Last month Amazon turned twenty. In 1994 founder Jeff Bezos left his job, drove to Seattle and set up the business in his garage. Originally going to be called Cadabra (as in Abracadabra), the name changed to Amazon after fears that people would mishear it as “cadaver”. It now offers over 230 million separate items for sale in the US alone and had 2013 revenues of $74.5 billion.
Amazon has radically changed how consumers shop, read and watch films, and affected a wide range of industries, from bookselling to video rental, and now, with the new Amazon Kindle Fire phone, mobile telecoms. So what have been the 5 key impacts on the customer experience?
1. Make it simple
As a web-based business Amazon has focused on making the customer journey as straightforward as possible. Ideas like One Click shopping (and now ordering via Twitter) ensure that the checkout process is fast and simple, without consumers having to re-enter credit card details or addresses. This also applies to customer service. If consumers have a query or want to return an item information is readily available and automated, with the maximum use of self-service, supported by channels such as web chat and email.
2. Share the experience
Amazon was the first company to introduce customer reviews and has made them central to the online shopping experience. Now, almost every retailer provides an opportunity to review the product that you have just bought – even down to a pack of nails from a DIY site, while most people won’t make a major purchase without checking relevant reviews on both products and the retailer itself.
3. Offer what customers want
Twenty years ago, customers were limited in what they could buy through the physical size of their local shops. The internet changed all of that, but led to the opposite problem – too much choice. Due to its size Amazon is able to capture a huge amount of data and uses it to deliver personalised offers and recommendations based on previous purchase history, tailoring information to particular customer needs.
4. Keep innovating
When Amazon started, people saw it solely as an online bookstore. However, this was never the long term goal – it was simply a start point to build customer trust in the then new experience of buying online. Since then Amazon has expanded far beyond retail – offering streaming services, digital downloads and physical hardware such as the Kindle ereader, Fire tablet and new Fire Phone. These not only integrate closely with the retail side of the business, but add innovative new features. For example, the Fire Phone has a near 3D screen and the ability to provide information on anything it sees or hears. Amazon has never rested on its laurels, and is continually moving forward.
5. Always put customers first
Compared to competitors with physical stores, Amazon operates on very low margins. From the beginning Jeff Bezos talked about being focused on customers, rather than competitors, and taking a long term view. It is rumoured that its core retail business just breaks even, and overall profits are still small compared to total revenues. Amazon’s strength is that it aims to think like a customer and provide what they want, building loyalty in a crowded market.
The internet has radically changed consumer behaviour over the last twenty years, widening choice and shifting the balance of power between companies and customers. Amazon has been at the heart of this and is helping reshape how we shop, both now and in the future.
The UK retail landscape has changed radically in the last ten years. The rise of the internet, new competition, increasingly demanding consumers and the slowdown caused by the recession have triggered the demise of many long-standing players, transforming the sector.
How are the UK’s top retailers coping with these challenges? To find out, the Eptica Multichannel Customer Experience Study evaluated 40 leading UK retailers, spread across four sectors, food & wine, consumer electronics, entertainment and fashion. It measured them on their ability to provide answers to ten routine questions via the web as well as their speed and accuracy when responding to email, Twitter and web chat. Sample questions included:
- Can I add items to an order before it is delivered?
- Can I order online and pick up instore?
- Do you have an ethical sourcing policy? If so, where can I find details?
The Study found wide variations between different sectors, channels and individual companies. These meant that while some retailers scored highly, the overall performance was patchy, with over a third of questions going unanswered online, via email or through Twitter. On a channel by channel basis, performance varied as follows:
- On the web: Retailers topped the overall study (which also looked at the insurance, travel, consumer electronics manufacturers, utility, telecoms and banking sectors) when it came to answering questions on the web – but also brought up the rear. Fashion retailers scored an average of 79%, while entertainment and electronics retailers only managed 52%.10% of retailers scored 9 or 10, while 17.5% were only able to answer 3 or fewer questions. This means that whilst the overall average for retailers was 60% (up from 53% last year) – 4 out of ten questions are simply not being answered online.
- Twitter: Over eight in ten (83%) of retailers are on Twitter, but just 33% responded successfully to tweeted questions and the average response time was slow at 13 hours 10 minutes. The fact that there was a 30% difference in performance between email and Twitter, even though the same question was asked on both, shows that the sector needs to share knowledge better between the two channels.
- Email: Overall, 63% of retailers successfully answered a question emailed to them, a 10% improvement on the same study last year. Speed of email response had also improved dramatically – with an average time of 35 hours and 43 minutes (versus 67 hours last year) but this does mask enormous differences – one electronics retailer responded in 7 minutes, yet another in the same sector, took nearly ten days.
- Web chat: When the research took place just three companies (8%) had web chat deployed, although others advertised on their web site and simply did not have it working at the time or have introduced it subsequently. Those that did offer chat, principally electronics retailers, benefited from its speed and flexibility – 83% of interactions received satisfactory answers in an average time of 4 minutes.
In an increasingly competitive market retailers should look at the following five key areas if they are to continue to meet rising customer expectations:
- Increase efficiency across channels: Retailers need to invest to improve efficiency by centralising customer service and automating as much as possible. Technology such as web self-service can deflect simple interactions to online channels, while advanced linguistic analysis can better understand incoming emails or tweets and suggest more relevant answers based on an understanding of language and context.
- Value customers’ time: Retailers need to deliver a multichannel response, answering questions quickly, on the customer’s channel of choice, powered by consistent, centralised knowledge. Retailers are advised to investigate new channels and devices such as mobile and social and ensure they have a presence on them that meets customer needs.
- Engage: To build loyalty and a deep relationship retailers need to engage with customers. Understand the customer journey and consumer expectations. Use linguistics to analyse and understand the questions people ask so that you can fine tune the experience to best meet their needs. Proactive web chat not only helps customers by quickly answering their queries but also increases engagement and drives additional sales.
- Benchmark the best: In a world where the internet increases competition and makes it easy for new entrants to launch, retailers need to be constantly improving. As a first step, companies should therefore benchmark their performance against immediate competitors. But they should also look further afield and review the wider market to spot new ideas that can be adapted and incorporated into operations, to increase differentiation and efficiency.
- Integrate with the business: Everyone is involved in the customer experience, from those working in shops to delivery drivers and senior management. Retailers are advised to work across departments to share information and link systems together to give an end-to-end view of the customer relationship. In the longer term linguistics can become part of the customer experience and information shared as part of a retailer’s big data strategy.
To download the study in full, including a sector-by-sector breakdown and to access further recommendations from Eptica please visit: http://www.eptica.com/Retail-Multichannel-Study-2014.html.