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...

Creating loyalty through great customer experiences

Brandon Schauer from Adaptive Path wrote a great article last week called The Long Wow, about how to create customer loyalty through repeated great customer experiences.  It encourages companies to go beyond just measuring loyalty (through overly simplistic measures like Net Promoter Score) or instituting "loyalty programs", and spend time to create experiences that delight customers again and again.  To quote from the article:

True loyalty grows within people based on a series of notable interactions they have, over time, with a company’s products and services. No card-carrying programs are necessary: Apple doesn’t have a traditional loyalty program; neither does Nike or Harley-Davidson. These companies impress, please, and stand out in the minds of their customers through repeated, notably great experiences.

As I read through the article (and you should too!), a couple of recent experience came to mind of how 2 completely different companies either made me loyal from the start, or increased my loyalty by doing something small to help me out.

 

1.  Running Revolution

Nothing is more important for a runner than shoes.  After sticking with New Balance shoes for years, I recently decided to try out something new.  But since I didn't know where to start, a colleague recommended Running Revolution, a small boutique shop close to where I live.  I became a loyal customer long before I even bought my shoes there.

These guys get runners.  There are no prices on the shoes -- for them it's about finding the right shoe for you, and nothing else.  They measured my foot with thermals, brought out pairs of shoes that they knew would be a good fit for me, put me on the treadmill and videotaped me to measure bio-mechanics, and I can go on and on.  Suffice to say that I didn't walk out with the most expensive shoes in the store, but I will never buy running shoes anywhere else again.  They made a life-time customer simply by fulfilling my need for a great running shoe.  They know that I will come back again and again, so they don't have to sell me the most expensive shoe in the store right then and there.

 

2. Amazon.com

Even though I'm already a loyal Amazon customer, the repeated great experiences keep strengthening that loyalty.  Small things count.  While browsing around, I noticed that the Overnight 1 Click button was disabled.  When I scrolled over the button, I got this message:

How nice and and completely unnecessary of them!   They could've gotten an extra $3.99 shipping cost out of me, but instead they refused to let me pay extra.

 

I'm sharing this as examples of what Brandon points out in his article -- that through a continuous focus on user needs and building great experiences, you create loyal customers that are so much more valuable in the long run than if your only goal is to squeeze as much revenue out of them as you possible can, right now.  Unfortunately Wall Street doesn't believe in this unique brand of economic "delayed gratification", but I wish more companies would just start doing it and prove them wrong...

The Amazon MP3 search experience

My colleague Michael Morgan did an interesting evaluation of the search experience on AmazonMP3 Beta, and I wanted to share his thoughts here because I think it's a very good overview of what works and what doesn't...

Overview

Some of the high points include DRM (Digital Right Management) Free music that can play on iTunes and Windows Media Player, a nice collage of fun facts (Top MP3 songs, Top Artists, and Artists Spotlights), and very inexpensive full albums and single tracks (.89 to .99, compared to iTunes costs of .99 to 1.29). As a comparison, Pink Floyd’s The Wall, a 26 track album costs $16.99 on iTunes but only $7.99 on AmazonMP3.

First Impressions of the Finding Experience

I really liked the Top MP3 and Top Artist Spotlights as I found this engaging and a place where I would come back to check who is in the Top 25 week to week. However, the music search experience is mediocre. The default sort is by relevance but I found the list of music arduous to comb through. After applying the ‘Best Selling’ sort, I had an easier time traversing the list as the songs that I knew (i.e., the popular ones) were at the top. The "sort by" setting does not stick from session to session so that is a bit annoying.

Albums are presented like all other merchandising is on Amazon, off to the side and on the left. After initial discoverability issues, I did find the albums as this was what I was originally looking for. There are not many reviews as the site is new but the music is very old so they could have easily used the CD reviews. I was initially unimpressed with Amazon’s search experience.

Final Thoughts

The Finding experience needs some work but I think the value and abundance of cheap DRM-free music is enough for me to come back and at least try it out. I don’t think there are any breakthrough experiences with respect to Finding, but there are other aspects that make this service compelling. Although I was not compelled to buy any music right away, I do think the new service as a few things going for it:

• Value. Songs are very inexpensive compared to iTunes DRM-Free tracks that sell for $1.29
• Abundance. Unlike the iTunes Store’s DRM-free tracks that only come from EMI, AmazonMP3 has secured 2 million DRM-free songs by more than 180,000 artists from over 20,000 major and independent labels
• Engagement. Publishing top 25 lists on songs and artists is very interesting.
• DRM. All songs are DRM-free, encoded at 256 kilobits per second, in comparison to iTunes' low bit rate, DRM saturated site.

