Amazon Stresses The Importance Of Customer Satisfaction Instead Of The Competitor

"If you're competitor-focused, you have to wait until there is a competitor doing something. Being
customer-focused allows you to be more pioneering." 11

"Each year the University of Michigan calculates a customer-satisfaction index for 225 of America ’s
largest companies. Amazon has led the online retailing category for years and has repeatedly placed in
the top 10 among all companies." 4  

Bezos adopted an approach to help never lose the importance of customer satisfaction and Amazon
narrows in on eliminating the risk of unsatisfied customers. As you can see from the quotes above,
Amazon walks the talk in being successful in maintaining customer satisfaction (See Michigan Study
for further details). Amazon strives for excellence in customer satisfaction, perhaps one could say a
strive for perfection. Bezos states that “We’re not satisfied until it’s 100%.” 9 It is noted that Bezos
would have an empty chair to remind staff in the meeting to imagine a customer present and to
consider what they would want.  He called the customers "“the most important person in the
room.” 4Bezos describes the importance of knowing your customer and things that will not change.
He notes customers want "selection, low prices, and fast delivery." He shares how these three
consumer desires are likely not going to change. 5 

Amazon Achieves Excellent Customer Satisfaction By Offering An Ever Expanding And Large
Selection of Products And A Personalized Experience

Amazon focuses on customer service and waits to see where opportunities present to sell them
personalized products. "We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and
they’re the reason we’re successful: Put the customer first. Invent. And be patient." 1  Amazon
observes the actual purchase behaviour of the customer. They take an individual approach to each
customer. They are noted to target middle and upper-class customers that are comfortable with
basic technology and look to save time by purchasing online. 6 Amazon implements customer reviews
and showcases items that would be personalized for the customer based on their previous purchase
behaviour. 
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Click Above to Watch Jeff Bezos about the Importance of Evolving

Amazon Achieves Excellent Customer Satisfaction Through Speedy Service

It is noted that Amazon is very focused on preventing any delays (in products, delivery, web page
loading).  "Amazon has metrics showing that a 0.1 second delay in page rendering can translate into
a 1% drop in customer activity." 4 Amazon stresses the importance of fast delivery for the consumer.
In addition to fast delivery, they also value efficiency within the operations of the company and
affordability for the consumer.  

Amazon Achieves Excellent Customer Satisfaction Through Competitive Prices

Bezos tries to keep all costs low within the business to allow for him to provide the low prices.
“Frugality” is one of eight official company values as stated earlier - This will align for how Bezos
operates the company and ensures unnecessary expenses are not occurring which would result in
the consumer having to pay more. For example, he is known for keeping old black-and-white
printers and other office equipment at low cost, no one in the company flies first class, and keeping
the size of the teams small.  He also has a "two pizza rule" which essentially is that if you require
more than two pizzas to feed a team, it is too big. 4 & 7 Bezos restricts his salary to $81,840 as well as
his management team's salary to help keep costs low. It appears that employees get some
ownership in the company (stock options) to counter the lower salaries. 8  

Amazon Trains Employees To Understand The Customer Experience To Get All Employees To
Understand The Customer

Jeff Bezos ensures managers and all staff understand the experience of the customer. He arranges
for them to take a two-day training at a call center to allow them to understand what the customer
goes through and to ensure humility. 4 & 9 Bezos not only encourages his managers to be sensitive to
the customer experience, but he also has role modeled this in his interactions with the consumers.
This can be seen when Bezos showed humility to his consumers when Amazon made a mistake of
deleting e-books of their customers and he sent out a personable apology. The apology is noted to
make customers remain loyal and quickly forget about the issue.  9 

Amazon's Marketing Strategy Is Providing Great Service That Creates Positive Word Of Mouth
and Focusing On SEO & PPC

“If you make customers unhappy in the physical world, they might each tell six friends. If you make
customers unhappy on the Internet, they can each tell 6,000.” 11

Amazon focuses on making the customers happy. Their budget for advertising is small for its size of
the company, but they focus on word-of-mouth being an essential part of their success. "If you do
build a great experience, customers tell each other about that. Word of mouth is very powerful." 4 &
11 
Amazon spent 2.8 billion dollars on digital marketing. If you look at their sales from 2014-2015, it
was $71.84 billion in sales. 12 & 13
In 2015, Over 90% of Amazon's marketing budget was focused on both SEO and PPC.  It is
noted that Etsy is the only other large brand that spent more of their budget on search marketing.
Following Amazon, the budget for Apple was 85%, and Target, Best Buy, Home Depot and Kohls
were less than 20% for their search marketing budget. 12Below we discuss a chart that displays the
statistics for Amazon's search engine. It shows that Amazon has been successful in the response of
how consumers use Amazon as a search engine to look for the desired product.  

