1to1 Magazine
Newsletters
Web Exclusives
Webinars & White Papers
Events
Resources
Wall Street Should Take Cue from Amazon
This past holiday season, I managed to conduct about half of my shopping at Amazon. Next season, I hope to increase that. Why so I shop there? Because I know that Amazon delivers the merchandise fast, offers products that I’m interested in buying, and is known for reliable and responsive customer service if I should have a problem or question.
I’m not alone. Amazon reported that last year each of its 72 million returning customers spent $184 million with the online vendor. Such significant spending and the rise in the company’s stock finally got the attention of Wall Street.
Many investors pondered the triumph, listing reasons ranging from success in international markets to healthy margins, but they missed the underlying driver. In a recent New York Times article, author Joe Nocera ponders what really lies behind the company’s success: its unending care of its customers.
Nocera reports that in a recent interview with Charlie Rose, CEO Jeff Bezos said “The reason I’m so obsessed with these drivers of the customer experience is that I believe the success we have had over the past 12 years has been driven exclusively by that customer experience. We are not great advertisers. So we start with customers, figure out what they want, and figure out how to get it to them.”
Bezos comments were probably largely ignored by Wall Street, which has never placed much value on customers, focusing on short-term results rather than the metrics that promote customer loyalty. Three years ago, in their book Return on Customer, Don Peppers and Martha Rogers, wrote an open letter to Wall Street, asking analysts to start looking at the long term—to balance short-term reporting with long-term success by accounting for quarterly results, as well as next year’s earnings projections.
I don’t think Wall Street heeded this call to action, still maintaining that placing emphasis on customer loyalty metrics is like throwing money away. But while Bezos has been “foolishly” investing in long-term value creation and now is reaping the rewards, other companies that have been “saving” money on customer-loyalty initiatives probably aren’t prospering the same and may not be around in another 12 years.
My bet for sustainability is with Amazon. I just hope Wall Street will begin to take its pursuit of the customer experience seriously.
Mila-
I completely agree with you, I did the majority of my shopping on Amazon this holiday season (at one point I had 4 deliveries in one week). The biggest reason I shop with them is because they always have things in stock, shipping times are always a few days or less even if you don't pay for express, and their returns are so easy.
I've heard people say "there aren't any human beings working at Amazon, good luck getting someone on the phone." That may be the case, but their processes work so well that I've never needed to speak to a person directly. The rest of the retail industry should take a close look at Amazon and learn how to keep customers happy.