Focusing on what customers want or need has driven many of Amazon’s most profitable business moves, Rachel Premack from Business Insider Australia writes. Amazon has 14 leadership principles that guide its employees’ business decisions, but founder Jeff Bezos said just one is the “secret sauce” to the trillion-dollar company’s success.
“(T)he No. 1 thing that has made us successful by far is obsessive compulsive focus on the customer as opposed to obsession over the competitor,” Jeff Bezos shares his insights with at the Economic Club of Washington on the success of his trillion-dollar business.
Take Amazon Prime. Bezos said at the talk that Amazon developed Prime, a paid subscription service for free two-day delivery, because he knew consumers love free shipping. Introduced in 2005, the service drew ire for being “too good to be true” and helped underline the idea that Amazon is too inexpensive to be profitable. The message was clear: Prime is draining Amazon’s profits and its stock.
But it’s clear now that pleasing its customers, rather than bumping Amazon’s short-term bottom line, has been a shrewd business move. Amazon Prime customers spend an average of $US1,300 in a year, nearly twice that of non-members. More than 100 milion peopleglobally are Prime members.
Competitor vs Customer
Bezos added that it’s easy to see if an entrepreneur or CEO has that same customer obsession, or if they’re just trying to nudge out their competitors and boost their stock.
“I talk so often to other CEOs and founders and entrepreneurs, and I can tell even though they’re talking about customers, they’re really focused on competitors,” Bezos said.
When he senses a lack of customer obsession, Bezos said he doesn’t want to invest in or acquire the company. As an example, Bezos highlighted The Washington Post, which he bought in 2013. He said the Post, which is now profitable, has been successful by focusing on delighting its readers, not simply courting advertisement dollars.
“By the way, where do advertisers want to be? Advertisers want to be where there are readers,” Bezos said. “It’s really not that complicated. It comes around really well.”
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