Editorial
The Gist
- Embrace the divinely discontented customer. Building products based on understanding your customer’s needs is no longer a competitive advantage. Customer needs are fickle and are evolving faster than ever.
- Connect the dots for potential solutions. Technology is leveling the playing field on customer insights. But turning insights into products by creatively connecting dots is a strategic opportunity.
- Exercise discipline in being fast and iterative. What separates the intent to be agile from the practice of agility is the disciplined use of methodology.
I’d like to propose a New Year’s resolution for us marketers and technologists — we will not put generative AI (or any other technology) above true customer-focus this year.
That may seem like an odd statement coming from an AI evangelist and marketer, but hear me out. There’s a real danger that the buzz about the annual $4.4 trillion new economic value of AI distracts us from a disciplined and strategic approach to capturing true CX value in 2024. It may be a new year and a new technology, but the customer is still the boss. “The consumer is boss” is a mantra that my ex-boss A.G. Lafley — the former CEO of Procter & Gamble — used to revitalize a stumbling company in 2000. That mantra is still valid today, and its execution demands an additional step, which is to go beyond customer experience and into customer obsession.
Customer Obsession in the Age of AI
The term customer obsession has been popularized by Amazon over the years. It implies evolving the company’s business model itself — as every aspect of the business is designed, assessed and reworked based on how it affects the customer. At Amazon, it is one of the four core principles (i.e., customer obsession rather than competitor focus, passion for invention, commitment to operational excellence and long-term thinking).
Outside of Amazon, the concept has existed for some time, but merits closer attention in today’s context. Over the past few years, customer satisfaction and customer experience have become table stakes in a world where customer data and analytics have become commodities. Your competitors are very likely to have the same data available for customer understanding. Striving for customer experience is likely to be a strategy for competitive parity only.
As mentioned previously on CMSWire, today’s consumers expect brands to respond and resolve their problems instantaneously, or before they happen. Technologies like AI are simply going to make it easier and cheaper for competition to understand and fulfill customer needs — as they are currently known. This caveat is important because there’s still a world of opportunity beyond today’s commoditized customer understanding. That’s where customer obsession comes in. It might be instructive to dig into it via the example that best symbolizes Amazon’s customer obsession — it’s Amazon Prime service.
Related Article: Where CX Meets EX: Customer-Obsessed Culture
How Customer Obsession Helped Create Amazon Prime
Amazon Prime, the subscription service that offers free shipping, has been called the highest-grossing employee idea of all time. It generates more than $25 billion per year for Amazon. However, the innovation to make Prime a success had a slow start. Prior to Prime, Amazon had launched Free Super Saver Shipping in January 2002. It didn’t work as well as hoped, and Amazon feared that it would fall behind its rival, eBay. Then Amazon launched Prime in February 2005, as a service for unlimited deliveries for an upfront payment of $79.
The genesis of the formal proposal for Prime started with an Amazon engineer, Charlie Ward, who submitted the idea of offering unlimited “all-you-can-eat” type shipping. Jeff Bezos took that a step further: He added the idea of faster shipping, in addition to unlimited shipping. Bezos has always espoused radical customer-centricity, and he believed that the idea of offering users a reason to stay and grow with Amazon was massive.
It wasn’t all easy going for Prime. Even within the company, the idea had its skeptics. Since shipping was part of the profit margin for Amazon, this meant they took a financial hit. Several individuals inside the company feared that this could be the idea that sank the company. It would take Prime several years to truly take off. That involved reengineering its shipping and logistics processes to make fast and cheap delivery viable.
It wasn’t until Prime Video was added as a free benefit to members in 2011 that it became a juggernaut. Once that tipping point was reached, there was no going back. It is now a competitive advantage that no other competitor can seem to match.
Among the many lessons the Amazon Prime story serves up, I’d like to highlight the three most relevant ones for today’s age of AI.
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1. Embrace the Divinely Discontented Customer
It’s true that the story of Prime offers a powerful example of customer-centricity. However, the learning goes way beyond customer-centricity and into customer obsession. Amazon goes several steps past delivering what its customers need and adopts an opportunity mindset. It embraces the customer’s fickle beliefs as opportunities for innovation.
In his 2017 Letter to Shareholders, Jeff Bezos called out the importance of staying on top of customers’ ever-increasing expectations. “One thing I love about customers,” Jeff wrote, “is that they are divinely discontent. . . People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary.’” Embracing the conflict and complexity of the open market customer and distilling durable customer needs into a constant stream of innovations has certainly worked for Amazon.
Embracing the fickle and demanding customer as an innovation opportunity is the next level of customer experience for most companies. It allows them to build upon the CX gains of previous years.
2. Connect the Dots for Potential Solutions
Prime was created out of new layers of free offerings over the years. What was constant over time was the goal of creating a moat around loyal customers so that they would never have to leave. However, the addition of each of the new, free services was highly opportunistic. Offering Prime Video for free to Prime members was initially puzzling even to some Amazon folks, as they questioned what video had to do with free shipping. It’s a great example of connecting two seemingly unrelated dots for Amazon to meet its higher goal: a stronger customer moat.
The idea of innovating by connecting existing product ideas synergistically is another big idea for most companies. If your company already has a base of CX projects to build on, then consider looking for synergies across them.
3. Discipline in Being Fast and Iterative
When the concept for Prime was first discussed, Bezos was disciplined in setting the team an urgent but relevant deadline. The product would have to be announced in six weeks, on Amazon’s Earnings Day.
This is very consistent with Amazon’s overall philosophy on fast and iterative innovation. Its approach has customer obsession at the core. That is supported by leadership principles that guide day-to-day behavior, such as “Think Big,” “Bias for Action,” and “Frugality.”
And all of this is then brought to life by Amazon’s toolbox of methodologies. Those tools are based on working backward from the customer benefit, all the way back to what needs to change at the starting point. This methodology of working backward permeates even routine operational processes such as budget management. When it comes to getting funding for work, the budget is simply an outcome of the plan for the work. In this way, planning and budgeting processes are combined. Most of the time is spent on the plan — the budget then follows.
That is in sharp contrast to the behaviors in most process organizations. For instance, in budgeting the process starts with the previous year’s total and is then refined to incorporate productivity improvements. Discussion on innovation is most often a separate portfolio process. Consequently, the chance to use financial processes to incentivize fast and iterative innovation is lost.
These three learnings — embracing the divinely discontented customer, connecting the dots on potential solutions, and discipline in fast and iterative innovation — are opportunities to set up unique and distinctive CX strategies for 2024 and beyond. It takes your CX plans to the next level and makes it possible to get ahead of competition by combining emerging technologies with customer obsession.
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