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Brick No5: Amazon.com – 3 lessons you can apply to your small business
By Matt Weston, Friday 3 October 2003 You may be thinking: what on earth could I learn from a company that offers the 'Earth's Biggest Selection' (Amazon's words not mine) and has a turnover of more than a billion dollars a quarter? But, believe me, Amazon's greatest achievement teaches us lessons that any entrepreneur should apply to their business, big or small. That it's incredibly fast and easily navigable is well documented - check out 'usability' guru Jakob Neilson's views on the subject. You're never more than two or three clicks away from any item on sale. And Amazon's great fulfilment service is legendary. CEO Jeff Bezos has plenty to be pleased about. But Amazon's GREATEST achievement? How it persuades customers to make buy more each visit, and how it leverages customer recommendations and knowledge to make other customers buy. Again, using Amazon's own words, it has become the 'Earth's most customer-centric company'. LESSON 1: Work very hard to REASSURE your customers that they are making the right purchase 'Customer ratings' - almost every Amazon product has a 1-5 star 'Average Customer Review'. The latest Coral Album, 'Magic & Medicine' has 31 customer reviews, and it was only released 6 weeks ago. It averaged over 4 stars so I bought it. This adds a real reassurance to purchasing from Amazon - you're not buying on the sales pitch of a big corporate monster, you're buying on the recommendation of Joe Public. So, testimonials from happy customers help you sell to new customers. I recently had my very old, very cheap windows replaced with new, gleaming Victorian sash windows. None of my friends in this area had had new windows fitted in the last 5 years, so I had no personal recommendations to go on. So I got a handful of quotes. In the end, my decision was not based on price OR the quality of the sales pitch OR the length of time the company had been in business. My decision was based wholly on the long list of 'happy customer' references the company I went with supplied - 25 in my immediate area, complete with addresses for me to go and view the work. Needless to say I'm now number 26 on the list - the company is I Foster & Sons of Romford (01708 725325) by the way. Highly recommended! You should take every possible opportunity to gather testimonials. The more the better. Always ask customers for feedback and if it's positive ask if they mind you using it - invariably they won't. Then make sure you use these testimonials at every stage of the buying process. LESSON 2: Know Your Customer - then PERSONALISE your sales pitch 'Wish Lists' - Amazon encourages you to set up wish lists. You can 'bookmark' products that take your fancy. Whenever you log in, it recommends new buying ideas - products that match the sort of products on your wish list. It's certainly a better judge of what I like than anyone I know. Working from home, I've started using Sainsbury's online ordering service, - it offers free delivery if you spend over £60 and get your order delivered on certain weekdays. I rate it highly. Yes, it took me just over an hour to set up my first shop. But now, by cross referencing my online purchases with data from my Nectar reward card, the site comes up with easy to use lists of regular buys and truly intelligent suggestions. I spend more with each shop - because it knows my preferences and personalises the products it offers me. Forget that Amazon and Sainsbury's possess funds and technology that a small business couldn't dream of. The principle applies as well to any small business - if you personalise the sale you will sell more. A publisher I know has built up, over the last 15 years, detailed information on over 200,000 customers and enquirers. His whole business has been built on using this data effectively. His database holds up to 500 pieces of information on EVERY INDIVIDUAL - contact details, purchases, responses to individual direct mail campaigns, website usage and much more. The publisher uses this information to analyse responses and decide where marketing money is best spent - for instance is it worth mailing subscribers to Magazine X with a special offer for Magazine Y? What response is likely? What return on investment will that bring? When the publisher does target enquirers from the database, it gets the best responses by personalising - for example 'As a reader of Magazine X, I thought you would be interested in subscribing to Magazine Y. It's the perfect partner.' LESSON 3. Focus on Maximising the Amount Your Customers Spend in One Go 'You may also like' - every Amazon results page suggests a product similar to the one that you're searching for. For example, searching for Delia Smith Books (a present!) Amazon also recommends I buy Madhur Jaffrey's Indian Cooking. 'Customers who have bought books by Jackie Collins also bought books by these authors' - Amazon ingeniously lists 5 authors I've never heard of (except Jilly Cooper), giving me even more birthday present ideas for my Mum, and making me spend more. Amazon is great at maximising the amount each customer spends online. It knows what other products buyers of certain products are likely to buy - and always has suggestions. It suggests 'Perfect Partner' product bundles - so if you're interested in the new Jungle Book 2 video it gives you a discount for buying it together with The Lion King. Think what other complementary products or services you might develop to offer your customers at their point of purchase - the best possible time to target a customer. Or perhaps there are other suppliers who you might team up with to offer a bundle? For example, if you're a freelance graphic artist, why not team up with a reliable printer to offer a full design and print service? Recommended book: SAMS Teach Yourself HTML and XHTML in 24 hours Just 4 days ago, I didn't know a single line of HTML - the programming language that powers the web. In fact, I don't even regard myself as particularly IT literate, so I didn't think HTML was something I could learn myself. But on a friend's recommendation, I decided to change this. For 5 years I've hated the idea that techie and webby types can take my money to design websites, without me really knowing how long things take, and how complex things are to do. I also wanted to be able to do simple things, to be able to get web pages up and live quickly yet not have to shell out for a £500/day web designer to do what I could do myself. Inside 3 hours, I had my first web page working. Now, I'm convinced I can put together a fully functioning site - watch this space. The guide is simple, engaging and really easy to digest. I recommend it heartily to anyone in the same boat as I was 4 days ago. And look - all 6 Amazon customer reviewers give it 5 stars out of 5! Remember to sign up: back to top |
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