On giving the customer what they needPosted: April 1, 2006
Seattle debates corporate blogging: The major companies in the greater Seattle area include Microsoft, Amazon and Google in no particular order. A recent flurry of activity was sparked off by Werner Vogels, Chief Technology Officer at Amazon. Amazon played host to two A-list bloggers, Shel Israel and Robert Scoble (Microsoft). Robert and Shel were there to present their point of view on why Amazon should promote blogging. Unfortunately, they were greeted with an antagonistic CTO who railed them on their approach. Offline, both parties felt that their patience was tried by the other. Werner urged that that Shel and Robert were adopting a rather fuzzy approach and should have been prepared for hard questions. Robert and Shel on the other hand were satisified with the conclusion that Werner had been rude in his approach and had tried to set the guest speakers up. Other observers were deeply divided on what exactly was the lesson from this toss up. I want to try and understand if Blogging can directly assist in growing a business.
Don't distract yourself: Respectfully, Werner played the bottom line and piqued my interest in Amazon's approach. The visiting evangelists claimed that corporate blogging would help Amazon tune into customer feedback better. Werner retorted (and I don't quote) that Amazon were already doing a great job of listening to the end customer. Werner also pointed out that Amazon does more than any other company on the planet to harvest customer feedback. I believe, Werner's point is that Robert and Shel had not presented a strong enough case to show that an Amazon blog would do better than what Amazon is already doing.
Excerpts from Werner's blog:
…We have a long history of promoting customers to use their voice about our products and our operations, so if you come to Amazon to tell us our business is going to really suffer if we do not blog, you better be prepared to defend your ideas with very strong arguments and hard evidence. We expect that from anyone, externally or internally, who wants to promote an idea within Amazon...
…I have been a promoter of weblogging for a long time, so I didn't feel particularly bad to challenge these two authors to tell me why customers would get a better Amazon product if we would institutionalize blogging at a wider scale around Amazon. Beyond "a more human face" and "conversations with individuals from Amazon" there was no real response how blogging will make the product named Amazon.com better for our customers given all the techniques we already use from soliciting customer feedback to discussion forums to snooping weblogs and comments sites, etc,. In my mind they had no solid data-driven answers to these challenges, which I would have expected from two seasoned evangelists. I myself actually knew some of the answers to my questions, but I was surprised to see that these guys were not prepared enough to slap me around with solid answers…
…If it does happen at a wider scale than it happens now, it will be because our customers have given us feedback that they think blogging is an excellent approach to interact with Amazon. Amazon will continue to innovate with involving customers with our sites, some of those may be weblog or wiki related techniques, many of those will be completely new approaches as people have come to expect from Amazon. We will do this because our customers want us to, not because "everybody else is doing it"…
Innovation at Amazon: I will admit, Amazon.com really do try hard to build a profile of the customer. This is not borne out of an altruistic need to do so, Amazon believe that if they are to survive in the marketplace, this is what they need to do. I wish they would not call their feedback gathering snooping. For example, if someone from Amazon.com were reading this to gather feedback, I would love to keep the credit. Amazon bring several innovative techniques to their site, try them out and retain the ones that work. Since I have begun buying from them, I can list at least 5 new incentives (failures and successes) initiated by Amazon to help me get more from my experience with them.
- The golden box (annoying).
- Recommendations (click-stream mining).
- User-driven lists and reviews.
- Amazon sponsored Author blogs
- Wish lists and personal inventory tracking.
I don't claim that these features were brought into the marketplace by Amazon first. But Amazon has them all under one roof. They get an 'A' for effort. Lets think about the next logical question, do they really work?
Amazon don't get it(?): This gave enough time for the evengelists' to come up with answers to Werner's points. They claim (and believe them) that blogging has helped Sun and Microsoft to be better solution providers for their customers. Unfortunately, from their comments, I feel they are beginning to project blogging as a soft-ROI item, something a startup will be very reluctant to take up right away. Imagine sipping single malt in the evening when you can't afford your morning cup of coffee. In fact, many evangelists have been citing successful small companies who use blogs for customer feedback.
