Amazon realizes it costs far less to maintain an existing customer than to convert a new customer. So they have a leadership principle called Amazon Customer Obsession to keep existing customers.
Regarding Amazon’s competition, companies like Walmart, Apple, and Starbucks all recognize the importance of satisfying customers, ensuring every customer has a reason to stay, buy and refer new customers.
Amazon’s leadership principles take customer satisfaction to the next level, using it to drive new ideas and ways to serve and satisfy customers.
What Is Customer Obsession at Amazon?
Suppose you need to learn more about Amazon. In that case, you get a clear picture after reading the Amazon vision statement, which is:
“Our vision is to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
Amazon’s mission statement to achieve this vision is “to be Earth’s most customer-centric company.”
To achieve its mission, Amazon has developed numerous leadership principles.
For example, customer obsession at Amazon is one of 16 leadership principles described on Amazon’s website: “Leaders start with the customer and work backward. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”
What’s important, however, is not the principle itself but how Amazon achieves customer obsession. So let’s discuss this next, along with ways to adopt a customer-centric mindset.
5 Ways Amazon Practices Customer Obsession (with “How to Obsess” Examples & Action Items)
Amazon uses several tactics to support its leadership principle of customer obsession. The tactics ensure that the Amazon workforce adopts the behaviors that lead to delighted customers.
Here is a list of Amazon’s strategies to support its customer obsession principle.
1. Satisfy Customer Needs: Earn & Value Customer Trust
Amazon emphasizes putting the customer at the center of every business decision to build a loyal customer base more likely to make repeat purchases and recommend the company to others.
The challenge to building a customer culture similar to the AWS leadership principles is that it requires a shift to a long-term view of every customer.
Action Item #1: Focus on Building & Maintaining Long-Term Trust
Suppose you are a Prime member and use Amazon regularly; you’ll know that the costs associated with monthly membership are far less than the costs of paying for shipping, and that’s not considering any other membership benefits.
Amazon recognizes that charging for shipping on every purchase is an inhibitor to the desired behavior of influencing customers to buy. By incorporating “no-charge” shipping, Amazon builds trust with its customers, further supporting Amazon values.
Use the following questions to formulate steps to build trust with your customers:
- What gaps exist in your market to ensure a positive customer experience?
- What can you provide your customer to address these gaps?
- Which of these would enable you to build trust with your customers?
2. Prioritize Customer Needs Over Beating Out Competitors
Short-term thinking leads most businesses to focus their attention on out-bidding their competition. Although remaining competitive is critical to business success, Amazon has a slightly different view.
Instead of focusing solely on its competition, Amazon’s customer obsession prioritizes customer needs over making changes to compete.
For example, if all of your competitors charged shipping to customers for any returns, your company would likely be inclined to do the same (to remain competitive and ensure you recoup costs).
Amazon’s slogan, or more officially, Amazon’s mission statement of “Earth’s most customer-centric company,” compels them to ask what is best for our customers.
Investments of time or money to satisfy this obsession are a secondary consideration, not the primary one.
Action Item #2: Be Competitive, But Don’t Sacrifice Customers in the Process
Amazon’s goal is to be customer obsessed. This means to place the customer’s needs first and avoid sacrificing positive customer experiences when trying to match or better competitors’ offers.
An excellent example of this customer obsession is Amazon’s refund policy, which allows returns for Amazon products and most sellers on Amazon within 30 days of receipt of shipment.
Many retailers offer return policies. However, few are as customer-centric as Amazon’s. Most customer returns are perceived as an expense rather than a service to the customer.
Numerous challenges and costs are associated with managing returns, including shipping, processing, and attempting to receive compensation from the manufacturer.
Amazon offers a return policy that ensures they are competitive. However, despite the challenges and costs associated with doing such, they designed the procedure for their customer’s needs, thereby making returns part of their competitive advantage.
They aim to ensure returns are accessible for the customer, even if it means additional costs or time invested for their employees.
Use these questions to prioritize your customer needs to beat competitors:
- What does your customer want or need (that your competitors don’t offer)?
- What are the costs associated with providing this?
- How many ideas can you generate to give this, and what are the prices for each?
3. Identify and Fix Customer Experience Problems
How does Amazon achieve customer obsession? One of the key differentiators in the Amazon experience is their obsession with fixing customer problems.
Amazon has always taken a long-term view of recognizing and correcting errors or problems their customers experience.
In other words, despite the costs or time associated with resolving the issue, if it will lead to long-term satisfaction and retention of a customer, then it’s time (and money) well spent.
Recognizing that customers can experience a wide variety of issues or problems and that the relative importance of these problems can vary by customer, Amazon has developed an easy-to-navigate help center.
