In this case study, you will get an insight on the business model of Amazon, its CRM applications and benefits. The success of Amazon is mainly because of its world class CRM strategy and its CRM tools. Amazon is preferred by millions of customers for online shopping as it provides them with good user experience and easy options to purchase a product. Though there is higher degree of competition, Amazon is able to sustain in the industry because of its efficient and well managed CRM strategy and application.
Amazon online shopping is the preferred by most of the customers as it provides whatever they need in a single website. This massive online reputation is often called as Amazon effect referring success of CRM function of the company. The CRM president of Amazon has referred that he doesn’t want to talk to anyone to run his business but he can continue providing a good experience to customer and they have accepted his strategy.
Effective reviews and product recommendations from clients based earlier purchases eases the shopping tension and provides a better shopping experience to end users both on kindle and site devices. This value addition has helped Amazon to come up with innovative strategies and attract the majority of customer base. Amazon has huge customer base and highest customer retention because of its CRM applications.
Amazon is one of the most popular E-commerce companies selling A to Z products online to millions of customers across the globe. The head office is in US. Initially Amazon started as a book retailer but now it has extended its wings to multiple product range featuring products from its own store and also many online market places. Kindle device is created by Amazon and it serves as an electronic reading device and is most popular among book readers.
Amazon has a diverse portfolio and it has acquired many product lines and has designed its own CRM to manage the multivariate business empire
Fig 1 : Product portfolio of Amazon
The biggest strength of Amazon is the diversified product line and differential strategy to establish a very strong brand image. The Amazon Company has targeted different segments which is another feather in cap for the effectiveness of the CRM practices.
Before we discuss about the CRM of Amazon, it is very important for us to understand the value chain and the SWOT analysis of Amazon market place.
Value chain of Amazon
The Value chain of Amazon has following stages namely the Supplier, Distribution, Amazon.com, Delivery etc. Amazon acquired print on demand company “Book Surge” and renamed it as Clear space. They clearly executed their distribution strategy using 65 fulfillment centers. Amazon had its next evolutionary step to own a customer account and connect with third party sellers. It has its own delivery network and has introduced home grocery deliveries in the name of “Amazon Fresh”.
SWOT analysis on Amazon Business model
The SWOT Analysis on Business model of Amazon reveals that the customer service, consistency and diverse product offerings are critical strengths for Amazon business model. The weakness will be the probable loss incurred due to free shipping options and possibility of confusing a brand with another.
Huge opportunities for Amazon in the Global Expansion (BRIC ) and Video on demand segment to project its success stories and acquire more revenue generation prospects. The threats are maturing E-commerce ventures and loyalty gained by certain Brick and Mortar stores.
CRM Journey of Amazon
It is quite evident that the CRM software is the basic element contributing to all these wonderful features of Amazon. Amazon has built in-house CRM software customized with their specific requirements. The CRM software of Amazon is called e-CRM (Electronic Customer Relationship management).
e-CRM software is designed to capture the customer data like personal details, demographics, interests and previous purchases for better understanding. It can be used for instant customization of user experience on site.
The major advantage of e-CRM is that it is a self reliant tool handling all the queries of the customer before reaching a stage where there is any requirement of human intervention. For instance, it is possible for each and every customer to access their order history and track their order progress whether it is in transit or it is out for delivery or whether it is delivered etc.
The return policy is also automated and it has reduced the need for intervention of a human element and is regarded as a cost effective solution without compromising on customer satisfaction.
Fig2: e-CRM of Amazon
CRM focus areas of Amazon – e CRM buzzwords
- Acquisition and retention of customers
- Ensuring customer satisfaction by creating customer delight experiences and extending them as loyal customers
- Customer loyalty rewards
- Customer Lifetime Value (CLV)
- Usage of latest technology, systems and databases.
- Service excellence and recovery
- Effective call center operations
- Elimination of redundant and unprofitable customers.
The below info graphic explains the CRM of Amazon in detail emphasizing their customer first investment concept. The key focus areas will be customer, innovation and frugality.
Elements of e-CRM software of Amazon
The key elements of e-CRM of Amazon are Database marketing and Relationship marketing.
Relationship marketing has the following features:
- Marketing after seeking permission from customers.
- Loyalty ladders and their tracking process.
- Strategy for establishing contacts.
Database marketing will include marketing strategy revolving around the data captures and interpreting the outcomes of collecting information.
Applications of e-CRM
The consolidated list of application of e-CRM is listed as below:
- Customer development by designing an effective website.
- Mass communication.
- Managing the email listing of customers.
- Offering online service facilities.
- Ensuring service quality by hiring experienced professionals for call center management.
- Enabling the email marketing campaigns.
- Having easy data mining options.
- Expertise in service to multi channel customer to get better results.
Benefits of e-CRM software tool
Data collection form in e-CRM tool
First step in ordering a product in Amazon is to create accounts and the customer has to give details so that it can be updated in the database. All the required details including delivery information can be retrieved when the customer revisits and orders and it saves the time of the customer. This also helps Amazon to execute the targeted marketing by mailing the offers and promotions to the customers based on their purchase history.
Personal data storage in e-CRM tool
The customer experiences ease of purchase because of the CRM tool. The database management is excellent in e-CRM as all the personal, payment details and address are linked with an individual customer account in Amazon. This facilitates quick purchase options for the customers saving his /her time and energy.
The return process in Amazon is designed in a professional way and returns process is completely online and there is no need for the customer to speak to any customer service representative. The CRM software helps in addressing customer grievances in a quicker and efficient manner.
Starting from personal accounts, to storage, payments and recommendations, the Kindle products and experience is more user friendly because of the e-CRM software tool of Amazon.
Sales pitch using e-CRM
Amazon is regarded as pioneer in featuring products based on demand of the customer. Amazon has designed an option of displaying recommendations to the customers based on their past purchases and buying preferences. Recently Amazon also sends out signals to buyers on the pattern of purchase behavior of other customers as well with the caption “customers who bought this item also bought”.
This is a perfect business pitch and it helps in increasing the sales and revenue without pressurizing the customers. This sales pitch is only possible because e-CRM from Amazon.
The working of e-CRM tool is amazing as it revolves around the dialogue or trilogue with customers by providing them with relevant options for purchase, quoting accurate details and providing them access to the payment gateway process. e-CRM provides an easy shopping experience to the customer at their doorstep creating the magic of customer satisfaction.
This case study about Amazon provides a clear insight on the role played by CRM software in business expansion, profit maximization and customer satisfaction.