Amazon has one of the clearest, most effective, and durable strategies in the history of business. However, after working there for 15 years and doing years of advisory work, I think it can be even better. I would make two changes:
1) Remove “Traffic”
2) Define the term “Customer Experience.”
Amazon’s retail growth flywheel has multiple spokes: Selection, Customer Experience, Traffic, Sellers, Lower Cost structure, and Lower Prices.
I would remove “Traffic” because it is an output, not a controllable input. The spokes of low prices, selection, and great customer experience do produce more traffic to Amazon, but the increased traffic is a lagging indicator of the work performed by Amazonians on the other spokes: providing a broad selection of products at low prices and making them arrive at your doorstep in two days or less.
The second edit is to define the term “Customer Experience.”
Management tools like the growth flywheel are meant to codify the company strategy for everyone, from the CEO to a first-day intern. Other spokes on the Amazon flywheel, like Selection and Low Prices, are clear enough that they provide direction up and down the organization.
Customer experience, however, is open to interpretation. For a new intern fresh out of college and walking into a 1.5-million-person company, that phrase can mean anything.
Does it mean customer support inquiries answered within 10 seconds by phone or chat? A no-questions-asked, 365-day, free returns policy? Personalized recommendations?
When the flywheel was introduced in 2001, this lack of clarity meant that each leader had a different interpretation, and resources were pulled in many directions throughout the 2000s. But over time, based on the results of these various efforts, it became clear that “Customer Experience” meant the speed and ease with which customers could:
(1) Find what they want
(2) Buy what they want
(3) Receive what they want.
This is how “customer experience” has been effectuated for Amazon’s retail business over the past two decades, and the results are amazing.
As it is, the Amazon flywheel is genius. Better customer experience drives more traffic, which attracts more sellers, which lowers prices and broadens selection, which in turn improves the customer experience even more.
It’s simple, elegant, and the results prove that it works.
But I think this could be more effective if the concept of customer experience were a defined term with the addition of a footnote.
This would codify the mission more clearly for everyone, even folks who haven’t been hired yet. When tools like this are designed right, they communicate the “what” and the “how” to everyone at all levels of the organization. They create a unified approach. That’s why they’re effective.
The flywheel does almost all of that today, but I think this small change could make it even more powerful.
What do you think?
