In the early 2000s, Amazon was struggling with a problem: how do you keep people engaged and — more importantly — loyal to Amazon?
Traditionally, to solve the problem that they were having, a business would look into creating a loyalty program, such as one where customers could rack up points they could later redeem for credits or other perks. Amazon took a different approach. Their culture is notoriously focused on customer obsession. In fact, according to Jeff Bezos, the CEO of Amazon, it’s their most important leadership principle. “Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf,” Bezos wrote in a letter to stakeholders. In November 2004, after years of testing and searching for the right loyalty program, a software engineer by the name of Charlie Ward submitted an idea through the internal suggestion box. The suggestion was to offer a free shipping service. Ward noticed how shipping costs and delivery times were big concerns for Amazon customers, and thought some customers would use Amazon more (and spend more per checkout) if they were part of a “buying club that offered rapid shipping.” Bezos was “immediately enchanted by the idea,” and on a Saturday evening, he gathered a group of his executives in the boathouse of his Medina, Washington home to crank out the logistics. They brainstormed a free two-day shipping concept. Bing Gordon, a board member at Amazon, came up with a name for it all: “Prime.” They worked fast; Bezos wanted this to be out and ready within two months — in time for the next earnings call in January 2005. “We knew we were building something that was going to be new and different,” said Amazon Vice President Greg Greeley about the planning meeting. “We knew we were onto something.” With that, Amazon Prime was born — pay an annual flat fee and receive unlimited two-day shipping.
It was a program that would cost them in the short term, but they knew it had potential. Prime members initially behaved differently and explored the site more (and in turn, bought more) to justify their annual fee. Over the years, Amazon added more benefits, such as unlimited video streaming or Amazon Music, to Prime membership to further promote customer loyalty and satisfaction. The effort paid off. Looking at the data, they saw Amazon Prime members spent $1,500 a year on Amazon, which is a whopping 250% more than the non-Prime Amazon user. Furthermore, Prime users represented two-thirds of the retail revenue. It’s no wonder that even when Amazon Prime raised their annual fee over 25% back in 2014, their membership grew 53%.
“In all my years here, I don’t remember anything that has been as successful at getting customers to shop in new product lines,” says Robbie Schwietzer, VP of Amazon Prime and an eight-year veteran of the company. The program now boasts 100 million members in 2018 and continues to grow. *** So what happened at Amazon? Amazon focused on their customer’s success — understanding what their customer’s pain points were and what customers needed from Amazon to become successful long-term. In fact, there is now a whole practice around customer success. *** I wanted to write this book for one reason: When I first started in customer success, I was lost and overwhelmed. As I’ve learned over the past year plus writing this book, I’m not alone in that feeling.
I felt lost in the dark about what customer success was, what best customer success practices would be for a company like mine (you know, non-B2B and with a very lean team), and how to even get started. Overwhelmed by the number of resources, I did not know who or what to trust. Different sources oftentimes contradicted each other and there seemed to be no true consensus. *** Over the next weeks, I’m going to be sharing excerpts and stories from my book, The Startup’s Guide to Customer Success in this blog series. The Startup’s Guide to Customer Success launches on February 22, 2019. If you’d like to be the first to get a copy, you can pre-order it on Amazon — here is the link: https://www.amazon.com/Startups-Guide-Customer-Success-Champion-ebook/dp/B07NDR49NF If you want to connect and learn more, message me on LinkedIn: https://www.linkedin.com/in/jennifer-chiang/