Monday, January 21, 2008

Should You Cancel All Your Advertising?

Source: http://www.grokdotcom.com/2008/01/06/should-you-cancel-all-your-advertising/

Jeff BezosIn February 2003, Amazon.com canceled all their advertising and put that money towards free shipping as a word of mouth strategy. Many thought Jeff Bezos was crazy and that Amazon.com would never turn a profit. In 2007 they were solidly profitable with over $15 billion in revenues. Bezos knew that marketers used to get paid to make promises the business had no intention of keeping.

He understood that, in an increasingly transparent environment, being truly customer focused would matter more than telling customers about how great your service was.

Recently, Joe Nocera of The New York Times told millions of people that Amazon puts customers first in his part article, part testimonial, part morality tale, "Put Buyers First? What A Concept." You should read it in full but here are a few excerpts:

"They care about having the lowest prices, having vast selection, so they have choice, and getting the products to customers fast," [Mr. Bezos] said. "And the reason I'm so obsessed with these drivers of the customer experience is that I believe that the success we have had over the past 12 years has been driven exclusively by that customer experience. We are not great advertisers. So we start with customers, figure out what they want, and figure out how to get it to them."

Anybody who has spent any time around Mr. Bezos knows that this is not just some line he throws out for public consumption. It has been the guiding principle behind Amazon since it began.

[…] Amazon says it has somewhere on the order of 72 million active customers, who, in the last quarter, were spending an average of $184 a year on the site. That's up from $150 or so the year before. Amazon's return customer business is off the charts. According to Forrester Research, 52 percent of people who shop online say they do their product research on Amazon. That is an astounding number.

[…] 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.

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.

[…] There is simply no question that Mr. Bezos's obsession with his customers — and the long term — has paid off, even if he had to take some hits to the stock price along the way. Surely, it was worth it. As for me, the $500 favor the company did for me this Christmas will surely rebound in additional business down the line. Why would I ever shop anywhere else online?

Clearly, it was worthwhile for Amazon to cancel its advertising.

Am I advocating that you cancel your ad budget? Perhaps. How are your products, service and customer experience doing?

Your customers' delight matters even more tomorrow than it did yesterday, especially online.

When a visitor comes to your website, will they brag to their friends about what they bought and who they bought it from, or will it be somebody else they rave about?

Can you tell me why they shouldn't brag about you, your products, and your service? After all, it's the customer experience that matters. So why aren't they buying?

Do you need help figuring out why they don't buy from you? We can't fix your products or services but we can help you improve your online customer experience, increase your conversion rates and help you understand your customers better.

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