Conversion optimization is a growth strategy, but it’s been handicapped. We all know what a sales conversion rate is, it’s the ratio of sales opportunities to closed sales. So if you close 3 of 100 opportunities your conversion rate is 3%. Sadly, this too simple understanding is holding businesses back, and not just online.
To increase sales conversion rates you can do one of two things:
- Decrease Friction – remove the obstacles that slow, block or confuse buyers while they are engaged in the buying process
- Increase Motivation – help the buyers gain confidence that this is the right purchase, at the right time in the right place and from the right people
Decreasing friction is much easier and more immediate than increasing motivation. I’m certain that’s why in 2017 the average US eCommerce conversion rate is approximately 3%. The top performers convert closer to 15% and Amazon Prime Members convert at 74%. Funny, in 2003 it was controversial when we asked people to consider why their online conversion rates were below 10%. We still ask.
Decreasing friction can be accomplished short-term, with a cross-functional team and a modicum of intra-company cooperation. That’s hard to accomplish. It’s worthwhile. Please don’t stop there!
Increasing motivation requires empathy for the customer across the organization and a cross-functional team. It also needs a leader who advocates for the customer, irrespective of silo or department. That leader needs enough authority to influence buy-in so it’s probably not the head of a department like marketing or sales. This so much harder to accomplish. It requires a leader who cares more about the customers than the particular internal structure of their organization. It’s the juiciest part of optimization and it’s a long-term growth strategy.
Caring about customers is what stimulates agile innovation and optimization. Optimization creates a virtuous cycle of high growth. It primarily requires caring about the quality of the experience of customers and potential customers. We wrote about Amazon’s Four Pillars of Success and how customer-centricity is the first push on the flywheel in Be Like Amazon: Even A Lemonade Stand Can Do It.
What stops businesses from extracting the juiciest parts of optimization?
- Internal teams focused inwardly instead of on the customer. They need a leader to help them see the bigger picture.
- Internal teams don’t think they have to change. Nobody likes change. They need a leader who knows when it’s necessary.
- Internal teams see themselves relative to competitors but not relative to the gap in customer expectations. They need a leader with a different reference point.
- Internal teams perform against a benchmark. However, often that data doesn’t reflect the customer’s reality. They need a leader who is focused on optimizable qualitative inputs instead of quantitative outputs.
Not caring enough about customers is what stands in the way of dramatic growth. It takes courage and vision to do what it takes to help customers buy from you. If you’re not the CEO or an owner you probably can’t pull it off without their full support. If you are the CEO or owner we’d love to hear from you. Do you have the courage and vision to sustain a long term high growth strategy?
Crecimiento Empresarial – primero un resumen de los conceptos básicos.
El departamento de marketing y ventas son los responsables de la adquisición de clientes, pero no la experiencia del cliente. La responsabilidad es de persuadir a los clientes potenciales para comprar productos y / o servicios. Aquí es donde la mayoría de las empresas se centran en el crecimiento de su negocio. Es un error.
El Costo de Adquisición es crítico. Añada todos los costos de adquisición de clientes. A continuación, dividir por el número de clientes adquiridos en ese período. Por ejemplo, si ABC S.A. gastó $ 100,000 en marketing en un año y adquirió 1,000 clientes su Costo de Adquisición es $ 100.
Margen Bruto es el porcentaje de beneficio que queda después de pagar los costos. Si el margen bruto es de 40% y la venta promedio de ABC S.A. es de $500, su beneficio bruto es de $200,000. Les cuesta $100,000 para generar $200,000 en nuevas ventas.
Cada empresario responsable y ejecutivo se preocupa por Costo de Adquisición y Margen Bruto.
Peter F. Drucker fue considerado el mayor filósofo de la administración (también conocida como management) del siglo XX. Fue autor de más de 35 libros, y sus ideas fueron decisivas en la creación de la Corporación Moderna. El escribió: “El propósito del negocio es crear y mantener un cliente“.
Crear un nuevo cliente es fundamental. Es sexy.
Y mantener un cliente también es fundamental. No es sexy.
La retención de clientes, el mantenimiento y servicio a los clientes, siempre reciben menos atención. Las acciones que toman las empresas para reducir el número de defecciones de los clientes no se celebran.
