This morning I read a NY Times article called “Put Buyers First? What a Concept” about an experience the writer had with Amazon.com days before Christmas. The PlayStation 3 he bought for his son had not arrived, so he looked up the tracking details only to find it had been delivered and signed for by his neighbor, who then put it in a common area. There is was likely stolen.
He realized it was not Amazon’s fault, but called anyway. They sent him a new one for free, which he got on Christmas Eve.
The rest of the article talks about how this is great customer service and how Jeff Bezos has made a lot of sacrifices in the name of customer experience.
Wall Street, however, has never placed much value in Mr. Bezos’ emphasis on customers. What he has viewed as money well spent — building customer loyalty — many investors saw as giving away money that should have gone to the bottom line. “What makes their core business so compelling is that they are focused on everything the customer wants,” said Scott W. Devitt, who follows Amazon for Stifel Nicolaus & Company. “When you act in that manner many times Wall Street doesn’t appreciate it.” What Wall Street wanted from Amazon is what it always wants: short-term results. That is precisely what Dell tried to give investors when it scrimped on customer service and what eBay did when it heaped new costs on its most dedicated sellers. Eventually, these short-sighted decisions caught up with both companies.
However, Amazon is doing well, the article states, largely due to its focus on the customer, which has produced great customer loyalty.
All of this, however, comes at a price. Indeed, as I’ve written before, customer service isn’t cheap. Certainly, a fair amount of the hundreds of millions of dollars Amazon has spent on R&D has gone toward developing, say, the Kindle, but a good deal of it has also gone toward improving the customer experience. Amazon is willing to lose money on some of its most popular items, like the latest Harry Potter novel. And even with Amazon Prime, it must surely swallow millions of dollars in shipping costs. Indeed, in a presentation to analysts in late November, the company’s chief financial officer, Thomas J. Szkutak, showed one slide that read, “Over $600 Million in Forgone Shipping Revenue.” And that was just for one year.
As I have said before, although I’ve been designing in a bubble at grad school, I do realize that companies and organizations also have to pay attention to the bottom line when making investments in good design and good experience. Though I wonder if there will ever be a major shift in the way businesses view the investment in the design of service and customer experience so that it’s not so short sighted. It seems Amazon is willing to suck it for a bit to improve the customer experience. And it pays off. (Although, is the focus on customer experience a design perspective—I don’t know.)
Some further questions I have: What is the general willingness of companies to invest in service or experience design? Is there an opportunity for design to help shift the perceived value of investing in the customer experience—and by association, customer service? Or will this remain a hurdle?