Tag Archive for: Amazon

Don’t abuse your best customers Part I: Amazon Case Study

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I have a love-hate relationship with Amazon.  Love their product selection, user reviews and especially the ease and price savings of Amazon Prime.  Hate the fact that for some reason Amazon refuses to use the data they have about their own customers in the most simplistic “pre-web 1.0” ways.  We wrote about this in the white post “The 4 R’s,” but here’s an even better example.

I love the Amazon Kindle (e-newspaper, blog, magazine and book reader) so much that I recently sent my own glowing review of the product to everyone I know, something I had never done before, despite my genetic need to tell people about great products and services I encounter.  My wonderful wife bought me a Kindle for our August wedding anniversary and within days I had uploaded 5 newspapers, 10 blogs and 4 books. I am clearly one of Amazon’s better customers and even became an “Amazon Associate,” so when friends buy a Kindle after reading my review, Year Up, my favorite nonprofit, gets a 10% rebate.

Despite all of this data that Amazon has telling them I am a Kindle owner/maven, look what Amazon greets me with when I recently logged to their site:

Amazon is using perhaps their most valuable online real estate – their home page – to tell me what a Kindle is.

But wait, there’s more:

What happens when you don’t use the data you collected to recognize and reward (or at least don’t abuse) your best customers.

A few weeks after I received my beloved Kindle, I fell asleep reading it.  When I turned it on the next morning, the screen had several thin lines running across the top.  At certain points, the cumulative effect of the lines was to block out almost ½ inch of text.  Up until this point, I had good experiences with Kindle customer service: their number is easy to find; the service agents speak English well; and they had been able to answer several questions, including helping me find an AC adopter in NYC when I forgot mine on a recent trip.

So, I called Kindle service with high expectations.  I volunteered that I had fallen asleep with the device and most likely rolled over on it and damaged the screen.  I asked if there was a program to replace, repair or offer discounts to “clumsy customers.”  To my surprise, the agent responded:

“We have many customers who have slept on, stepped on and even dropped their Kindles in the bath tub.   Amazon used to have a program to replace damaged Kindle’s, but we are not running that right now.”

Somewhat stunned, I asked for clarification, asking something like;

“Are you saying that if I had broken my Kindle at another time earlier in the year, Amazon would have replaced it or at least offered a discount?

He confirmed this was the case, but went on to say:

“If you would like, I can have your name added to our email list and if we bring back that program, we will contact you.”

Only then did he ask for my email address, which could have and should have alerted him to the fact that I am heavy Kindle user and also spent over $10,000 on Amazon last year for business and family purchases.

So, despite having the data to identify me as a very good Amazon customer, the customer service agent was not instructed or trained to use that information to at least recognize and thank me for being a loyal customer.

Not only did Amazon fail to recognize me as a good customer, they added insult to injury by telling me that I had to spend another $350 to replace the Kindle, something other – and presumably less profitable customers – did not have to do, due entirely to the unfortunate timing of my clumsiness.

In the white post “Amazon, Facebook, Eons and the 4 R’s of Relationship Marketing,” we introduced the concept of the 4 R’s using a hand written version of this virtuous cycle:

We believe that companies who collect information about customer purchases through their direct sales businesses, reward programs, or “convenience” programs like Amazon Prime or Hertz Number 1 (see Part II) need to recognize that they are rewarding both the purchase of the good or service and the sharing of information by the customer to the business.

Customers are sharing information about what they buy and when they buy it.  We also believe that customers know businesses are collecting that information and will increasingly expect those companies to recognize and reward them for their loyalty.  At a minimum, they will expect to be treated as well as other, less profitable customers or will become highly susceptible to being poached by a competitor.

Questions:

  • What data do you have on your best customers that you are taking advantage of today?
  • Are there similar examples of “best customer abuse” happening in your company?

Amazon Kindle

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Click Here to buy a Kindle from amazon.com and 10% of the price will be donated to Year Up

4 Reasons why the Amazon Kindle e-reader is one of the best devices ever, will help you lose weight, save money and lower your stress level.

My wonderful wife gave me an Amazon Kindle for our anniversary recently and I believe it is one of the best devices I have ever used; so good that I want to recommend it to everyone I know.

So what’s so great about the Kindle and why should you try one? Four simple words:  Content, Functionality, Portability and Value.

Content:

Every morning when I wake up, my Kindle has the latest copies of The New York Times, Boston Globe, WSJ, and Washington Post.  It also has the latest posts from the 5 tech/web 2.0 blogs I follow and several political blogs. I have also downloaded several books and the Kindle will open to the last page I read, but I primarily use it for newspapers and blogs.

I recently showed the Kindle to Ken Dec, one of my partners in Underwood Partners. Ken is a marketing/branding genius and instantly recognized that Amazon has been marketing the Kindle as an e-book reader, where as I (and probably most of you will) use it primarily as an e-paper/blog reader.

