Amazon founder Jeff Bezos is a Star Trek junkie. He almost named his company Make-it-so.com. You might say he is a nerd (hey, I like nerds!), having graduated from Princeton University summa cum laude with degrees in computer science and electrical engineering. Right out of college, Bezos took his talents to Wall Street, where he quickly became a rising star. Then he had the guts to quit a great career to start Amazon. Bezos has achieved astounding results since founding the company, growing annual sales to $100 billion and market capitalization to more than $150 billion in 10 years. What can you learn from Amazon to increase your sales and business value continuously, over many years?
Amazon’s Growth Strategy
Jeff Bezos said, “We know customers like low prices. We know customers like big selection. We know that customers like fast delivery. And we know those things are going to be true ten years from now. They are going to be true 20 years from now. So we can count on those things and we can ‘put energy into them.’”
When Bezos says, “we know what customers like”, he means that Amazon’s customer research shows that three things matter most: price, selection and speed. Data analysis confirms these are the key drivers of customer satisfaction and loyalty where Amazon competes. Amazon just out-executes everyone in those three attributes of the customer experience. That’s how they became the number one ranked company in customer satisfaction across all industries.
When you know which elements of your customer experience inspire loyalty, and you are confident those will be the underlying key drivers for a long time, you can “put energy into them.” Sustained effort and investment in creating a loyalty-inspiring customer experience will dramatically increase financial returns. According to a recent Harvard Business Review webinar, companies that are loyalty leaders in their industries grow at double the Compound Annual Growth Rate of average performers in their industries over the course of 20 years.
The Customer Secret You Can Borrow From Amazon
Experience drives loyalty. Loyalty drives compound growth. Customer loyalty – as evidenced by a steadily increasing revenue stream – is the number-one value-creating factor in business valuation. Your business and Amazon have that in common.
- The customer secret you can borrow from Amazon: Find out what customers like and give it to them, better than anyone else!
In Bezos’ own words, “know what customers like” and “put energy” into delivering those things. You need to manage your customer experience to be significantly superior to your competitors in these few crucial areas. In the view of customers, are you pulling ahead, slipping behind or just treading water? Without data about your customer experience and the customer experience your competitors deliver, you are just guessing. You don’t specifically know how customers think you are superior, or inferior, to other brands in your category. Sharing a continuous stream of competitive benchmark data helps focus the competitive spirit and pride of your team on improving the right things.
Thinking ahead
Today, the value of customer loyalty, plus engaged and skilled employees, and intellectual property – the intangible assets of a business – are worth more than the value of tangible assets, such as inventory, machinery and equipment. Customer loyalty – as evidenced by a steadily increasing revenue stream – is the number-one value-creating factor in business valuation. Optimizing customer loyalty in your business, and proving it with customer experience and sales data, are essential to a long-term growth strategy – and to a rewarding exit strategy too.
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