Shel writes on his blog,
…There's the example, I published of my own experience, of having Amazon recommend books for nearly 10 years from categories that are not my reading tastes…
…In our book, we discussed a Japanese online bookseller called BK1, who old us they had increased book sales by 20 % by encouraging employees to blog about books they did or did not like. They found a direct correlation between favorable blogs and immediate sales. I believe this is absolutely applicable to Amazon. It also lets you compete with the one compelling reason to shop at small, independent bookstores, where the selection is smaller and the prices are higher than at Amazon. What they have that you don't have are "book buddies" employee and owners who read books, who share their enthusiasm for books, who ask customers how they liked their books. In short they have passion and authority for books that Amazon does not yet display…
…You have forwarded the argument that blogging may be okay for some little unknown company, but because you are Amazon, you don't need this stuff. That is the attitude of incumbents whenever innovation disrupts their agenda. They dismiss the new stuff. You may be the most powerful incumbent in the world, but if you ignore innovation–particularly innovation that puts you closer to your customers, you will eventually be disrupted. If I were an entrepreneur today, looking for a market opportunity for a new startup, I would be exploring points of vulnerability in large incumbents. I would be looking for kings of the mountain who are s certain of themselves that they will ignore me for a prolonged period, until I can get my foot in the door. That's what Amazon did a decade ago. That's what Yahoo did a decade ago–opening the opportunity for a young agile company to use innovative technology to take over the Search category…
…7. The ROI Question
Werner, I suspect you already know that this is a Sphinxlike riddle. When something is new, and as dynamic as blogging, it is impossible to forecast the ROI. There will come a day for companies that blog when they look backward at historic data and can make honest assessments of increased revenue or other benefits. I think Microsoft and Sun for example, have been blogging long enough to say that perceptions of them have improved because of bogging. They could not have told you that when their toes were at the base of the mountain and they were just beginning their journeys.
I would add to this a second observation. Sometimes, the quest for ROI in all corners of the corporation has caused the problem with customer relations that most reasonable people agree exists. We wanted better ROI from customer support, so we lowered the quality for the support. Marketing was historically to touchy feely for financial reviews, so we started adding ROI requirements to each project, forgetting that the essence of marketing is relationships that improve the ROI of the sales department. Companies still know this. They realize the ROI of a press release, an employee health club, a three-day trek to a conference where an executive speaks for 45 minutes, a donation to Katrina survivors and so on. Those are soft-ROI items, but most companies see their values…
To feature or not to feature: Shel offers great feedback to Amazon. There are many features in the Amazon marketplace that just do not work as they are intended to.
To step into the technology, it appears that Amazon's profile mining system is based on an over-generalized approach. When studying Data Mining problems back in school, we always tried to find a best-fit algorithm for the problem at hand for a high success rate. I suspect that Amazon on the other hand have taken a very large problem (guessing the needs of the consumer) and have designed a solution ignoring the inherent heterogeneity of the problem. As a result, their recommendations are often skewed and may instead be perceived as annoying.
I am sure Amazon are already taking a hard look at the gap between present customer demand and potential demand through impulse buying, recommendations and identificiation of thier needs (I wish I had some numbers here to publish). At the end of the day, Amazon will guarantee greater sales, and I, the consumer, will read more books (they are still a book retailer at the core).
Blogging is not the (only) efficient solution: In my last product company, I experienced first hand how users adopt a frank atitude on neutral forums dedicated to company's products. Developers who I worked with followed customer feedback closely. We learnt what customers thought of our products and what they felt was missing or broken. We also learnt about how customers were using our product in exciting and unintended ways. A great example are the forums for snapstream.com a PC digital video recording technology startup. So, blogging is definitely not the only possible solution for small/medium-sized and large companies.
37Signals is a success story worth investigating. Could intensive blogging helped them close down the feedback loop well? Shel is definitely on the right track, recommendations from a credible source helps promote impulse sales. I still remember being introduced to Monty Python movies by a young RIT student working at the local BlockBuster. It is sad that Shel offers anecdotal evidence on existing problems within Amazon's marketplace and then immediately succeeds the evidence with an argument on how blogging will solve the problem. In doing so, Shel and Robert don't get Amazon.
Give the customer what they want: Today, those with a startup mentality will never romance the solution for the solutions sake. The first question every new solution provider is posed is "Is there a market for this?". The originator of the proposal is then required to present qualitative and quantitative data on why he or she thinks his solution will work. Shel and Robert failed to understand the Amazon startup mentality by attempting to run around this first hurdle. Instead they painted the question as rude (and therefore unanswerable). They failed to pitch blogging to Amazon.
This week has been a fruitful one for me. I met up with a possible business mentor over coffee. A father of successful startups, he left me with basic advice "At the end of the day, do a good job of what you have set out to do. Understand the needs of the customer, satisfy them. Don't worry about what the other guys are doing and try to spread yourself too thin".
On employee blogging: Employees do stupid things. Even the smart ones. If it is not in your job profile, you don't publicly represent the company. That is a privilege earned and not a right. Your blogging for yourself. And remember you signed an NDA.
An update: Werner shows that he has a sense of humor: Amazon Gets IM.