Does your company love its customers?

"All you need is love"? No, but it helps… a lot

| More on:
buy transaction between a customer and a merchant

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If I could have known just how big Amazon.com, Inc. (NASDAQ: AMZN) would get, I would have bought shares at the IPO.

Which is probably the most useless sentence ever written!

It's akin to 'If I'd known what last night's lotto numbers were, I would have marked them on my ticket'.

It is perhaps wiser to ask 'Given Amazon's success, what lessons does it offer us?'

One, by the way, is 'It's better late than never'; I left plenty of money on the table but did — belatedly — buy Amazon shares, and I still hold them today.

The lessons might go to disruption and innovation. Changing the game, doing things differently — better — is hard. But if you can do it well, and actually achieve 'escape velocity', then you turn others' benefits of incumbency into millstones around their neck.

Not easy to do, of course, but once you've done it, the world can be your oyster.

The lessons might, related, go to scale. Size becomes its own defence at some point, as you go from puny upstart to dominant player. You get to set standards, call the shots, and your marketing costs can fall as you become a household name, at least among your target market.

And the lessons might go to culture. Building from scratch, though difficult, can be easier than trying to turn things around from inside. An oil tanker takes more time, effort and distance to turn than a speedboat does.

But, as I said before, these things are only obvious in hindsight, and only after a company crosses an invisible tipping point.

Plenty of would-be Amazons have failed. Wal-Mart, usually held up as the victim of Amazon's success, has found a second wind.

Still, I was amazed — and, again, I'm a shareholder so discount it accordingly, if you think that's appropriate — to get an email from Amazon this morning, telling me they'd sent me a refund.

The word refund was in the email's 'subject line' but it didn't tell me what the product was.

"Bugger", I thought, "I wonder what I'm not getting.

Opening the email, I was instantly confused. I'd actually received the product yesterday.

I had to read a little further.

Then I read it:

"Reason for refund: Item shipped late"

I hadn't complained.

Truth be told, I hadn't even realised it was late.

Yet Amazon had refunded my shipping cost. In full.

Again, remember I hadn't complained.

Amazon swallowed my shipping cost.

Not to keep me sweet. Not because I complained.

But because they figure they screwed up, and wanted to make it right.

They could have done nothing. I probably wouldn't have noticed.

If I'd complained, they could have legitimately blamed COVID-related shipping delays.

Or begrudgingly offered me a partial refund or site credit.

I probably would have been satisfied with that, had I complained.

But Amazon doesn't want me to be 'satisfied'.

It doesn't want me to feel neutral about the company.

It doesn't want me to tell my friends that Amazon is 'okay'.

Don't get me wrong — Amazon isn't doing this out of the kindness of its (shareholders') hearts.

Amazon is doing it because it knows that customer love matters.

That meeting expectations is the ticket to the dance, but truly delighting customers sets a company apart.

It knows that by treating customers better than they expect to be treated, those customers will be even more likely to use Amazon next time.

That freight saving is an investment in customer retention.

Because Amazon also knows that the cost of 'acquiring' a new customer is many, many times the cost of keeping an existing one.

It probably also knows that people want to work for a company that cares for its customers, too. And that it's far more efficient to pre-emptively deal with supply chain failures than deal with unhappy customers.

And it knows human nature means that I now feel better about being an Amazon customer than I did before I opened that email.

So, I'm probably going to use Amazon more in future, because I know how much they care about their customers. I'm going to be less worried that they might try to get one over on me next time. That, choosing between Amazon and someone else, I'm going to trust Amazon a little more.

And all of the above, measured over days, weeks, months and years, makes that freight refund a pretty cheap investment.

Which begs the questions:

How many businesses try to make a buck on every single transaction, missing the forest for the trees?

How many businesses are investing time, effort and money into making their customers' experience a better one?

How many businesses are truly playing the long game — realising that happy customers, even if less profitable today, are goldmines over the long term.

It's not just Amazon, of course.

For example, Aussie Broadband Ltd (ASX: ABB), in the usually boring, low-expectations world of telecommunications, elicits a tonne of customer love, and recommendation.

Corporate Travel Management Ltd (ASX: CTD), a company whose shares I also own, has long won awards for customer service and satisfaction and has high customer retention rates.

And there are plenty more besides.

As a group, I reckon there's a pretty good chance that companies that care most about their customers — and whose customers feel that love — will beat those who don't.

It's not the only way to pick a stock market winner. And there will be exceptions that prove the rule. But when your customers actively tell others about their great experience… well, you're probably onto something worth paying attention to.

Fool on!

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Scott Phillips owns shares of Amazon and Corporate Travel Management Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon and Aussie Broadband Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Amazon and Aussie Broadband Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Motley Fool Take Stock

Gold piggy bank on top of Australian notes.
Motley Fool Take Stock

No, Treasurer. Leave the Future Fund alone

They just can't leave well enough alone...

Read more »

illustration of three houses with one under a magnifying glass signifying mcgrath share price on watch
Motley Fool Take Stock

The housing problem that's about to get a *lot* worse

.. and a limited time to fix it!

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Motley Fool Take Stock

After all that scandal… a share price high?

Karma isn't real. Sorry.

Read more »

Businessman studying a high technology holographic stock market chart.
Motley Fool Take Stock

Where to invest for 2, 5, 10 and 20 years

How your timeframe should impact your investing.

Read more »

A young boy laughs with his grandpa as he puts a fishing net over his head.
Motley Fool Take Stock

An investing lesson – sort of – well learned

Sometimes, discretion is the better part of valour.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Motley Fool Take Stock

An 'all-time high' investing plan

With the ASX near all-time highs, what's an investor to do?

Read more »

A man leans forward over his phone in his hands with a satisfied smirk on his face although he has just learned something pleasing or received some satisfying news.
Motley Fool Take Stock

How should investors respond to US rate cuts?

It was a big cut. How should investors respond?

Read more »

Happy young couple saving money in piggy bank.
Motley Fool Take Stock

The three things that drive your investment returns

Bottom line? Kenny did a great job. But Penny did better.

Read more »