Making Customers Happy

When the 2007 year-end tallies are calculated, Amazon is expected to have grown revenues to $15 billion, an increase of 35.0% from the year prior. The company counts 72-million active customers who spent, on average, $184 on Amazon.com last year. Profit margins, which have been as low as 3.0%, have increased to 6.0%. Amazon is making money.

Amazon is also making customers happy. Ed Nocera, writing in the New York Times, thinks profit and sales-growth at Amazon is a by-product of making customers happy.

Ed purchased a PlayStation 3 as a gift from Amazon this Holiday. Concerned the package hadn’t arrived yet, Ed tracked the shipment from Amazon’s website. He learned the package had arrived and a neighbor had signed for it. Ed asked his neighbor about the package and learned she put the package in the hallway after signing for it.

Ed knew his PS3 was MIA so he managed to find Amazon’s customer service phone number and explained his situation to the customer service rep. Amazon shipped out a replacement PlayStation3 and on Christmas Day, Ed’s son was happy. And so was Ed.

Curious about Amazon’s stock performance, Ed looked it up and saw it had risen about 140% in the past year. Wall Street types credit the Amazon run-up to improved margins, international expansion, its web services business, and to increased sales with its reseller merchant market affiliates.

Ed has a different take,

I couldn’t help wondering if maybe there wasn’t something else at play here, something Wall Street never seems to take very seriously. Maybe, just maybe, taking care of customers is something worth doing when you are trying to create a lasting company. Maybe, in fact, it’s the best way to build a real business — even if it comes at the expense of short-term results.

Jeff Bezos, Amazon CEO and Founder, appeared recently on The Charlie Rose Show and had this to say about his obsession with customers,

“They [Aamzon customers] care about having the lowest prices, having vast selection, so they have choice, and getting the products to customers fast. And the reason I’m so obsessed with these drivers of the customer experience is that I believe that 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.”

Ed Nocera closes his article with this gem,

There is simply no question that Mr. Bezos’s obsession with his customers — and the long term — has paid off, even if he had to take some hits to the stock price along the way. Surely, it was worth it. As for me, the $500 favor the company did for me this Christmas will surely rebound in additional business down the line. Why would I ever shop anywhere else online? Then again, there may be another reason good customer service makes sense.

“Jeff used to say that if you did something good for one customer, they would tell 100 customers,” said Suresh Kotha, a management professor at the University of Washington business school.

I guess that’s what I just did.

SOURCE | Put Buyers First? What a Concept (Ed Nocera) | NY Times (Jan. 5, 2007)

Comments

[Scott White]

I wrote a blog article on this subject last week. Check it out:

http://www.brandidentityguru.com/wordpress/?p=442

[Joel D Canfield]

Back in September, I had the same experience with a $40 technical book. No questions asked; Amazon simply replaced the book, upgraded the shipping, and begged me for another chance.

http://CommonsenseEntrepreneur.com/ce/archive/2007/09/#amazon

Yeah; their profits *must* be coming from increased margins ;)

[Shama Hyder]

I have had the same experience with Amazon. They are fantastic to deal with!