complaining about in a blog about Amazon?

      Though you did add weight to my argument about blaming issues of change on the wrong entity I replied to on in another blog recently....
      William.Farrel
  • Why the fuss?

    When I want to make an online purchase I first check to see if the item is available at Walmart .com. If it is, the price will invariably be cheaper than the same product on Amazon. If the item(s) priced at $50+ shipping is free. AND, if the item proves unworthy I have a local return option available, no questions asked.

    If it's not a mainstream product, and not available on WM, then Amazon might get my business.

    Please don't respond with holier than thou "But Walmart abuses their employees" BS. Fact is, they provide jobs to people who would have difficulty finding employment elsewhere, or wind up at another lower end job anyhow.

    They also provide a place where the less affluent segment of our nation's population can save money. Lots of money.
    louishelps
  • I can understand how someone so focused on...

    selling their personal CRM ability might pen such an article, but PULEEZE, it is way overdone, doncha think? And, since WHEN is it acceptable to associate being disruptive with being an important business model.
    One of the greatest obvious shortcomings is that this penning seems to relate ONLY to consumerism, and overlooks the fact that there are orders of magnitude more dollars involved with many large businesses who do NOT pander to consumers.
    And, who's to say just how long before this "instant gratification" desire in so many irresponsible consumers will become a liability instead of asset?
    Others have already well covered the many foibles Bezos' org suffers from - so all I can say to that is "totally agree...". Wake up CRM folks - it ain't always about instant fulfillment.
    Willnott
  • Had my fill with Amazon

    One Christmas a few years ago, I was planning on doing my Christmas shopping totally online. I purchased a camera from Amazon that was $150.00. The next day there was a charge on my debit card for $400.00 - supposedly a hold on my account. I inquired with Amazon about this and never received the same answer twice - the "hold" was effective for nearly two weeks preventing me from doing the rest of my Christmas shopping. I nearly was unable to finish my Christmas shopping because of Amazon.

    I haven't and won't return. They never apologized nor offered me anything to get my business back. It seems they are not that concerned so I will no longer shop with them and will seek out a competitor even if it is more expensive to do so.
    laserwizard
    • Use a credit card dummy

      Why a debit card?
      prof123