El valor de la vida del cliente, es abreviado a menudo como LTV, es Life Time Value en inglés. LTV predice los beneficios de la futura relación con un cliente. La retención del cliente afecta directamente a los valores de por vida. Si la ABC S.A. gasta $100 para atraer a un nuevo cliente, obtiene un beneficio bruto de $100 en la primera transacción. Si ganan $100 cada mes durante cinco años ganan $6,000. Cuanto más larga sea la relación, mejor será el retorno de la inversión (es abreviado a menudo como ROI).
El patrimonio del cliente es el total de los valores de por vida de todos sus clientes actuales y futuros. Es la suma total de todo el valor que jamás se dará cuenta de los clientes. Los clientes crean todo el valor. El patrimonio de los clientes es el mismo que el valor de “Negocio En Marcha” de su negocio.
Valor de un Negocio = Patrimonio del Cliente + (Activos – Pasivos)
Compradores Transaccionales Versus Compradores Relacionales
Cada persona tiene un modo transaccional y un modo relacional de hacer compras. Los compradores transaccionales son aquellos cuyo mayor temor es pagar demasiado por algo. Les encanta la experiencia de compra. Van a comprar muchas empresas y sitios en busca de gangas.
No son leales a ninguna marca o negocio, buscan sólo el mejor precio.
El miedo más grande de los compradores relacionales es comprar la cosa incorrecta. Ellos ven las compras como parte del costo de la compra.
Buscan ayuda de expertos y pagan una prima por la guía de confianza. Confían en las relaciones, con marcas y personas, para ayudarles a tomar decisiones.
Cada persona tiene un modo transaccional y un modo relacional de hacer compras. Así que no se sorprenda cuando se vea en ambas descripciones. Usted es extremadamente transaccional en ciertas categorías de productos y servicios. Usted también es totalmente relacional en otros. En cualquier momento dado y en cualquier categoría dada, aproximadamente la mitad de todos los compradores estarán en modo transaccional. La otra mitad estará en modo relacional.
Los compradores en modo transaccional irán de compras por todas partes. Les encanta negociar. Las empresas a menudo concluyen, equivocadamente, que la mayoría de los compradores están en modo transaccional, porque son mucho más visibles y vocales. Pero en verdad, más compras son realizadas en silencio por los clientes en el modo relacional.
Esta equivocación es una de la las fallas que más dañan al emprendedor.
El Costo De Adquisición Del Cliente Depende De La Retención Del Cliente
Las empresas tienen un 60- 70% de probabilidad de vender a un cliente existente. La probabilidad de vender a un nuevo cliente potencial es sólo de 5-20%. – de acuerdo al libro Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance,,
Tenga en cuenta los datos públicos de Amazon. Las visitas de los clientes de Amazon Prime (ellos que pagan una suscripción anual por el privilegio de ser miembros se convierten en ventas el 74% del tiempo. Gastan 300-500% más que los miembros no pri- meros. Aproximadamente el 60% de los hogares norteamericanos son miembros de Prime de Amazon.
¿Puede ver el impacto que el enfoque en la retención puede tener sobre los costos de adquisición?
Enfoque En La Experiencia Del Cliente Para El Crecimiento Sostenible
El estudio de Rockefeller Corporation encontró que el 68% de los clientes se van porque creen que las empresas no se preocupan por ellos.
Bain & Company encuestó a 362 empresas. Encontraron que el 80% cree que entregan una “experiencia superior” a los clientes. Cuando le preguntaron a los clientes, informan que sólo el 8% están realmente entregando. Bain & Co. llamo a este resultado la “brecha de entrega”. ¡Yo lo llamamos trágico!
Ahora fíjese en este dato bien conocido: que los líderes de la experiencia del cliente superan las valoraciones del mercado de acciones de los rezagados de la experiencia del cliente:
Cuando se trata de crecimiento, la experiencia del cliente claramente importa!
Ahora, yo quiero ser generosos y darles a los 80% de los ejecutivos el beneficio de la duda. Ellos realmente creen que sus empresas están centradas en el cliente Nadie discute cuando explicamos los cuatro pilares del crecimiento de Amazon.
Estos son los cuatro principios unificadores de Amazon:
UNO. Centricidad en el cliente.
DOS. Optimización Constante.
TRES. Cultura de Innovación.
CUATRO. Agilidad Corporativa.
¿Qué es lo que impide en el camino? Piense en lo siguiente como los cuatro principios disunificantes.