Functionality:

Readability:

The Kindle is about the side of a medium paper back, although much thinner: 7.5 inches tall x 5 inches wide x 0.5 inches think.  The reading screen is about 5 x 3.5.  One of the reasons the Kindle is superior to other readers I have tried is that they have come as close to possible to replicating black ink on white paper (the most readable combination). Although the screen is not back-lit and therefore requires some light on planes, in bed, etc., you can read it in bright sunlight without any difficulty – say while your 9 year old son is warming up for a soccer game.

The Kindle has multiple font sizes, which can be changed by clicking two buttons once.  I found this to be extremely helpful the second day I had the Kindle when I took it to a hotel exercise room and found I needed to increase the font size to be legible on the recumbent bike (re: the “lose weight” comment above).  It’s also a god send if you forget your reading glasses.

Turning Pages:

To turn pages you push a bar on either side of the Kindle to go the next or previous page.  A “back” button takes you back to the pervious section you were on.

When reading newspapers the menu button will bring up a drop down window with several choices: front page, sections list, articles list.  This enables you to go to the section you want (e.g., Sports) or scroll through all of the articles in the paper or within a section.

Downloading Content:

One of the best features of the Kindle is you can download content anywhere in the country as long as you have any signal on the Sprint network.  Amazon calls their network the “Whispernet” and it truly works almost anywhere.  Newspapers, blogs, magazines all update automatically whenever there is new content and you have the “connect” switch on.  Although you pay for content (see below), you do not pay for the air time and don’t have to log onto T-Mobile or any other pay site. It literally works everywhere – even in my Dad’s nursing room home in rural West Virginia.

To add content you select “Shop in Kindle Store” from the menu and have your choice of 190,000 books, 26 newspapers, 18 Magazines and 940 blogs. All newspapers, blogs and magazines have a two week free trial, and books allow you to read a section before purchasing.  Books usually sell for $9.99, newspapers $9.99 per month and blogs a dollar or two.  All cost less than their paper versions. The download time is amazing – 200 page books in a minute or two.  All payments are made through your Amazon one click settings, so you don’t waste time entering credit card numbers and billing addresses.

Underlining and writing notes on pages:

When I was CEO of Loyalty (and before kids) I read several books a month and would underline important passages, making notes in the margin of business related books.  Our receptionist would type up the notes and sections and I would share them with our senior management team and clients.  The Kindle lets you do this without the receptionist.  With a couple of clicks you can highlight sections and also type notes using the keyboard at the bottom of the Kindle.  You  can then email or print the sections from your PC.

Portability and stress relief:

The Kindle weighs just 0.6 lb; slightly more than my Blackberry which weighs 0.5 lb.  With its small width and size it is easy to fit in a briefcase or just carry with you anywhere.  So here’s how it reduces stress. Carry it with you always and you can blast through a few articles or blog posts if you are:  waiting for the person in front of you at the grocery checkout lane trying to find her coupons, checkbook, etc.; so far, flight attendants have not yet figured them out so you can read during take-off and landings; the 15 minutes the traffic police keep you waiting to give you a ticket – no problem; your best friend who is always late for breakfast, let him take his time; etc., etc., etc.  And guys, the Kindle makes it easy to take 5 newspapers to the bathroom with you.

I also found it to be highly functional in my favorite NYC restaurant (Wild Edibles,3rd & 35th) where I was able to read despite having covered the 18″‘ square table with three appetizers,  drinking a beer  with one hand a eating sushi with the other, needing only a 5X7 inch space for the Kindle and one finger to navigate. It also came in handy after shoulder surgery when it would have been impossible to handle a broadsheet traditional paper.

Value

The Kindle costs about $350 from amazon.com and I assume you can try it and return for a complete refund if you don’t like it.  They can also be found on craigslist for around $200, but not often.   Even at the full price, the payback on the difference between the paper price and the Kindle price of the NYT, WSJ and Boston Globe is less than 6 months.

Improvements

The only things I would like to see on the Kindle are an easy way to forward articles to friends and colleagues and some kind of backlight, although traditional clip on book lights can take care of this need for now.  Without a “tell a friend” button, the Kindle lacks one of the basic Web 2.0 imperatives of making it easy for consumers to share/evangelize with their friends.  Look for that in a future version.

Click Here to buy a Kindle from amazon.com and 10% of the price will be donated to Year Up

Facebook, Amazon and the 4R’s of relationship marketing

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When 2 former Bain consultants and one recently minted Harvard MBA started AIR MILES Canada, we knew a lot about the economics of customer loyalty and how to quickly understand and model the profit drivers of almost any business. We also knew almost nothing about database marketing other than a few buzzwords one of us picked up from a girlfriend.

One thing we knew for sure was that if we could build a broad based coalition of leading Canadian companies who committed to market the program to their customers, we would have the opportunity to create and utilize one of the world’s best marketing databases. All of our friends got that as well; and every one of them thought we would “make a ton of money selling the database.” What they didn’t get was our founding principal of not selling the “list” to businesses outside of the Sponsor coalition (i.e. the companies who paid for the points. We believed we could create the future of database marketing (although we didn’t have a clue as to how we were going to do that), but only if we developed a relationship with our Collectors built on trust.

