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How Amazon Puts Customer Retention At The Heart Of The Business

by Simon Spyer on Mar 20, 2014 9:05:00 AM

5 Extraordinary Commitments to Customer Retention

How Amazon Puts Customer Retention At The Heart Of The Business

When Amazon reports its latest results to the US Securities and Exchange Commission, they are accompanied by a letter to Amazon's shareholders from CEO and Founder Jeff Bezos.

This letter is the most compelling, articulate justification for a customer-centric business model.

That this is written by a listed company is even more extraordinary. Here are the 5 things that we find most extraoridnary and inspiring.

1. The complete and utter focus on customer 'wow'.

Customer centricity is the defining point of Amazon's culture and proposition.

The 'C' word is mentioned thirty times in the letter.


2. Total commitment from the top.

Customer centricity isn't something new; it's as old as capitalism.

The focus on customer centricity from the very top of the organisation is however very unusual.

Most companies would claim to be customer focussed but the reality is that they focus first on sales or profit (normally over a short time frame), second on operational efficiency and perhaps (often quite a big perhaps) third on customers.


3. Consistency.

With every submission, Bezos attaches Amazon's original 1997 letter to shareholders. The consistency of what Amazon are doing in 2013 with their 1997 vision is extraordinary.

The same leadership, investor support and a great initial vision certainly play a part. But the principle of delighting customers is paramount - if you start with this objective, why should you ever need to change?


4. Willingness to fail.

Amazon know they won't get everything right but testing and learning in baked into the company's DNA.

They know that they will be successful more often than they fail but that they will learn from their failures.


5. Persuasion.

Persuading Wall Street that this is the right strategy is perhaps Bezos' greatest achievement.

Most companies would like to do things differently but have to deliver quarterly results and are therefore very much focussed on the here and now.

Bezos quotes Benjamin Graham and then goes on to add:

"In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience. We aren’t 10% smarter when that happens and conversely aren’t 10% dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company."



Amazon aren't perfect.

They don't do a perfect job of understanding their customers (for example, timetabled sales communications and continued marketing messages for product categories only purchased once as a gift). However, a cursory review of the level of customer-centric innovation that has been delivered should mean that we cut Amazon a little slack.

With such a strong vision and strategic execution and utter focus on delighting its customers, Amazon will more than return for its investors in the long term.

All companies should look at Amazon when setting customer retention strategies.


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This post was written by Simon Spyer

Co-founder & Insight Partner at Conduit, professional insight-monger, dad, lover of all sport and Spurs.

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