Become The Leader In Your Market

"Our overall sales to new customers has improved as a result of detailed
analysis, proposed solutions, and successful execution.” 
Tom   -  Business Owner & Customer
 

What has Amazon been successful in?

 Amazon grew within two decades of growing from a leader in book sales, to competing in
every other industry (electronics, music, clothes, toys, etc). 14

  "The company has also grown at a tremendous rate with revenue rising from about $150
million in 1997 to $75 billion in 2013." 15

 “AWS, Marketplace and Prime are all examples of bold bets at Amazon that worked, and
we’re fortunate to have those three big pillars. They have helped us grow into a large company,
and there are certain things that only large companies can do,” said Bezos. 16

Statistics on Amazon's Leadership 

 Amazon is noted to have over 130 million visitors each month. 17 

 According to Reasonate, 86% of online shoppers make purchases on Amazon (based on

surveying 200,000 consumers annually). 18 
 “Amazon became the fastest company ever to reach $100 billion in annual sales,” said Jeff
Bezos, chief executive and chairman of Amazon. “Also this year, AWS (Amazon Web Services) is
reaching $10 billion in annual sales — doing so at a pace even faster than Amazon achieved that
milestone.” 16

 Below you can see a chart of Amazon's net sales. 19 It is noted that in 2015 Amazon reached
$100 billion in annual sales.
 When looking at Amazon's sales, there are other companies that are higher (ex. Walmart),
but it is noted how fast Amazon has achieved the 100 billion mark in such a short time (22
years). 19
 55% of online consumers start searching their product of interest on
Amazon. 20 

 Bloom Reach 20 did a study on Amazon that suggests: 

 o When consumers are looking for a product, 90% will check Amazon even if they are
going to purchase elsewhere. This could be related to the customer reviews. It is noted that
78% people will do this either often or always.
o 50% of mobile shoppers try Amazon first, compared to search engines on 34% and
other retailers on 16%.
o It is noted that consumers get inspiration from Amazon even when they are not
necessarily going to Amazon to purchase a gift (49% start on Amazon to search for an idea,
compared to 28% on a search engine, and 26% for retailer)
o In addition to inspiration, when the shoppers are aware of the item they want to
purchase, 59% start on Amazon (compared to 24% on a search engine and 16% retailer) 
 Below you can observe BloomReach's finding in 2015 when exploring Amazon and Online
Purchases. 21
How Does Amazon Respond to Competition?
“What’s really happening out there is that Amazon is shredding the competition, and the competition
just doesn’t know what to do about it.”  22

Amazon expanded their services quickly and have caught competitors by surprise by some of the
industries they have invested in (such as making movies). By expanding quickly and taking minimal
profit, it is hard for competition to keep up with Amazon. 23 

An example of how Amazon responded to competition (Netflix) in the area of movies is how they
introduced offline streaming a year well before Netflix offered this feature. 37 Amazon did this to
lessen the cost for the customer (offline streaming, no data), and increase ease of use anywhere (no
limitations with connectivity). 36 This is a perfect example of how Amazon is pushing the bar for
innovation and is ahead of their competitors.  Originally, Netflix stated they wouldn't offer offline
streaming, but after a year of Amazon offering this, Netflix introduced it to their consumers as an
option. As discussed earlier, Jeff Bezos does not focus his energy on competition, but rather on the
consumer and how he can appeal to their loyalty and satisfaction.  As a result, this overflows into
advancement and development of ways that consumers are more satisfied (such as offline
streaming).

Amazon is also hopeful to capture as many Americans to subscribe to the Amazon Prime
membership.  Statistics show that members of Amazon Prime spend on average almost $900 more
than non-members a year.   Analysts suggest that in 2015 there were between 40-50 million
28

members worldwide. 25  Amazon expanded quickly and aggressively when they introduced Amazon
Prime.  It is noted that over the last 10 years they expanded their items from 1 million to 20 million.
They also expanded internationally aggressively for Amazon Prime to maintain their leadership and
as a result, they are pushing out any competition in their market worldwide. 25  Amazon focuses on
building customer loyalty - by offering free trials or bonus features such as free e-books, music
streaming, and video/tv series when purchasing Amazon Prime. 25  By having the loyalty of the
consumer, they will be more apt to continue to make purchases long-term and not turn to other
competitors for their purchases.

How does Amazon position their Brand?

 Amazon logo 35

In 2015, Amazon's brand was worth $176 billion USD. 6 Amazon has developed their brand story
through how Jeff Bezos started the business. An entrepreneurial story about how he started selling
books from his garage to an extensive successful online store that sells a vast amount of
selection. 34 The brand of Amazon is also strongly associated with putting the customer at the center.
Jeff Bezos has focused on getting his brand to be associated with having a vast variety of products,
low prices, and customer satisfaction. 