UNO. Un enfoque organizacional: los impide centrarse en el cliente. Los equipos internos se centran en el “rendimiento” de su propio equipo, no en la realidad del cliente
DOS. La aversión al riesgo: mantener el status quo, los impide de la optimización continua. La gente no percibe su proceso como roto y no ven el beneficio de optimización.
TRES. Un enfoque en los competidores – observan a los líderes de su industria – es lo que les impide tener una cultura de innovación. Las empresas se ven en relación con los competidores, pero no en relación con las lagunas en las expectativas de los clientes
CUATRO. La imputabilidad errónea -la necesidad de culpar a alguien- los mantiene fuera de la agilidad corporativa. Los equipos internos cumplen o exceden sus puntos de referencia internos, pero esos datos no reflejan la realidad del cliente
Las Intenciones Son Importantes, Pero Las Acciones Hablan Más Que Las Palabras
Nos juzgamos por nuestras intenciones, pero los clientes nos juzgan por nuestras acciones. Juzgarte por sus intenciones no es un peligro entre amigos. Un amigo conoce su corazón. Pero es un peligro muy real en los negocios. ¿Qué sucede cuando un posible cliente hace contacto con su empresa? ¿Conoce a su mejor empleado en el mejor día de ese empleado? Por supuesto no. Reúnen a un empleado promedio en promedio
O peor aún, se encuentran con un empleado por debajo del promedio en un día por debajo del promedio. Y entonces usted está confundido por esas críticas negativas.
Triste, ¿no? Sus intenciones, motivaciones y compromisos personales nunca llegaron a la fiesta.
En Resumen: Usted Tiene Un Negocio En Crecimiento. Pero Podría Crecer Más Rápidamente.
Usted necesita conocer mejor a sus clientes. Reconocer que los clientes tienen sus expectativas establecidas por las empresas ni siquiera en su categoría de negocio.
Como líder, hay muchas demandas en usted. Es difícil priorizar y mantener un enfoque a largo plazo cuando lo urgente interrumpe lo importante.
En lugar de centrarse sólo en el crecimiento de las ventas, los competidores, la tecnología o todos los cambios en su mercado, nos gustaría ayudarle a centrarse en las cosas que no cambiarán. Usted puede construir un crecimiento sostenible y saludable si se centra en las prioridades de sus clientes. Por favor creame. Si usted entrega una gran experiencia, mantiene un margen razonable, y permanece enfocado en sus prioridades entonces el crecimiento es inevitable.
En mis próximos artículos voy a hacerle un seguimiento de cómo uno se enfoca en el cliente y los fundamentales que los impacta.
Mientras tanto, por favor, lea Triunfar como Amazon: Hasta un puesto de limonada puede lograrlo. Hay muchos ejemplos de los cuales puede aprender. También siéntase libre de contactarnos si tiene alguna pregunta.
What Gets In The Way? Think of the following as the four disunifying principles.
- An Organizational Focus– keeps them from Customer Centricity. Internal teams are focused on their own team’s “performance”, not the customer’s reality
- Risk aversion—maintaining the Status Quo— keeps them from Continuous Optimization. People don’t perceive their process as broken
- A Competitor Focus—watching the industry leaders—keeps them from having a Culture of Innovation. Companies see themselves relative to competitors but not relative to the gaps in customer expectations
- Misplaced Accountability—the need to place blame—keeps them from Corporate Agility. Internal teams meet or exceed their internal benchmarks but that data doesn’t reflect the customer’s’ reality
You have a growing business. But it could grow more quickly.
You need to know your customers better. Recognize that customers have their expectations set by companies not even in your category.
As a leader, there are a lot of demands on you. It’s hard to prioritize and maintain a long-term focus when the urgent disrupts the important.
Instead of focusing on only on growing sales, competitors, technology or all the changes in your marketplace we’d like to help you focus on the things that won’t change. You can build healthy sustainable growth if you focus on your customers’ priorities. Please believe me. If you deliver a great experience, maintain a reasonable margin, stay focused on your priorities then growth is inevitable.
Please read Be Like Amazon: Even A Lemonade Stand Can Do It. There are many examples you can learn from. Also feel free to reach out if you have any questions,
The sales team is having a hissy fit. They proclaim we’re 11% ahead of goal and we’re in the slow season! Why are you making life more difficult for the sales team? This change project is unrealistic! None of our competitors do better than us! It’s not broken, why fix it?
