The keys to Amazon's success

The charmed life of Amazon's Jeff Bezos is a great article in the latest Fortune magazine about Amazon.com's success.  The key paragraph for me is the CEO's statement of their relentless focus on customer satisfaction -- even it means bad earnings for a few quarters:

For all of Amazon's ups and downs over the past 13 years, Bezos's strategy is one thing that hasn't changed. Customers want three things, he says: the best selection, the lowest prices, and the cheapest and most-convenient delivery. At Amazon, he explains, all decisions flow from those fundamentals. "What's not going to change over the next 10 years is incredibly important - you can build plans that are durable and meet important customer needs," he says, adding, "Ten years from now, customers will still want vast selection, low prices and fast, accurate delivery. In fact, it is impossible to imagine a world 10 years from now where customers will say, I love Amazon, but I just wish your prices would be higher."

A good example of this is Amazon's decision to build some excess warehouse capacity. As Amazon started to grow its business in the late 1990s, some members of the management team argued in favor of building just enough of the giant, automated warehouses - four of the $60 million facilities - to meet projected demand. Bezos decided to build five. "From a financial point of view, we should have built four rather than five," says Bezos, pointing out that in 1999, when the centers were built, "for a company that only had $1 billion in sales, spending $300 million on fulfillment centers is a very big investment."

Instead, he was positioning the company to pursue "more fundamental things": that is, keeping Amazon's customers happy. Remember all the post-holiday news stories at the turn of the millennium about little Timmy and Janie not getting their presents on Christmas because some fly-by-night toy site couldn't handle the holiday crush? Amazon came out smelling like a 1-800-FLOWERS rose. "A lot of companies stumbled and we didn't," said Bezos. "We had an insurance policy against that huge burst of demand" - the fifth fulfillment center.

Which leads up to the most important statement I think he makes:

"A lot of decisions around consumers are like that," Bezos says. "When you do the math it's not clear what will happen."

When you create a great user experience, the business will follow...

UX links of the week (4/10/08)

Interaction Design

Designing Office 2007
Jensen Harris, the guy responsible for user experience in the Microsoft Office group, delivers a near-comprehensive talk on how the Office 2007 UI was conceived. A must-see for everyone!

Sign Up Forms Must Die
You load a new web service, eager to dive in and start engaging, and what’s the first thing that greets you? A sign-up form. We can do better, says Luke Wroblewski, author of Web Form Design: Filling in the Blanks. Via a technique of "gradual engagement," we can get people using and caring about our web services instead of frustrating them (or sending them to a competitor's site) by forcing them to fill out a sign-up form first.

 

Content Strategy

Placing Value on User Assistance
User assistance writers are often the Rodney Dangerfields of the UX world, bemoaning the fact that we don’t get any respect. I think the real problem is that user assistance folks are not particularly good at communicating the ways in which we add value to an enterprise. This column explores two models that show how user assistance adds value and how we can communicate that value to those who pay our salaries—something I would like to encourage other user assistance writers to do.

 

User Experience Research

Extreme User Research
Clients don’t know a thing about their users, and designers think that if they like it, everyone will. Sound familiar? Daniel Lafreniere's 30-minute "extreme user research" plan comes to the rescue for those of us facing this exact situation. With this practical method, you can generate loads of useful data that will have a real impact on design, thus making the website more effective and profitable.

Usability testing: integrating eye-tracking and mouse clicks
Our usability test lab has a software environment allowing for capture, recording, analysis and full interpretation of observable events during a usability test. Moreover, since we are very interested in user behavior, verbal comments, facial expressions and eye movements, as well as keeping a record of keystrokes and mouse movement, we also use other software.

What Adaptive Path Thinks When It Thinks About Eyetracking
Recently, we had a discussion on an internal mailing list about eyetracking, specifically around why we didn’t use it as a research tool…

 

A little off topic…

I'm Over Twitter
I'm so over Twitter. I haven't wanted to admit it to myself, but a couple of things really tipped the scales for me. The first was a Newsweek article from 1995, which famously called the Internet a passing fad.  The fear of being the guy (or gal) is a big part of what drives the technology hype-machine.  Better to keep your mouth shut and appear stupid than to open it and remove all doubt. I feel like it's time to be brave enough to say what I really think.

Design for the Next Billion Customers
Niti Bhan and David Tait, who are specialized on research and strategy for emerging markets, recently collaborated with Experientia on an extensive ethnographic research project in Africa.   Niti and Dave condensed their broader insights in what it means to design for emerging markets in a long article for Core77.

Is the Internet just a fad? Ask 1995!

There's nothing like a little trip down memory lane every once in a while.  And when I recently stumbled upon this 1995 Newsweek article that called the Internet a fad, I couldn't tear myself away from it.  To be honest, my first though was, "Man, this guy must feel stupid for writing this."  But after thinking about it for a while, I realized that the author had a 50/50 chance of being right.  Things could've gone the other way -- a few smart people could've decided to focus their energies elsewhere, and this Internet thing would have never become what it is today...

Below are a few excerpts -- but I encourage you to read the whole article, it really makes you think twice before speaking in absolutes...

After two decades online, I'm perplexed. It's not that I haven't had a gas of a good time on the Internet. I've met great people and even caught a hacker or two. But today, I'm uneasy about this most trendy and oversold community. Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic.

Baloney. Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.

Then there's cyberbusiness. We're promised instant catalog shopping--just point and click for great deals. We'll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obsolete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month? Even if there were a trustworthy way to send money over the Internet--which there isn't--the network is missing a most essential ingredient of capitalism: salespeople.

To the author's credit -- stores have not become obsolete...

Brand Loyalty and the User Experience

I recently attended a brand presentation where the video below was shown. It’s pretty funny, and also (in my opinion) a perfect example of how interactive products and consumer-generated content should fundamentally change our traditional views of customer loyalty. Loyalty in our current environment is fostered through repeated great (user) experiences, not through advertising and coupons…

But even though I like the general point the video is trying to make, I think it stops a little short of the real issue. It is really just saying that we should listen to our customers better. But that's not enough -- we need to understand the customer in ways they don’t even understand themselves, and then build experiences that meet unmet (and sometimes unconscious) needs through repeated, positive experiences that deepen the customer-company relationship.

Uncovering these needs happens not through "Voice of the Customer" research programs, but through more contextual research efforts like ethnography and contextual inquiries (combined with validating quantitative research). I believe this is where traditional Market Research programs have historically fallen short -- although there is evidence that the tide is turning on this topic as HCI becomes more mainstream and user experience research techniques become more accessible.

In my view there can be no more powerful synergy in discovering how to deepen true customer loyalty than a collaborative effort between Market Research and User Experience Research. This view is very much in line with the thinking described in the Adaptive Path blog essay The Long Wow, which I have referenced before.

So in essence, my viewpoint is this: To not realize how important repeated, quality user experiences are to Loyalty would be an egregious misjudgment of what Loyalty really is about with an interactive product.