How Does Amazon Maintain Leadership?

Amazon Maintains Leadership with Their Product Selection

Amazon maintain's their leadership by creating a diverse product selection.  They have moved from
the arts (literature, music, movies) to online groceries, cloud computing, and film/TV production.
Amazon is known as the "everything store". There are some odd selections of products as well that
can be found on Amazon, such as a model of fat replica or inflatable unicorn horns for cats. 22 & 37

Amazon Maintains Leadership by Offering Various Features and Services

A list of Amazon business segments are as follows:  24 & 42

 Amazon Prime - a free two-day shipping for eligible purchases and extra benefits (unlimited
streaming of movies and TV with Prime Video, and Kindle Owner Lending Library)
 Amazon Video - to purchase, rent, and watch digital movies and tv shows
 Amazon Cloud Drive & Cloud Player - 5 GB for storage for photos, files, videos etc.
 Amazon Web Services -a secure cloud services platform
 Amazon Fresh & Amazon Prime Pantry - to purchase household products and groceries
 Amazon Dash - a wifi connected device that will reorder your favourite products by pressing
a button
 Amazon Kindle - a device and database where consumers can browse, purchase, download
and read a variety of literature 
 Amazon Echo - a hands-free speaker that is controlled by your voice
 Fire TV - connects your HDTV and allows you to stream TV shows and movies

List of Amazon's Subsidiaries:  24

 Audible - Sells digital audio books, audio magazines, audio newspapers, radio and TV
programs 40
 Create Space - A service that allows you sell your books, music, and videos through internet
retail, your website, or other bookstores/retail outlets, etc. 43
 A9.com - Manages and develops search engine and advertising technologies 44
 Twitch.tv - A live streaming video platform 45
 Goodreads - A free website that allows you to keep track of the books you've read and plan
to read, and for people to see other people's book lists and their reviews 46
 Woot - Internet retailer that offers various daily deals and sales 47
 IMDb - Stands for Internet Movie Database - a source for movie, TV, and celebrity content 48
 Zappos - Online clothing and shoe shop 49
 Alexa.com - Provides web traffic data and analytics 50
 DPReview - Known as Digital Photography Review - a website about digital cameras and
photography 51
 Box Office Mojo - An online box-office reporting service that tracks revenue 52
 AbeBooks - An online marketplace for books (new, used, rare, collectibles) 53
 Double Helix Games - An American video game developer 54
 Brilliance Audio - Produces audio books 55
 Shelfari - A social cataloging website that merged with Goodreads in 2016 56
 Beijing Century Joyo Courier Services - A small freight service company in China 57

Amazon strategies by expanding their business and service aggressively, to the point that they will
embrace minor profit margins or experience losses for the "rapid growth." 25Amazon focuses on
keeping the customer happy and customizing products that would appeal to the customer. One
study suggests that consumers value personalized shopping as an important factor (85%) compared
to what retailers weighed personalized experiences (2% of retailers weighed personal experience,
and put more weight on brand recognition). 26 Another study states that almost 9/10 consumers said
they are more likely to purchase from a virtual store that caters to their shopping preferences as well
as 7.5/10 feel Amazon is superior at offering the accurate recommendations for purchase. 27

Amazon Continually Improves the Customer Experience

Amazon is constantly looking to improve their customer service. Amazon has implemented using
drones to deliver packages faster. This started in England in December 2016.
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Click Above to watch how the Drone delivers packages
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Another Video on Amazon's Drones

Amazon looks for new ways to satisfy customers. Jeff Bezos stated,  "Our job is to invent new options
that nobody’s ever thought of before and see if customers like them.” 23 An example of this creativity
is Amazon Go (Grocery shopping without any waiting in line) and Alexa in Ford Cars. 

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Click Above to Learn More about Amazon Go  

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Click Above to Learn More about Alexa and Ford

How Does Amazon Respond to Failures and

Setbacks?
Amazon has been known for having a high turnover rate with staff, which is an expense for the
company. Constant demand on resources for hiring new employees and training would be inefficient
and costly. Amazon has attempted to alleviate the employee loyalty concern by offering employee
stocks options as compensation (which increases the amount the longer you are with the company).
They also try to entice workers to stay longer by requiring the employee to pay back a portion of
their signing bonus if they leave early. Some describe the workplace as "Darwinism." 29 

One writer discusses how Jeff Bezos "brags" about his failures (Auctions and zShops). The major
difference between Amazon is that the company embraces their failures and tries learns from them. 30 

Examples of Amazon's Marketing

 Below you can see how Amazon utilizes Online and Offline Marketing. 31 
Amazon maximizes e-mail marketing to dominate the online retailing. Amazon takes a personalized
approach instead of promotional. They use the information about the consumer such as their online
behaviour, previous purchases, demographics (age, gender, location, amount spent). One writer
breaks down the email marketing steps after signing up an account and making some purchases:  1

