Multi-Unit Franchisee Magazine Issue I, 2015 | Page 72
CustomersCount BY JACK MACKEY
Make It So!
Customer growth lessons from Amazon
A
mazon founder Jeff Bezos
is a Star Trek junkie. He almost named his company
MakeItSo.com, based on the
adventures of the USS Enterprise, when
Captain Jean-Luc Picard would confirm his
commands with the words, “Make it so!”
“Make it so!” may also be the ultimate
personal motto for multi-unit operators
trying to grow their businesses. But the
practical question is, How exactly do you
increase sales and business value continuously over many years?
What is the secret to Amazon’s growth?
Bezos answers like this: “We know customers like low prices. We know customers like
big selection. We know that customers like
fast delivery. And we know those things
are going to be true 10 years from now.
They are going to be true 20 years from
now. So we can count on those things and
we can put energy into them.” You can
sense his passionate focus on customers
is founded on the kind of cool long-term
thinking that characterizes great investors.
The Amazon CEO came from humble
beginnings. Born to a teenaged single mom,
his $30 billion fortune is self-made. He is
not a warm and fuzzy guy, having graduated from Princeton University summa
cum laude with degrees in computer science and electrical engineering. Bezos also
had the guts to quit a great job to go into
his own business. He was a rising star on
Wall Street right out of college, so he is
very savvy financially.
When Bezos says, “We know” what
customers like, he means that Amazon’s
customer research shows that price, selection, and speed matter most to his customers. Data analysis confirms those are the
key drivers of customer satisfaction and
loyalty in the online retail business where
Amazon competes. And national benchmark data from the American Customer
Satisfaction Index (ACSI) show Amazon is
rated highest in the online retail industry,
thus supporting the connection between
the customer experience, revenue growth,
70
and ultimately, business valuation. (Amazon actually has the highest ACSI score
among all companies across all industries.)
Even though Amazon is not a franchise
system and your businesses may seem
much different from online retailing,
you should have access—through your
franchisor—to similar research proving
what’s most important to customers of
your businesses. And you should be able
to see benchmark data on your customer
loyalty compared with other franchisees
and with competitors.
The value of
customer loyalty,
plus engaged and
skilled employees,
and intellectual
property, are
worth more
than the value of
tangible assets,
such as inventory,
machinery, and
equipment.
For example, if you are a franchisee
of a top-tier brand, you should be able to
see real-time customer comments, sentiment analysis, and ratings that indicate
how each of your locations is performing on your key drivers. For restaurants
it might be taste of food, speed of service,
and friendliness. You can count on those
elements of the customer experience
being important for a very long time, so
you “can put energy into them.” Over the
months and years, you can compare your
customer experience against competitive
benchmarks to see if you’re pulling ahead,
slipping behind, or just treading water.
What differentiates your brand?
The customer experience Amazon creates is what distinguishes the brand.
It includes every customer-facing element: from unbeatable product prices
to unprecedented selection; from the
algorithms that recommend items you
actually want to buy to how they package them to ensure accuracy and ship
them to avoid damage.
Bezos understood that when entrepreneurs put money toward winning customer
loyalty, those dollars are investments that
yield compounded returns over time. According to a 2011 webinar by the Harvard
Business Review, companies that are loyalty
leaders in their industries (like Amazon)
grow at double the compound annual
growth rate of average performers in their
industries over the course of 20 years.
Did you know that the value of customer loyalty, plus engaged and skilled
employees, and intellectual property—
the intangible assets of a business—are
worth more than the value of tangible
assets, such as inventory, machinery, and
equipment? Customer loyalty, as evidenced
by a steadily increasing revenue stream, is
the number-one value-creating factor in
business valuation. Optimizing customer
loyalty in your business—and proving it
wi th customer and sales data—is essential
to a successful exit strategy.
What the example of Amazon shows
us (reminds us really, because we all know
this) is that the root cause of business
growth is gaining and keeping an everincreasing number of customers. That’s
not just true for big, world-famous companies, either. In fact, it is even more important for emerging companies, such as
multi-unit franchisee organizations, to
build a future on the solid foundation of
customer loyalty. Make it so!
SMG Chief Evangelist Jack
Mackey helps multi-unit
operators improve loyalty and
drive growth. For an analysis
of the customer research capabilities leading franchisors
provide today, request “An Executive Critique
of the Customer Experience” (either the retail
or restaurant report). Contact him at 816448-4556 or [email protected].
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