Before long, we began to talk about the 4 R’s of Relationship Marketing and sketching this diagram on napkins and tablecloths around Toronto, Montreal and Calgary:

The 4 R's

We described our thinking about building relationships like this:

1. If we recognized that when people showed their AIR MILES card at a retail Sponsor we were rewarding them for both their loyalty to the Sponsor’s business and the fact that they were sharing information with our company (by purchasing the good or service and identifying themselves as an AIR MILES Collector, they were telling us when and where they made the purchase, if they were responding to a targeted offer or coalition promotion, etc.), and…
2. If we respected the information Collectors shared with us – including demographic and shopping intention information millions shared with us in return for bonus miles – and didn’t sell or give that information to anyone outside of the AIR MILES coalition (and not even other Sponsors if so requested), and…
3. If we used the information to present relevant offers to Collectors based on their shopping habits, needs and interests (if a Collector was turned down for an AIR MILES Mastercard, we wouldn’t send them additional bonus offers to apply for one; if we knew there were only guys living in a household, we wouldn’t send them offers for women’s magazines; no car, no Goodyear offers, etc.), then…
4. We would create higher open, read and respond rates to both our basic offers as well as our targeted specific offers and bonuses, which would – in turn – give us the opportunity to reward both loyalty and the sharing of information.

If you think about this simple model, it doesn’t just apply to relationship marketing, but also to basic human relationships as well. If you begin to develop a relationship with someone and share something personal and confidential with them, that relationship will be short lived if they share it with others or otherwise don’t respect your confidence. Likewise, we tend to develop relationships with people we have at least something in common with – some point of relevance – be it kids, snowboarding or web 2.0. If these 2 elements are present, the potential for a relationship exits; without them, one probably won’t develop.

This model, along with a lot of other parts of the AIR MILES model, appears to have worked fairly well as the program now has over 70% (that’s 9 million) Canadian households as members. More pointedly, while I was CEO, we had open rates for our (snail mail) direct marketing programs of over 70%. Although AIR MILES doesn’t share specific data on email response rates, my understanding is that the company enjoys high open and click through rates for their email marketing programs.
Which brings me to Facebook, Amazon and Eons. Like Jeremiah and many others, I was amused to be served up a banner ad on Facebook last spring for “Thirty Plus and Single” when on the same page I clearly listed my status as “married.”

Facebook was clearly not getting the relevance part and I don’t need to go into all of the respect angles of Beacon. Business Week had a good article on the social networking sites’ challenges with developing advertising.

Like many, I use a separate email account for marketing emails. Last week, as I was cleaning them out, I found 2 other examples of online businesses not getting the 4 R’s from Eons and Amazon.
John Della Volpe, the founder of SocialSphere, always thought one of the challenges facing Eons was that many people over 50 aren’t really excited about standing up and telling everyone, or joining a social network for those over the hill. Do people really like to say, “Hey, I’m old?” Partially because I’m in the business, partially because I know Jeff through our work with Year Up, and partially because I was eligible (even before they lowered the age threshold) I joined Eons. But I never really got the value proposition. At least AARP’s mailings tell you right up front about discounts and other offers they bring. Not terribly hip, but getting a deal on anything will always be relevant to me.
So imagine how jazzed I was to open an email only to be greeted with an offer to “get pictures of your grandkids” or something like that. Surely, they have some way of knowing I am probably a couple of decades away from being a granddad. Not relevant and not the kind of email someone like me would open again.

Then Amazon, who has many features I dearly love and admire (Amazon prime may be the world’s best loyalty program – more on that in a future post) sends me an email with a recommendation to buy a case for the flip video I recently purchased.

So what’s wrong with that? Take a look at the user ratings – 2 STARS! This one stood out to me because I had already checked out the product and new it was a dud. Amazon served up the “people who bought this product also looked at these” content when I was purchasing the flip. After seeing the 2 stars and reading a couple of reviews (e.g. “This pouch is really cheaply made, hard to use, and not worth the money at all”), I didn’t bite.

Back to our core principle – building a relationship built on trust. As John Lederer, the longtime leader of Loblaws supermarkets often said, “the consumer has given us their trust to select products for them to be available in our stores.” Although Amazon sells many products through third party retailers and clearly lets you know they are not being sold by amazon.com, it’s one thing to sell products you have little control over and another thing completely to send an email to a highly active customer recommending a product other customers have given a 2-star rating. I have come to trust that Amazon will offer great products and extraordinary service. I have been less enamored with their recommendations and – given this latest example – am less even likely to look at their recommendations or open their emails.

The more time I spend in this space, the more I realize that on-line community builders and advertisers can learn a lot from those of us that also spent time in the traditional direct mail and loyalty space. In true web 2.0 fashion, combining the best of both models will create the most effective strategies.

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