Surprise and delight your customers to build long-term trust and customer lifetime value
Jeff Bezos letter to shareholders 2012
KEY MESSAGE 15/22
Jeff Bezos has been writing a letter to shareholders since 1997 and looking at all if them gives an insight to the organisation and a masterclass in leadership. This is a series of short blogs that gives you a snap shot / key takes outs of each letter, along with links to them all.
“When we’re 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.”
In the short term, spending money to deliver value above what your customers could reasonably expect looks foolhardy — in the long run, it could be your competitive advantage.
Proactively bringing value to your users and delighting them builds attachment and trust. Build enough of it, and you create a connection with your customers that becomes hard to break.
On Wall Street, delivering value above and beyond what your customers expect is not considered a sensible decision — especially if it costs money. One early critic of Amazon derisively described the company as a “charitable organization being run by elements of the investment community for the benefit of consumers.” This kind of attitude has become so pervasive that for many businesses, it’s seen as safer to move in lockstep with your competitors, never falling behind but never advancing ahead of them either.
Building a great customer-centric business over the long-term doesn’t happen when you’re only reacting to your competitors.
Proactively delighting your users costs money, but it pays off when you distinguish yourself — your customers stick around for longer and they pay you more.
The longer a company is able to retain its customers, the less it needs to spend on acquisition or marketing. The more revenue it drives from each customer, the stronger its business.
For Amazon, building a high lifetime value among its customer base through proactive delight has been a powerful differentiator. The average lifetime value of a Prime customer was estimated at $2,500 in 2017, well over the $150 average in e-commerce.
link to all letters to shareholders
- 1997: Bring on shareholders who align with your values
- 1998: Stay terrified of your customers
- 1999: Build on top of infrastructure that’s improving on its own
- 2000: In lean times, build a cash moat
- 2001: Measure your company by your free cash flow
- 2002: Build your business on your fixed costs
- 2003: Long-term thinking is rooted in ownership
- 2004: Free cash flow enables more innovation
- 2005: Don’t get fixated on short-term numbers
- 2006: Nurture your seedlings to build big lines of business
- 2007: Missionaries build better products
- 2008: Work backwards from customer needs to know what to build next
- 2009: Focus on inputs — the outputs will take care of themselves
- 2010: R&D should pervade every department
- 2011: Self-service platforms unlock innovation
- 2012: Surprise and delight your customers to build long-term trust
- 2013: Decentralize decision-making to generate innovation
- 2014: Bet on ideas that have unlimited upside
- 2015: Don’t deliberate over easily reversible decisions
- 2016: Move fast and focus on outcomes
- 2017: Build high standards into company culture
- 2018: Wandering is an essential counterbalance to efficiency