Jeff Bezos on Word-of-Mouth Power
Says Amazon's CEO: "If you build a great experience, customers tell each other." That, he believes, is better than any TV advertising
Amazon.com boasted one of the best-known brand names on the Internet almost from the time it opened its virtual doors nine years ago. But slowing growth and mounting losses as the dot-com wave crested in 2000 tarnished its reputation as a business. Chief Executive Jeffrey P. Bezos, however, never stopped pushing his obsession to please customers. Now, that persistence has paid off -- not only in recent profitable quarters and recharged growth but also in the value of Amazon's (AMZN ) brand.
According to the latest BusinessWeek/Interbrand survey, Amazon's brand ranking rose 22% last year. Bezos spoke recently with Robert D. Hof, BusinessWeek's Silicon Valley bureau chief, about what explains Amazon's brand resurgence. Following are edited excerpts from their conversation:
Q: How did you build Amazon's brand at the start?
A: We firmly believe that for us, the right way to build a brand is by delivering a great service. Customers learn about who we are as a result of interacting with us. A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well. People notice that over time. I don't think there are any shortcuts.
Q: How important is advertising to building the brand?
A: We don't do any television advertising, and we take all of the money that we would put into television advertising, and instead put it into things like free SuperSaver shipping [free shipping on most orders over $25], lower product prices, category expansion, and invention of new features.
We take those funds that might otherwise be used to shout about our service, and put those funds instead into improving the service. That's the philosophy we've taken from the beginning. If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.
Q: Even with all the publicity you got at the start, do you think word of mouth was the most important thing that built the brand early on?
A: Absolutely. The thing that we did early on is that we made it very easy for people to find very obscure products. That was something people remarked on. If you're not doing something that people will remark on, then it's going to be hard to generate word of mouth.
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