There’s a disturbance in The Force.
Ten seconds into our call I hear that Chuck, our client who owns a thriving $28 million business, is shaken up. We’ve been working together for almost three years. It’s not the first time we’ve met resistance to what the organization calls The Customer Rules Initiative.
In almost three years we’ve rolled out eleven important changes and dozens of small improvements. The Customer Rules Initiative has helped our client grow beyond their expectations.
Chuck is second guessing his twelfth change. The pushback on this change project is almost as hard as the first project where we decided to put all the information a customer needed on the website. The sales team was in open rebellion. They couldn’t imagine why anyone would call if we answered all their questions online. They were wrong then, they’re wrong now. Being wrong is human, acknowledging it and pushing beyond it is hard.
How Do You Stay On Track?
My job is to remind Chuck why the Customer Rules Initiative matters. First I listen. I listen for about half an hour. This has the desired calming effect.
I remind him of his favorite quote: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton
Chuck is listening, that’s good. The problem is real. We have to fix it.
Chuck is committed to what we teach as The Four Pillars of Amazon’s Success:
- Customer Centricity
- Continuous Optimization
- Culture of Innovation
- Corporate Agility
If you’re a growing company it’s hard to argue with any of them. Intuitively every business owner knows they need all four pillars, they are unifying principles.
Funny thing is that Chuck was the first client we drew the flywheel for. We published that flywheel in Be Like Amazon: Even A Lemonade Stand Can Do It
Chuck’s the guy that pointed out that The Force that propels this flywheel is Customer Centricity. The gap between customer expectations and customer reality is what needs to inform change.
The Force = Customer Centricity = Caring about the customer’s perspective
What Caused The Disturbance In The Force?
After almost three years of continuous improvements, why don’t they just trust us? If it were only that simple.
We came up with the twelfth change the first month we engaged. We’ve been putting off taking action on it since then.
A few months ago while visiting with Chuck and his senior executives at an offsite retreat we needed to print out several documents. The hotel couldn’t accommodate us. Bryan, my business partner, ordered a printer using Amazon’s Prime Now. Less than an hour later we were printing.
Bryan decided to point at the elephant in the room. We can get a printer here in an under an hour, why exactly can’t the sales team always respond to an inquiry within two business days? What do your customers expect?
Sales Team Response Time
In our first draft of our Buyer Legend, the narrative originally read that the customer was delighted because sales team responded in four minutes. That draft was abandoned. Two business days was substituted. They didn’t know their actual response time but anecdotally we estimated it averaged 2-4 days. We didn’t win this battle but we did insist on compliance with updating Salesforce. We now know that they respond to 87% of leads within two days. Of course, there are automated emails that are intended to follow up.
Yet, customers are human. Humans want what they want now. Not later, not even in five minutes. We want it now!
A New Goal – 5 Minute Response Time
After a long discussion, we agreed to tackle the twelfth change. We agreed that customer expectations could be unrealistic but we could meet that challenge. It helped that this time we had internal data to back us up. Leads that were reached by phone the same day closed a little over 3x the leads that took more than a day to respond to. Leads are expensive! We also reminded them of The Lead Response Management Study by Professor Oldroyd, a Faculty Fellow at MIT.
The new buyer legend says: “John (the prospective customer) is delighted because the inquiry was responded to immediately. John says “if they respond that quickly to an inquiry I bet they do that for customers too.”
Let’s examine why this change makes sense based on the unifying principles of Amazon’s Four Pillars Of Success:
- Customer Centricity – immediate response is what the customer wants and expects
- Continuous Optimization – be better today than yesterday is always the way towards our new goal
- Culture of Innovation – find solutions and embrace change to improve customer experience
- Corporate Agility – work to become more nimble and react to changing customer expectations
The Sales Team Rebels
This change is what the sales team was up in arms about. They missed the part where the sales coordinator, a new position, made the call answered a few questions, asked a few questions to qualify the prospective customer and scheduled a follow up with a sales person.
What we had was a failure to communicate. Chuck assumed the sales team reread the Buyer Legend carefully. The did not. Crisis averted.
Publishing a new Buyer Legend means employees scan quickly for changes. There are always minor changes highlighted but major ones are deliberately not. That is supposed to encourage careful reading.
