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Bezos Goes With His Intuition

On the train this weekend I had a chance to read yet another Jeff Bezos cover story from the August Fast Company magazine. The article written by Alan Deutschman covers a range of subjects related to Bezos. Of interest were insights into how Bezos trusts his instincts and intuition about what is good for the long term satisfaction of Amazon customers. Clearly Bezos is into "leap of faith" kind of decisions when it comes to serving the interests of customers:

What really distinguishes Bezos is his harrowing leaps of faith. His best decisions can't be backed up by studies or spreadsheets. He makes nervy gambles on ideas that are just too big and too audacious and too long-term to try out reliably in small-scale tests before charging in. He has introduced innovations that have measurably hurt Amazon's sales and profits, at least in the short run, but he's always driven by the belief that what's good for the customer will ultimately turn out to be in the company's enlightened self-interest.
However he also has a strong reputation for measuring the performance of new features and programs.
"One of Jeff's most recurrent phrases when someone has a good idea is, 'We can measure that,' " says Stonesifer. But, she adds: "It's one thing to be a data junkie who just looks at history, but Jeff takes a prospective view. He takes risks and he changes and changes."

Sometimes, Bezos says, you can't rely on facts because it would be too hard to test an idea, or too costly, or you can't figure out how to do it. And "sometimes we measure things and see that in the short term they actually hurt sales, and we do it anyway," he says, because Amazon managers don't think the short term is a good predictor of the long term. For example, they found that their biggest customers had such large collections of stuff -- especially CDs -- that they accidentally ordered items they had already bought from Amazon years ago. So they decided to give people a warning whenever this was about to happen. Sure enough, the warnings slightly reduced Amazon's sales. But it's hard to study the feature's long-term effects. Would it reduce sales over a 10-year period? They didn't think so. They thought it would make customers happy and probably increase sales. "You have to use your judgment," Bezos says. "In cases like that, we say, 'Let's be simpleminded. We know this is a feature that's good for customers. Let's do it.' "

Amazon faced similar dilemmas with its dramatic moves to cut prices and offer free shipping on orders of $25 or more, which is very costly for the company. "You can do the math 15 different ways, and every time the math tells you that you shouldn't lower prices 'cause you're gonna make less money," Bezos says, laughing inevitably. "That's undoubtedly true in the current quarter, in the current year. But it's probably not true over a 10-year period, when the benefit is going to increase the frequency with which your customers shop with you, the fraction of their purchases they do with you as opposed to other places. Their overall satisfaction is going to go up."

Clearly, Bezos makes decisions based on what is in the long term best interest of it's customers. It's a vision thing. Bezos' intuition tells him that serving the best interest of his customers over short term sales performance wins the day. Another example:
From Amazon's early days, his vision was "to create the world's most customer-centric company, the place where you can find and buy anything you want online." Within weeks of first publishing customers' reviews of products, Bezos says, "I started receiving letters from well-meaning folks saying that perhaps you don't understand your business. You make money when you sell things. Why are you allowing negative reviews on your Web site? But our point of view is we will sell more if we help people make purchasing decisions."link
When you are making decisions about your company and your customer communications are you looking out for their long term best interests? Educating customers and prospects is perhaps one of the best ways to look out for their best interests. Knowing more about your industry and specifically the problems and opportunities your products or services address is a powerful way to link customers and prospects to your brand. E-newsletters provide a great opportunity to provide world class communication and education in a format that is completely trackable and measurable.

What innovations or ideas have you implemented where short term analysis proved negative but the long term interests of customers carried the day?

July 19, 2004 in audio publication, Blog Outsourcing, blog publish, Brand enhancement, build credibility, Building B2B Relationships, Building Customer Community, bulk email marketing, Business Marketing, Business newsletter, CMO | Permalink

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