Putting people first? What a concept! 15 Jan 2008
"It is almost impossible to read or see an interview with Mr. Bezos in which he doesn't, at some point, begin to wax on about what he likes to call 'the customer experience'...Anybody who has spent any time around Mr. Bezos knows that this is not just some line he throws out for public consumption. It has been the guiding principle behind Amazon since it began. 'Jeff has been focused on the customer since Day 1,' said Suresh Kotha, a management professor at the University of Washington business school who has written several case studies about Amazon. [Legg Mason's legendary fund manager, Bill Miller] noted that Amazon has really had only one stated goal since it began: to be the most customer-centric company in the world.
"In this, it has largely succeeded. Millions of people instinctively go to Amazon when they want to buy something online because they have come to trust the company in a way they trust few other online entities. Amazon's technology, its [user] interface, its one-click buying service -- they are all incredibly easy to use. Its algorithms offer 'suggestions' for further buying that actually appeal to its customers. Its Amazon Prime program -- for a $79 annual fee you get two-day free shipping -- is enormously popular. Unlike what happens at certain other technology companies, when you have a problem, the customer service telephone number isn't hard to find. It is even willing to correct mistakes that it didn't make."
Yet, despite all this, Wall Street has never placed much value in Mr. Bezos' customers-centred approach, - as the NYT article goes on to explain:
"What [Bezos] has viewed as money well spent -- building customer loyalty -- many investors saw as giving away money that should have gone to the bottom line. 'What makes their core business so compelling is that they are focused on everything the customer wants,' said Scott W. Devitt, who follows Amazon for Stifel Nicolaus & Company. 'When you act in that manner many times Wall Street doesn't appreciate it.' What Wall Street wanted from Amazon is what it always wants: short-term results. That is precisely what Dell tried to give investors when it scrimped on customer service and what eBay did when it heaped new costs on its most dedicated sellers. Eventually, these short-sighted decisions caught up with both companies.
"But Mr. Bezos refused to give in. 'He was spending his time on long-term value creation,' Mr. Miller said. There aren't many chief executives who can so easily ignore the entreaties of the investment community, but Mr. Bezos turned out to be one of them...And it also helps that his dogged pursuit of a better customer experience has turned out to be exactly right...Amazon says it has somewhere on the order of 72 million active customers, who, in the last quarter, were spending an average of $184 a year on the site. That's up from $150 or so the year before. Amazon's return customer business is off the charts. According to Forrester Research, 52 percent of people who shop online say they do their product research on Amazon. That is an astounding number."
Next article: 1960s Braun products hold the secrets to Apple's future
Previous article: Happy Pills