The Rewards of Customer Obsession

Covid-19 has changed every company, but is there any company that has had to adjust to this new environment faster than Amazon? Or any that has done so more successfully in the face of higher expectations? The company has had its share of struggles over the past few months, but for the most part, it’s delivering, if you’ll pardon the pun. 

Several years ago, Amazon posted its 14 management principles. No. 1 on the list: customer obsession. “Leaders start with the customer and work backwards,” the description explains. “They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”

In my 40-plus years working with companies on the best ways to delight customers, I don’t know if I’ve seen another example that so clearly ties customer focus to innovation. Indeed, management principle No. 3 is “invent and simplify.” And I think this focus is paying off today.

To serve customers, to delight them and to make itself invaluable to them, Amazon has added more and more services over the past 15 years. The company has targeted its best customers and prospects with Amazon Prime, an ever-sweetening club membership that’s home to a lot of that innovation. It seems like, every year, Amazon tries to improve the value of Prime membership with one or more innovations.

Although Covid-19 has stressed Amazon’s service standards, and delivery dates have slipped, Prime membership continues to grow. I believe the firm’s continued success is the result of its consistent and obsessive upgrading of Prime’s value proposition.

Here’s a partial timeline:

• 2005: Amazon launches Prime with unlimited free two-day shipping for a $79 annual membership fee
• 2006: Begins fulfilling orders for third-party merchants
• 2011: Adds free e-book rentals through Kindle Library and instant streaming of movies and TV shows without ads
• 2014: Launches same-day delivery of commonly ordered items in large cities, often within one to two hours, via Prime Now; introduces Prime Pantry, streaming music and unlimited photo storage
• 2015: Creates Prime Day, an online shopping event offering deep discounts to members
• 2017: Introduces Whole Foods discounts, a cobranded credit card with cash back on purchases, and Prime member-exclusive brands such as Goodthreads
• 2019: Starts free grocery delivery and pickup from Whole Foods; announces that standard Prime delivery will drop to one day from two days

Prime now has 150 million members globally, a group that spends 2.3 times as much as non-Prime customers do. Bain research shows that the Net Promoter Score for Prime is higher across most categories, including consumer electronics, furniture and groceries, by as much as 30 points. 

My interviews with current and former Amazon executives have convinced me that company leadership is very serious about embedding the 14 principles into every management process—from hiring to training to promotions and, of course, how the company treats customers. Interestingly, not a single principle has to do with growth or profit targets. That is refreshing, and the stock market doesn’t seem nervous about Amazon’s value to shareholders.

However, there is one worrisome omen for me. None of its 14 principles has to do with treating employees with loving kindness, or caring deeply for their safety and well-being. If there is one part of Amazon’s success that makes me wonder if its formula is sustainable, it is the firm’s failure to demonstrate that it has become a truly great place to work.

Nevertheless, any company striving to become more customer-centric should look closely at its leadership principles and even consider adopting some of them—especially the one at the top of the list, Amazon’s overarching precept: customer obsession.