You need to set up and organize so that you can do as many experiments per unit of time as possible. If doing an experiment costs $100 million and takes three years, well, you’re not going to be able to do very much innovation.
Jeff Bezos – Amazon.com
Amazon’s behavioral segmentation/targeting procedure’s are an excellent sales promotion campaign. I have recently become a customer of Amazon, purchasing music in MP3 format (interestingly, Amazon’s client side software, Amazon MP3 Downloader, is adept at recognizing the preferential music playback format and automatically loads the content to my Window’s Media Player). After the first purchase, the landing page became “Recommendations for Gregory.”
After a series of purchases, the recommendations became amazingly on point. Older albums that I had owned in the past were listed, and newer releases that I was unfamiliar with I found to be intriguiging, much in line with my tastes. I would surmise that Amazon does a tremendous amount of data mining to achieve such behavioral segmentation results. One can only wonder at the investment in software programming that Amazon expended, yet their efforts, at least in my case, have paid off handsomely; intially I had only planned to purchase a single album, and to date have bought over $100.00 in product. Given that I am an informed insider to such upsell techniques, I presume that the typical customer must also be induced to repeat purchase. Thus, Amazon’s behavioral segmentation/targeting has to be considered as a prime example.
- Is the marketing strategy of focusing on long-term rather than short-term goals a wise one?
I would have to say yes. Long-term goals are an investment. I have in the past been employed in many sales positions, including marketing my own services as a professional performer (magic illusions). At one point in the mid-’70’s, I sold new and used cars. That was truly an educational experience. I discovered two distinct types of salesmen: those focused on the long-term, and those focused on the short-term. The former tended to be established professionals, and after time developed many repeat customers. The latter were known as “road runners”; these were rather unscrupulous characters that would hire on to an agency and sell to family, friends, etc., and after exhausting their client base, would move to another dealership and restart the process with a different brand. Those focused on short-term goals rarely lasted in the business, while those focused on long-term goals found lasting success. In a broader sense, I believe the same applies to eCommerce concerns, and for the same reasons.
- What factors do you think helped Amazon.com eventually yield a profit?
Several factors assisted Amazon in their search for monetization. Primarily was Bezo’s early awareness of what many are trying to learn in today’s market, that of successful Social Media Marketing campaigns. By creating a “community minded” business model, he developed and nurtured a client base that became fiercely loyal. Rule #1 is that everyone wants a part in the decision-making process, however small that role may be. Additionally, Amazon focused on growth rather than immediate profitability. Here again we witness the wisdom of long-term vs. short-term goals.
- When do current monetary losses start to negatively affect future profitability?
When the losses out-distance the ability to recover them. A prime example seen in the past has been that of online grocery delivery services; invariably, each failed due to an inability to successfully stock and sell perishable items, particularly those with a short shelf life. Inflexibility can be another problem; refusal to change business practices in the face of obvious failure. Nature has historically taught that those species unable to evolve with changing conditions tend to go extinct.
- Can a business have a large customer base and still fail financially?
In the event that said customer base is failing to generate profit via adequate sales, either new or repeat business, then yes, without question. Many niche markets can adequately keep a business afloat when properly engaged, where mass markets offer no guarantee of success when improperly managed.
- Would you adopt for yourself, or recommend to others, this marketing strategy?
Given that Amazon’s tenaciousness and long-term outlook, as well as their willingness toward community engagement, by all means. One of the most important considerations that must be made when establishing an eCommerce concern is the understanding that there is no magic bullet. One must be prepared for the long haul, willing to change with current market conditions, and posess solid business and revenue models to achieve profitability. The dot-com boom proved that there are no quick fixes.