From its humble beginnings as an online bookseller, Amazon has grown to become one of the world’s largest ecommerce businesses. But unlike many massive multi-national organizations, Amazon remains incredibly popular with its customers.
In fact, so popular that Amazon accounts for 10.8% of total US retail turnover (nearly $218 billion in 2021) and 37.8 % of the US ecommerce market, becoming the leading online retailer in the country. In terms of NPS, Amazon’s score is 50% higher than main street stalwart Macy’s.
According to Prosper Insights’ survey of over 7,500 U.S. adults, more than three-quarters (76.7%) of Macy’s most frequent shoppers headed to Amazon during the holiday season.
Amazon has redefined the meaning of the shopping experience. Now shoppers don’t need face-to-face communication to make a purchase and gain public trust. Good pricing, product reviews, fast shipping, and easy returns seem to have replaced traditional shopping.
The secrets of Amazon’s success
It is important to note that Amazon’s journey to success has been a long and difficult road. For many years the company posted little or no profit while refining the technology and processes that power its current success.
The good news is that your business can “steal” many of these techniques to improve your own customer satisfaction ratings. Here are some to consider.
1. Investment and experimentation
Amazon has never been shy about spending money. The business invests vast sums in ensuring that its back-end processes are as efficient as possible. They also spend a lot on research and development, building new products and services they believe will be of value to their customers.
This willingness to experiment is combined with a willingness to fail too. While no one likes failing, it comes with the territory. The Amazon Fire Phone released years back was not a hit with customers, reporting a $170 million loss.
Yet, Jeff Bezos, then CEO of Amazon, explained that “as a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle…The good news for shareowners is that a single big winning bet can more than cover the cost of many losers.”
While the phone was unsuccessful, they learned valuable lessons that have served them well when working on devices like Echo and FireTV.
On the other hand, Amazon Locker, allowing customers to collect packages from secure locations because they cannot take delivery during office hours, has been an unqualified success.
Amazon does have the luxury of very patient shareholders and investors, allowing them to spend much more than their competitors. For smaller companies, funding needs to be controlled more tightly – but that does not mean sacrificing the capacity for experimentation, especially if the customer experience is compromised as a result.
2. Personalization everywhere
By carefully monitoring how customers use their website, Amazon builds a very detailed, highly accurate picture of their individual customers. This information then forms the basis of every email and marketing effort.
Shoppers using the Amazon website will see a list of recommended products at the bottom of every page, including items they have previously browsed but not purchased. This is followed by regular emails encouraging shoppers to return and make more purchases.
New products like Alexa and Echo will only help to enhance this profile-creation further. By listening to their owners, these devices feed real-time information back to Amazon allowing them to add extra context to profiles that cannot be collected by website usage monitoring alone.
Also, if you have registered a complaint with Amazon, you don’t have to keep telling the same story the next time you reach out to them. The records of customer complaints are persistently stored in Amazon’s centralized database, and can be accessed conveniently by any customer service executive.
3. Subscription membership
One of Amazon’s most successful strategies has been its Prime subscription. Amazon Prime has grown from a priority delivery service to becoming a value-add membership program.
Not only do subscribers receive their goods quicker (and for free). They now have access to Amazon Prime TV entertainment content and even priority booking for tickets to shows and concerts.
Jeff Bezos told investors that the idea behind Prime is to make “such a good value, you’d be irresponsible not to be a member.”
Although the company has added more and more new perks to its Prime subscription, 63% of Amazon shoppers report that free delivery is the most important factor in their purchasing decisions.
So, while Prime subscribers pay for the privilege, they also receive unlimited free postage. The deal works out well for Amazon, too – Prime subscribers typically spend 300% more than non-subscribers.
4. Effective self-service
Although they appreciate traditional service channels (phone, email, regular mail, etc.), most actually prefer to use self-service tools – at least in the first instance. Amazon has carefully refined its service processes, making many key operations available to customers.
Instead of having to call a customer service rep to report a problem, shoppers can log a call in their account control panel, and carry out much of the initial escalation themselves.
This level of control allows them to “own” their issues and frees up Amazon’s internal resources to focus on delivering excellent service on aspects that cannot be solved without human intervention.
Shoppers expect businesses to respect their time, making trade with them as easy as possible. In fact, Forrester Research found that 73% of customers believe that “valuing their time” is the most important thing their suppliers can do for them. And by providing the tools needed to initiate problem solving, Amazon is clearly demonstrating respect for their customers.
5. Diversified product base
As mentioned earlier, Amazon began as an online bookseller – but as new opportunities have presented themselves, product lines have expanded. As well as physical goods, Amazon customers can now purchase digital downloads, groceries, and hardware – like Kindle e-readers and the Alexa digital home assistant.
Amazon has also found a way to productize its own internal processes. The Amazon Web Services (AWS) cloud service replicates its internal infrastructure, making the same flexible computing model available to other businesses. By selling a subscription to these computing services, Amazon is also a significant player in the infrastructure services market.
While the COVID-19 pandemic pushed consumers toward remote care and online shopping, Amazon seized the opportunity to lay the ground for wider healthcare services with Amazon Pharmacy. Launched in November 2020, it was described by many as Amazon’s most significant venture into the healthcare industry. In 2021, Amazon’s medication delivery service became the leader in the Drug Stores & Pharmacies industry with an NPS score of 66.
By constantly expanding what they offer, Amazon has become a one-stop shop for a huge range of goods and services. This makes shopping with Amazon particularly convenient, boosting NPS and ensuring repeat purchase.
“The beauty of this mission is that you never run out of runway; customers always want better, and our job is both to listen to their feedback and to imagine what else is possible and invent on their behalf.” – Jeff Bezos
Reading through the many press-releases and statements over the years, Amazon has always placed the customer at the core of what they do. The brand works backward from the customer, not the other way around.
The new product ideas pursue something that meaningfully changes customer experience over a long period of time – with “long period” being a key word here. That’s because the company focuses on better long-term experiences and loyalty rather than short-term success, no matter the investment.
They put themselves in the customer’s shoes and are always all ears for customer feedback. The brand is willing to learn what users want or dissect what doesn’t work well for them to create better solutions. With that in mind, they make good use of customer satisfaction surveys – at critical touch points – and regular follow-ups. Turning to feedback loops and analyzing data is vital for managing customer expectations.
Moreover, Amazon offers the opportunity to rate received products/sellers and submit reviews, thus building trust and handing more control over the shopping experience to the customer.
Complex, yet simple
Many of Amazon’s internal techniques are quite complex (the Amazon AWS Cloud arm of the business is incredibly technical), but they are all focused on the same goal – happy customers. Every development, innovation, and new service is designed to make customers’ lives easier.
From more accurate product recommendations to applying technology to simplify the shopping process, everything Amazon does is focused on making things easier and more convenient for their customers.
If your business cannot replicate anything else that Amazon does, it can still borrow this relentless focus on customer satisfaction. After all, a customer-focus ethos is free to adopt. And ultimately, it is only by providing an outstanding customer experience that you can push your NPS scores upwards.
For more help and advice about measuring NPS and using it as a measure for your own business performance, please get in touch to arrange a demo.