Amazon.com's redesigned home page

Amazon.com just redesigned their home page (click thumbnail on the left for a bigger picture).  Nothing major, but still a nice improvement.  At first glance there seems to be more visual consistency, and they're also now able to get more merchandising inserted above the fold.

The interesting part for me, however, is how they explain this change to users.  The top right corner has a link that says "We've been remodeling. Come take a look."  That immediately struck me because it's such a non-traditional, Web 2.0 way of writing copy. 

 

 

 

 

 

 

The page you see when you click the "come take a look" link is shown below (again, click the thumbnail for a bigger version).  I really like the content on this page, and how Amazon speaks to their customers here.  My favorite part is how they framed what must have been countless hours of usability testing:

How did you decide on this design?

We consulted the foremost experts in the field: our customers. We traveled around the world, inviting customers like you to come and try out the new features and design. We listened to their feedback and made changes based on their opinions. Then we asked more customers for their advice, and we made more changes from their feedback. The design you see today reflects the input of many real-life customers of our U.S. and international websites

And about the slight color change of their main navigation bar:

Hmm. Something else looks different too. What is it?

Good eye! The color of the top navigation bar has changed--it's now a different (and slightly more fetching) shade of blue.

And then there are some quirky ways they address people who might not be happy with the change, like "But I liked Amazon the way it was! I really dug [insert your favorite feature here]."

I think this is a really great way of introducing design changes.  Talk to users like real people.  Be witty, open and honest.  Acknowledge that everyone might not like the changes, but explain in simple language your reasons for doing it.  Good job, Amazon...

Jesse James Garret on usability (and eBay)

The web site e-consultancy recently conducted an interview with Jesse James Garrett, the man who coined the term 'Ajax' and president of Adaptive Path. It’s a great interview and I wanted to highlight some of the things he said. First, on usability…

Usability doesn’t really get at the psychological and emotional context of use. Usability will tell you, from an ergonomic perspective, what people can do with a product, but there is lot more to making a product successful in the marketplace and making a product feel successful in people’s minds. Often, we find that clients come to us, thinking they have a usability problem, but it turns out that their products are pretty usable. The reason that the product is falling short is it is not satisfying an emotional or psychological need.

That is a philosophy that I wish can be top of mind for all designers and researchers -- what's cool isn't always what's best. You have to start by understanding the underlying user needs -- that's why I firmly believe in continuous user research throughout the design process. (I do think that very successful products can be created through genius ideas outside this formalized process -- iPod anyone??? -- but I'm referring to us normal people who need a little more help along the way to make our products work well...)

Then, on a question on if he agrees with a recent survey in which respondents rated Amazon, eBay and Google as the top 3 international sites in terms of usability, Jesse said the following…

It’s interesting to see Amazon and eBay so high on the list, because I think Amazon was delivering a really terrific experience a few years ago, but have found themselves in a land of diminishing returns in the design choices they are making.

If you compare the sheer number of navigational elements on a present day Amazon page with the way it was just a few years ago, they are just starting to load these pages up with features. I think the reason they are doing that is that they are trying to squeeze every drop of revenue they can out of these pages, but I think the overall usability is starting to suffer. It’s becoming so baroque - all of the different features and components they have loaded onto these pages.

eBay has almost the opposite problem, in that because they have this enormous community of people, the sellers, that depend on eBay for their livelihood, there are a lot of people that have really invested in how the site functions. eBay has been slow to change, because they haven’t been able to make changes that would appease this audience of millions of people that don’t want to see the site change.

My take on it is a little different... I think that if you ask regular Internet users about the usability of a site, they don't think of usability the way we do. They immediately jump to "how useful is it to me." And if a site is useful to them, i.e. it fills that underlying user need we talked about earlier, they will figure out a way to use it and make it work for them. This is not to say that bad usability doesn't matter -- good usability is essential for the sustainability of a site that fulfills user needs effectively. They go hand in hand and can't be separated. The point is that the value propositions of eBay and Amazon are so clear and so significant, and the sites so useful, that if you ask users about usability, they will immediately make the connections to these brands in their minds.