Amazon’s 63 Second Secret to Success

These articles are part of my weekly Tuesday Tidbit religiously read by over 30,000 senior executives. Go to NoahFleming.com to make sure you’re on the list.

Last week Amazon officially opened the doors to its new cash-free grocery store known as Amazon Go.

One person wrote, “It will never work! What do people do if they need help?!?”

To one customer responding, “There are lots of people walking the floor, so you just ask them for help.”

Bloomberg wrote an article titled Amazon's Pointless Obsession With Cashiers. I usually let silly comments roll off my back, but to see Bloomberg so fundamentally miss the point on something was a touch too much.

The article dives into how little time consumers save (they claim an average of 63 seconds for the whole checkout process), and suggest that it’s worth neither Amazon's nor the customer’s time to save those seconds.

It misses the mark from both sides of the argument.

First, the easy one:

People have shown time and again that they’re willing to sacrifice the “human touch” of a cashier for a minor added convenience.

In this classic book, Ray Kroc wrote that McDonald’s would never use computers for ordering as they would lose the human touch. Every day more and more McDonald’s restaurants are deploying giant interactive displays for ordering. I watched two customers use the device even though there were three people were standing there waiting to take orders.

This isn’t a trend that’s going away.

Nor should it. Contrary to what Kroc suggested, just having a human be part of the process doesn’t create a “human touch.” It’s incredibly rare to have interactions with cashiers that elevate the consumer's experience (though that’s a great place to create elevation, so if you employ a lot of cashiers, there’s a great opportunity for you to stand out while the position of cashier still exists!)

More depressingly, though, the Bloomberg article neglected to mention why Amazon would want to do this. It’s not about combating rising minimum wages (though that’s an added benefit). Instead, it’s about allowing Amazon to collect even more information about the buying habits of all of its customers.

It will allow Amazon to get a much more complete picture of their customers. It will create better advertising opportunities and ensure that Amazon can “get to yes first” on any transaction that its customers are thinking about (and, with the rise of predictive analytics, to know what people will be thinking about buying before they're even thinking about it!)

The experiences of purchasing from a physical store are fundamentally different from those of purchasing online - retailers have long known that the choice of music, scents, product placement and store layouts can have a massive impact on their gross revenues. 

What Amazon can do with Go, for the first time, is to tie that information to online purchasing habits for individual customers, and truly understand what impacts individual customers propensity to buy. MoviePass is another service trying to do something similar in the theatre industry, and so far it’s working pretty darn well. The true value of this disruptor lies in the data.

What Safeway and Tesco have done with varying degrees of success in trying to understand grocery buying habits, Amazon will be able to do much more comprehensively across a much wider swath of the shopping experience, and the information they get from that will be invaluable to them.

The fact that so many, including Bloomberg seem to have missed this point is depressing, but not surprising. It’s been almost 60 years since Ted Levitt wrote Marketing Myopia, but the fundamental misunderstanding of what businesses do is still readily apparent.

Your Challenge For This Week:

This weeks challenge is in two parts.

Part 1: Think about the world like Amazon. Think about how you could make better decisions (both strategically and operationally) if you had better or more complete information about your client's buying habits.

What information would you need?

What could/would you do with it?

Part 2: Brainstorm five things you could do that would allow you to collect the information, without worrying too much about how much it would cost / or whether it would be fully adopted. 

Don’t fall into the “It’ll only save people 63 seconds” trap (remember last week’s Tidbit?) 

Train yourself to think about the world regarding collecting and using the information to increase revenue, selling opportunities and crafting more meaningful customer experiences. Do that, and you’ll quickly find ways to be putting it to use. 

Here are two examples to get you thinking, which we have implemented with many of our clients:

“If only I could predict when somebody was about to leave, I could focus 70% of my internal marketing budget to attrition reduction directly on those clients, and see a much greater return on those dollars, freeing up more capital for new product development.”

“If only we could pull an Amazon, and predict what somebody would be most likely to buy, we could help our sales team make the highest value suggestions when they’re meeting with clients, instead of relying on luck or intuition.”

Go!

#amazongo

#amazon

#linkedinLearning

Noah is the author of the landmark books, Evergreen, The Customer Loyalty Loop, and the upcoming release of Dealing with Difficult Customers. The books break new ground on customer loyalty, customer service, customer experience, and customer retention. Since 2005, Noah’s firm, Fleming Consulting & Co., has worked with clients around the globe to help them dramatically grow their businesses. Learn more about Noah here. Noah is also a LinkedIn Learning Instructor–view his courses here.