Why customer-obsessed Amazon is our most important business force
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
"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.
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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.
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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.