Why Amazon Ranks Number One in Customer Experience
“The company that provides the best relationship with the customer will win — not through product, but through the best experience.” – Tesco chairman Sir Richard Broadbent
“I would define Amazon by our big ideas, which are customer centricity – putting the customer at the center of everything we do – [and] invention.” – Amazon founder and CEO Jeff Bezos
Broadbent and Bezos are just two of many c-level executives who are focusing more than ever on the customer experience, understanding the role it plays in the current and future success of their business. In today’s retail world companies are no longer in the driver’s seat when it comes to their relationships with consumers. Customers hold all the power now with Web and mobile devices affording them the opportunity to change brands without a second thought and voicing their opinions about it through social media. As a result, retailers have come to realize that their best chance of long-term success is to provide a superior customer experience. And if they haven’t come to that conclusion yet, they really need to…and soon.
In the recently released ForeSee Experience Index (FXI), we got a pre-holiday glimpse into how some of the top retail and apparel brands fared in customer experience. Overall, the category scored very well at the brand level, recording an 81 (on a 100-point scale). This is good news considering the ForeSee benchmark for excellent is 80. However, there is a large 15-point range between the top and bottom of the list, which means anyone scoring below the category aggregate is risking loyalty, recommendations and sales among both current and new customers.
Retail & Apparel
Satisfaction with the Customer Experience
Average 81 Amazon 87 Nordstrom 86 Coach 85 Costco 84 Tiffany 84 IKEA 83 Ralph Lauren 82 eBay 82 Burberry 81 Lowes 81 Adidas 81 Sam’s Club 81 Nike 80 Louis Vuitton 80 Home Depot 80 Best Buy 80 Zara 78 H&M 78 Gap 78 Target 77 Walmart 72
It comes as no surprise that Amazon leads the pack. While the retail and Wall Street darling only marginally leads specialty retailers such Nordstrom and Coach, it does hold a significant advantage over direct mass merchant competitors such as Costco, Best Buy and Walmart in terms of customer satisfaction.
But why is it that Amazon continues to dominate the retail market year after year?
Bezos has also said in the past, “If there’s one reason we have done better than any of our peers in the internet space over the last six years, it is because we have focused like a laser on customer experience.”
It obviously has paid off. And the simple truth to the matter is: Amazon is good at everything they do from the customer experience standpoint, and ForeSee’s data supports it. The image below is a representation of the scientific model used for the ForeSee CXA methodology that shows the element (or drivers of customer satisfaction) and customer future behavior (or the outcomes of the customer experience) scores for Amazon as measured in the FXI.
Amazon scores relatively high across the ForeSee model. In fact, it ranks first in Price; ties for first in Service, and ties for second in Product. Amazon also scores highest in all future behaviors (ties for first in positive word-of-mouth recommendations).
While Amazon’s business strategy works well for them and as a result Bezos and company provide the best customer experiences in the retail industry, it does not mean every retailer should try emulating what they do. They should, without question follow stride and focus on the customer. But there are a lot of moving pieces to the customer experience and making improvements to any one of them could make or break a company. Until you correctly measure the experience your customers are having with your company, you won’t know exactly what piece that is.
Broadbent and Bezos are focused on the right thing without question. Twenty years ago or even ten years ago, a retailer might have won with the best product or best price. Today, it’s all about the customer experience. Retailers will no longer reap the benefits of having the best product and best price unless those offerings are matched with a winning customer experience. Plain and simple, the customer experience is more important today than ever before and those who focus on it will walk away as winners.
While December’s FXI offers a snapshot of the retail industry, we will be releasing a new report next month that focuses strictly on the industry, offering customer satisfaction scores for at least 100 of the top U.S. retailers.