Disturbance In The Force A Post Mortem
There are four forces that pull against the unifying principles of Amazon’s Four Pillars of Success:
- Organizational Focus
- Maintaining Status Quo
- Competitor Focus
- Misplaced Accountability
We could call them disunifying principles.
Let’s examine how they almost derailed the twelfth change:
- Organizational Focus – the sales team metrics were focused on their own team’s “performance”, not the customer
- Maintaining Status Quo – the sales team didn’t perceive their process as broken
- Competitor Focus – the sales team saw themselves relative to competitors but not relative to the gap in customer expectations
- Misplaced Accountability – the sales team was exceeding sales goals, an internal benchmark, but that data didn’t reflect the customer’s reality
Happily Ever After?
The sales team was asked to reread the Buyer Legend and some minor edits were made and agreed upon. The twelfth change is underway and initial results are positive. We’re nowhere near the 5-minute goal but our motto is #BeBetterToday. Nearly every lead is having a conversation within the same day as their inquiry. The hero of a Buyer Legend is always the customer. Chuck is unshaken in his faith that when he takes the customer’s perspective things work out well in the long term.
Do you have faith in The Force?
How can your business be more like Amazon?
Shep Hyken interviews Bryan Eisenberg co-author of the book, Be Like Amazon: Even a Lemonade Stand Can Do It.
Shep Hyken’s opening comments focus on how any company can improve their customer service, by thinking about how they can become more convenient for their customers. The reason that Amazon has become so successful is that they have developed a way to create customer convenience. Shep gives an example of how, in areas where Amazon offers two-hour delivery, a product could arrive at your home faster than the time it would take you to drive to the mall to purchase it.
Shep begins the interview by asking Bryan Eisenberg about the four secret ingredients to making a great presentation, which are:
1. Provide entertainment – tell a story.
2. Present a Big Idea.
3. Give the “How to’s.”
4. Give the audience or the reader the hope that they, too, can do it.
Bryan continues his “rule of four” by telling you exactly how you “can do it,” by discussing the four unifying principles of how to successfully run your business:
1. You must be customer-centric.
2. You must have a culture of innovation.
3. You must be agile. Execute, test and fail quickly, so you can keep learning.
4. You must continually optimize by shaving costs and adding value.
• Don’t “water the soup.” Putting a little water in the soup may give you more soup, but it takes away from the great taste. It’s not smart to do things that produce an immediate profit if what you are doing isn’t in the best interest of the customer.
• Don’t think short term. An example Bryan gives is when Starbucks payment system went down, they gave away the coffee. Most coffee shops would have shut down until they could take payment for their coffee. But, not Starbucks. They knew the cost of free coffee was better than losing customers – and it showed how committed Starbucks is to taking care of their customers.
Bryan Eisenberg is the co-founder of BuyerLegends. He is the co-author of the Wall Street Journal, Business Week, USA Today and New York Times bestselling books “Call to Action”, “Waiting for Your Cat to Bark?”, “Always Be Testing” and “Buyer Legends.”. Bryan is also a professional marketing keynote speaker.
Shep Hyken is a customer service and experience expert, best-selling author and your host of Amazing Business Radio.
Micheal E. Gerber asked 50+ experts, “What’s your best tip for growing/scaling your business?” You can read Bryan Eisenberg’s contribution below:
You can read Bryan Eisenberg’s contribution below:
Plan A Customer Journey That Is Channel Agnostic
Charlatans are endemic to all forms of marketing but they are especially attracted to digital. I’d like them to go away but there is always somebody willing to buy what they are selling.
ALL business is becoming digital!
Connected customers engage in many ways (foreseen and unforeseen) with brands in and out of stores, offices, call centers, social media, catalogs and websites.
Those customers don’t care what channel they interact with or what department gets the credit. Customers think of every interaction with a brand as THE brand experience.
Then they happily share the best and worst of those experiences. Wonder why customer experience isn’t what most CEOs focus on for differentiation?
Customer satisfaction and customer experience appear not to have budged at all.
According to Bain & Company, 80% of surveyed companies claimed to be delivering a superior customer experience, but only 8% of those companies had customers that agreed with them. What a dangerous blind spot!
That leaves an awful lot of companies actively disappointing customers while smugly congratulating themselves on their “superior customer experience.” Couldn’t be you, right?