1. Welcome e-mail
2. Receipt e-mail of purchase
3. Shipping e-mail confirmation
4. A thank-you email for purchase which includes Amazon plugging their services and other
Amazon features that the consumer may not be aware of, and invitation to make further
purchases that are targeted to consumer demographic
5. Upsell e-mail that is relevant to your purchasing/browsing traits
6. Promotional emails of sales occurring such as black-Friday
7. A review e-mail that encourages purchaser to provide feedback on the product
8. and lastly, a browsing e-mail (which shows what you have looked at and not purchased)
 Above is an example of how Amazon is using email marketing and personalization 8

In 2015, Over 90% of Amazon's marketing budget was focused on both SEO and PPC.  It is
noted that Etsy is the only other large brand that spent more of their marketing budget on search
marketing. Following Amazon, the companies that spend the highest percentage of their marketing
budget on SEO and PPC was Apple at 85%, and then Target, Best Buy, Home Depot and Kohls, which
were less than 20%. 12 Above we discuss a chart that displays the statistics for Amazon establishing
itself as a search engine for online shopping. It shows that Amazon has been so successful with its
SEO and PPC marketing that now 44% of people just go directly to Amazon when they start to look
for the desired product and 90% of people will check Amazon when making a purchase. 

Here is an example of how Amazon is utilizing SEO:

Here is an example of how Amazon is utilizing PPC:
 

Other Interesting Facts 

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Click Above to Watch an Overview of Amazon's Story

 The name Amazon was chosen because Amazon River is one of the largest in the world. 31 
 Young Women purchase more frequent at Amazon and thus are a targeted consumer
(women are known to be more impulsive, Prime Amazon targets mothers who will re-purchase
many items such as diapers, wipes, etc). 32
 Amazon has a spot that showcases funny reviews.  You can read more here Click to Read
Amazon Reviews

References

1. https://www.getvero.com/resources/guides/the-amazon-experience/

2. http://fortune.com/2015/09/17/amazon-founder-ceo-jeff-bezos-skills/

3. http://seoperson.net/9-reasons-amazon-com-successful

4. https://www.forbes.com/forbes/2012/0423/ceo-compensation-12-amazon-technology-jeff-bezos-
gets-it.html
5. https://davidjaxon.wordpress.com/2015/02/20/the-question-that-amazon-answers-to-set-its-
strategy/

6. http://www.marketing91.com/marketing-strategy-of-amazon/

7. http://www.businessinsider.com/jeff-bezos-two-pizza-rule-for-productive-meetings-2013-10

8. http://www1.salary.com/Jeffrey-P-Bezos-Salary-Bonus-Stock-Options-for-Amazon-Com-Inc.html

9. https://www.salesforce.com/blog/2013/06/jeff-bezos-lessons.html

10. https://www.amazon.com/p/feature/p34qgjcv93n37yd

11. https://econsultancy.com/blog/63184-10-customer-experience-soundbites-from-jeff-bezos/

12. https://www.spinutech.com/blog/digital-marketing/how-much-does-amazon-spend-on-digital-
marketing

13. http://fortune.com/2015/11/06/amazon-retailers-ecommerce/

14. http://whartonmagazine.com/blogs/learn-from-amazons-leadership-principles/

15. http://www.theleadermaker.com/core-values-amazon-com/

16. http://readwrite.com/2016/04/11/amazon-web-services-10-billion-sales-dt4/

17. https://www.thebalance.com/amazon-mission-statement-4068548

18. http://www.resonate.com/amazon-knows-why-people-buy/

19. https://qz.com/605380/amazon-just-joined-the-100-billion-club/

20. https://www.clickz.com/55-of-online-product-searches-begin-on-amazon-stats/106326/

21. https://www.bloomreach.com/en/resources/blogs/2015/10/amazon-commands-nearly-half-of-
consumers-first-product-search.html

22. https://www.cips.org/supply-management/analysis/2016/february/the-secrets-behind-amazons-
success/

23. https://www.fastcompany.com/3067455/why-amazon-is-the-worlds-most-innovative-company-
of-2017

24. https://www.zacks.com/stock/news/215339/the-complete-guide-to-everything-owned-by-
amazon

25. http://fortune.com/2015/02/03/inside-amazon-prime/

26. https://www.research-live.com/article/news/amazon-best-for-personalisation/id/4012321

27. https://sg.news.yahoo.com/amazon-number-one-shopping-search-engine-report-
144248368.html

28. http://www.businessinsider.com/amazon-prime-members-may-spend-more-than-double-what-
non-members-do-2015-1

29. https://w