Amazon Prime’s Pathway to Success

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Amazon Prime’s Pathway to Success


The Gist

  • Embrace the divinely discontented customer. Building products based on understanding your customer’s needs is no longer a competitive advantage. Customer needs are fickle and are evolving faster than ever.
  • Connect the dots for potential solutions. Technology is leveling the playing field on customer insights. But turning insights into products by creatively connecting dots is a strategic opportunity.
  • Exercise discipline in being fast and iterative. What separates the intent to be agile from the practice of agility is the disciplined use of methodology.

I’d like to propose a New Year’s resolution for us marketers and technologists — we will not put generative AI (or any other technology) above true customer-focus this year.

That may seem like an odd statement coming from an AI evangelist and marketer, but hear me out. There’s a real danger that the buzz about the annual $4.4 trillion new economic value of AI distracts us from a disciplined and strategic approach to capturing true CX value in 2024. It may be a new year and a new technology, but the customer is still the boss. “The consumer is boss” is a mantra that my ex-boss A.G. Lafley — the former CEO of Procter & Gamble — used to revitalize a stumbling company in 2000. That mantra is still valid today, and its execution demands an additional step, which is to go beyond customer experience and into customer obsession.

Customer Obsession in the Age of AI

The term customer obsession has been popularized by Amazon over the years. It implies evolving the company’s business model itself — as every aspect of the business is designed, assessed and reworked based on how it affects the customer. At Amazon, it is one of the four core principles (i.e., customer obsession rather than competitor focus, passion for invention, commitment to operational excellence and long-term thinking).

Outside of Amazon, the concept has existed for some time, but merits closer attention in today’s context. Over the past few years, customer satisfaction and customer experience have become table stakes in a world where customer data and analytics have become commodities. Your competitors are very likely to have the same data available for customer understanding. Striving for customer experience is likely to be a strategy for competitive parity only.

As mentioned previously on CMSWire, today’s consumers expect brands to respond and resolve their problems instantaneously, or before they happen. Technologies like AI are simply going to make it easier and cheaper for competition to understand and fulfill customer needs — as they are currently known. This caveat is important because there’s still a world of opportunity beyond today’s commoditized customer understanding. That’s where customer obsession comes in. It might be instructive to dig into it via the example that best symbolizes Amazon’s customer obsession — it’s Amazon Prime service.

Related Article: Where CX Meets EX: Customer-Obsessed Culture

How Customer Obsession Helped Create Amazon Prime

Amazon Prime, the subscription service that offers free shipping, has been called the highest-grossing employee idea of all time. It generates more than $25 billion per year for Amazon. However, the innovation to make Prime a success had a slow start. Prior to Prime, Amazon had launched Free Super Saver Shipping in January 2002. It didn’t work as well as hoped, and Amazon feared that it would fall behind its rival, eBay. Then Amazon launched Prime in February 2005, as a service for unlimited deliveries for an upfront payment of $79.

The genesis of the formal proposal for Prime started with an Amazon engineer, Charlie Ward, who submitted the idea of offering unlimited “all-you-can-eat” type shipping. Jeff Bezos took that a step further: He added the idea of faster shipping, in addition to unlimited shipping. Bezos has always espoused radical customer-centricity, and he believed that the idea of offering users a reason to stay and grow with Amazon was massive.

An Amazon Prime truck makes a delivery in downtown Fresno, California, in piece about customer obsession.
The genesis of the formal proposal for Prime started with an Amazon engineer, Charlie Ward, who submitted the idea of offering unlimited “all-you-can-eat” type shipping. Matt Gush on Adobe Stock Photos

It wasn’t all easy going for Prime. Even within the company, the idea had its skeptics. Since shipping was part of the profit margin for Amazon, this meant they took a financial hit. Several individuals inside the company feared that this could be the idea that sank the company. It would take Prime several years to truly take off. That involved reengineering its shipping and logistics processes to make fast and cheap delivery viable.

It wasn’t until Prime Video was added as a free benefit to members in 2011 that it became a juggernaut. Once that tipping point was reached, there was no going back. It is now a competitive advantage that no other competitor can seem to match.

Among the many lessons the Amazon Prime story serves up, I’d like to highlight the three most relevant ones for today’s age of AI.



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