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Amazon, The Best of the Best

Amazon is one of the most customer driven firms in the world. Probably the best in the world. They understand speed, price, technology and everything is built around customer service.

Jeff Bezos has a net worth of about $25 billion. His salary at Amazon is the same as in 1995 $81,840. Sales last year were $61 billion with 43% International. Sales increased 27%. They lost $39 million dollars last year but had free cash flow of $395 million. They have 88,400 employees.

Bezos again reprinted his 1997 letter to shareholders. You can read the letter in his 2012 annual report. His vision is incredible. Amazon obsesses over customers.  One of the comments in the 1997 letter he said, “Its’ not easy to work here (when I interview people I tell them, “You can work long, hard or smart, but at Amazon.com you can’t choose two out of three.”)

In his letter to shareholders Bezos said, “One advantage — perhaps a somewhat subtle one — of a customer-driven focus is that it aids a certain type of proactivity.  When we are at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. 

We build automated systems that look for occasions when we’ve provided a customer experience that isn’t up to our standards, and those systems then proactively refund customers.  When you pre-order something from Amazon, we guaranteed you the lowest price offered by us between your order time and the end of the day of the release date. Doing it proactively is more expensive for us, but it also surprises, delights and earns trust.”  He states in his letter to the shareowners, “We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience.

Most firms are constantly trying to rip you off…. always trying to figure out how to take advantage of you. Very few CEO’s think like Jeff Bezos and understand the power of the service strategy.

On May 12, 2003 I invested $9,000 in nine service leaders to track what happens with investments. Those investments as of May 12, 2013 are now worth $22,787. The $1004.51 I invested in Amazon is now worth $8,436.16. Costco and Home Depot are the next two highest return investments.  Dell is the worst performing firm. After Michael Dell retired, the company lost its focus on customer service and even though Michael Dell returned, he was never able to turn the company around. After JetBlue badly screwed up the winter storm several years ago where it kept passengers on the plane for 13 hours and NO service recovery the stock has been in a free fall. The 10 year results are below:

Amazon

$8,436.16
Costco $3,759.68
Home Depot $3,218.04
TD Bank $2,276.58
Walmart $1,694.32
General Electric $1,123.43
Southwest Airlines $892.99
JetBlue $486.00
Dell $439.40

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