Most companies don’t have a map. They haven’t mapped out the customer journey, either in terms of what it is now, or what it ideally ought to be. And without that map, they can’t plot the data to determine what’s actually happening — or what they ought to do about it.
Jeff Bezos said it best “If you’re customer-focused, you’re always waking up wondering, how can we make that customer say, wow?
We want to impress our customers — we want them to say, wow. That kind of divine discontent comes from observing customers and noticing that things can always be better.”
Why do so few companies bother to plan and then validate the buyer journey with accountable metrics?
Is it inertia?
“We often miss opportunity because it’s dressed in overalls and looks like work” – Thomas A. Edison
Or perhaps it is…
“Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” – Andy Grove
There is some hard work on your business involved. There is the careful navigation of people’s territories, channels, and silos, There is the inherent career risk that comes with greater accountability.
There is also a great opportunity. Plan a great experience, deliver a great experience and then improve on it. That is a challenge all businesses face. Some will live up to that challenge and most won’t.
You can read more about planning customer journies in Be Like Amazon: Even A Lemonade Stand Can Do It
I sent my friend, Tom Grimes, Amazon’s New Bricks-and-Mortar Bookstore Nails What the Web Couldn’t. In reply he wrote me:
My son Zack went to Tennessee to carve a rocking chair.
He’s into that sort of thing.
When all is said and done he is going to have hours and hours and a couple of thousand dollars invested in his chair.
You can buy a rocking chair at most Cracker Barrels for less than $200.The man teaching the class made the observation that if they actually were interested in selling their chairs … they couldn’t sell a chair.They were selling ART.And when people buy ART … they are buying the STORY that is wrapped around it.What does this have to do with AMAZON?When I went through the article I thought … Amazon is selling the stories in the books with stories about the books.They are providing a satisfying way to find a book that fits amidst the almost limitless number of books you can get.That Bezos’ guy is a clever guy.
Tom Grimes is a clever guy too. He recognized why Amazon will succeed in retail. Amazon’s is showing that curation and presentation remain the primary reasons for retail to exist. They’re just showing the world what happens when bookstores go through a digital transformation of the customer experience.
What retail categories do you think are ripe for digital transformation?
This is a post about false accountability and the worship of quantitative idols. Companies looking to be innovative face a dilemma. Policies and procedures that make them efficient at execution also stifle innovation.
On day one a startup is flexible until it discovers its business model and establishes a goal. On day two a mature company organizes around that goal and measures the efforts to reach the goal. Then they strive to find the most efficient ways to reach that goal. They create processes to make execution repeatable and scalable by employees.
These KPIs and processes, which make companies efficient, also impede agility.
In Jeff Bezos’ 2016 Letter To Shareholders he explains why he worries about day two.
“Jeff, what does Day 2 look like?”
That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.
I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?
Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.
Jeff Bezos is once again describing the Four Pillars of Amazon’s Success:
- Customer Centricity.
- Continuous Optimization.
- Culture of Innovation.
- Corporate Agility.
Every business (B2C, B2B and others) can make Amazon’s Four Pillars work for them. Leaders can use Amazon’s Four Pillars to refocus on what never changes. Amazon’s Four Pillars help you look beyond data about your company’s performance. They help you see the data that reveals your customer’s reality.
Examine whether what you measure is what you most value
In chapter one of Be Like Amazon: Even a Lemonade Stand Can Do It, we discuss the four unifying principles of Kodak’s George Eastman.
George Eastman organized the Eastman Dry Plate Company in 1881 under four unifying principles:
- Keep the price of the product low so the customer will and more uses for it.
- Always sell by demonstration.
- Be the first to embrace new technologies.
- Listen to what the customer tells you.
In 1976, Eastman Kodak sold 90% of all the camera film and 85% of all the cameras in America. By 1988 they had more than 145,000 employees worldwide, and in 1996 they had 16 billion dollars in annual revenue and a valuation of $31 billion. In 1975 Kodak’s Steve Sasson invented the digital camera, they patented it. In 2012 Kodak went broke because they decided they were in the camera film business. That was the result of abandoning their unifying principles in favor of the false accountability of their KPI’s.
What if Kodak had pioneered digital photography? What about they listened to their customers? What if they decided that instead of how many units of film they sold their measure of success would be how many magical moments customers captured?
I certainly hope you are measuring and optimizing the right things.
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