Although a help center isn’t unique, what does stand out are the various methods to contact Amazon are displayed at the top of the page (often, companies hide these in an attempt to have customers seek their answers before reaching out). Additionally, topics are easy to understand and navigate for anyone who wants to avoid reaching out. For example, “Where’s My Stuff” and “Find a Missing Item” are prominently displayed and easy to navigate for customers.
Action Item #3: Solicit Feedback From Your Customers
Amazon values customer feedback. Requests for feedback exist at various stages of the customer’s journey, including post-purchase, post-delivery, and even as a periodic request sent via email.
Customer feedback is the gold standard for improving a customer’s experience.
For years I’ve assisted clients with improving their sales by offering what I refer to as my Forensic Sales Audit. One of the significant components of the audit is soliciting feedback from customers.
There are several methods to solicit feedback from customers, including direct outreach, email, physical mail, and electronic surveys.
Ensure that the process of requesting the feedback is personalized and that you obtain responses to three key questions, namely:
- What have you enjoyed about your experience?
- What could we improve about your experience?
- What else do we do that would further enhance your experience?
4. Embrace Data & Customer Narratives for Informed Decision-Making
Customer obsession at Amazon begins with obtaining and analyzing big data alongside customer accounts to inform and aid decision-making.
The data is the feedback received from Action Item #3 above, and it serves to inform Amazon leadership on what’s working well and what requires improvement in the customer’s experience.
Additionally, algorithms analyze customer data to make personalized recommendations for products. For example, Amazon’s “Customers Also Bought” prompt makes product suggestions based on their collective customers’ purchase and browsing history.
In addition to data, Amazon uses customer narratives shared by associates and customers in online reviews to determine how better to improve product placement, positioning, and product descriptions.
Action Item #4: Use Data & Feedback to Analyze Customer Behavior and Preferences
Gaining access to data for your company doesn’t have to be complicated. You likely have data already, and either you must be made aware or invest the time to review the data.
If you have Customer Relationship Management (C.R.M.) software, you have data. The real question is, what information would be helpful to you to understand your customer’s behaviors and preferences better?
A company such as Amazon Inc. might seem like a foreign entity compared to your company. However, the data they use fundamentally is the same data you use. They try to find and track the data, then apply it to decide better how they serve and sell to customers.
For example, you likely track what products your customers buy, which means you can also identify to your customers “what others bought.” Sure, you might need more fancy software to do this automatically, but the information exists and can help you better inform and serve your customers.
Here are three critical data points and feedback to consider:
- What marketing strategies attract customers to your products/services?
- What products or services are in the most significant demand by your customers?
- How competitive is your product or service pricing?
Answers to these questions can inform the changes, improvements, or additions you make to your product or services.
5. Foster a Culture of Innovation
Amazon encourages innovation and experimentation to serve customers better. Amazon’s leadership is willing to take risks and try new things, even if they don’t always work out.
Herein is the definition of innovation. It’s the willingness to explore and try new things without fear of failure. The goal, however, is to fail fast if the idea doesn’t work out.
Amazon famously launched a product in 2014 called the Fire Phone, designed to compete with Apple and Samsung smartphones.
Unfortunately, Amazon dropped the phone price from $650 (retail) to just .99 cents with a two-year contract after only two months. As a result, phone production ceased in August 2015, and Amazon took an estimated $170 million loss.
Contrast this to BlackBerry, which took heavy losses in sales and revenue for years before eventually ceasing production.
Building a culture of innovation means engaging the Amazon workforce in being customer obsessed and placing the customer at the forefront of all decisions. Former CEO Jeff Bezos has built an expectation of “starting with the customer and working backward” philosophy, which continues within the company today.
Action Item #5: Encourage Creative Thinking
Above all, the Amazon leadership principle of customer obsession encourages employees to practice creative thinking.
When challenges directly or indirectly impact customers, it often takes creative thinking to identify solutions.
The principles for encouraging your team to think creatively are:
- Turn a problem into a question.
- Ideate to generate potential answers to the question.
- Assess replies and responses for relevance and effectiveness.
- Introduce a solution and determine its effectiveness.
- Prepare to fail quickly, then move on to another solution.
When you create an environment where employees can think creatively, using a framework similar to the above, you generate new and unique ways to serve your customer.
Make sure to reward creative ideas, whether they are successful or not. Doing so will promote the behaviors necessary to drive innovation amongst your team.
Using Amazon’s Customer Obsession Model to Fuel Your Business Growth
Customers are the lifeblood of any organization, and the Amazon leadership principle recognizes this.
Although Amazon’s goals might differ from yours, if you intend to sustain and grow your customer base, becoming customer obsessed is crucial.
Use the five action steps above to practice Amazon customer obsession and watch the sales roll in.
Which action step will you start with?
© Shawn Casemore 2023. All Rights Reserved.