In the previous three chapters, you learned about engaging consumers and communicating customer value through integrated marketing communication and about four elements of the marketing communications mix: advertising, publicity, personal selling, and sales promotion. In this chapter, we examine direct marketing and its fastest-growing form: digital marketing (online, social media, and mobile marketing). Today, spurred by the surge in internet usage and buying as well as rapid advances in digital technologies—from smartphones, tablets, and other digital devices to the spate of online mobile and social media—direct marketing has undergone a dramatic transformation. As you read this chapter, remember that although direct and digital marketing are presented as separate tools, they must be carefully integrated with each other and with other elements of the promotion and marketing mixes.
Let’s start by looking at Amazon, a company that markets only directly and digitally. In little more than 20 years, Amazon has blossomed from an obscure dot-com upstart into one of the most powerful names on the internet. According to one survey, an amazing 40 percent of people turn to Amazon.com first when searching for or buying products online. How has Amazon become such an incredibly successful direct and online marketer in such a short time? It’s all about creating customer engagement, value, and relationships through personal and satisfying online customer experiences. Few online marketers do that as well as Amazon.com.
AMAZON.COM: The Poster Child for Direct and Digital Marketing
When you think of shopping online, chances are good that you think first of Amazon. The online pioneer first opened its virtual doors in 1995, selling books out of founder Jeff Bezos’s garage in suburban Seattle. Amazon still sells books—lots and lots of books. But it now sells just about everything else as well, from music, electronics, tools, housewares, apparel, and groceries to fashions, loose diamonds, and Maine lobsters. Most analysts view Amazon as the model for direct marketing in the digital age.
From the start, Amazon has grown explosively. Its annual sales have rocketed from a modest $150 million in 1997 to $107 billion today. During just the past five years, Amazon’s revenues have more than tripled. On last year’s Cyber Monday alone, Amazon.com sold approximately 52 million items to its 300 million active customers worldwide—that’s more than 600 items per second. Currently, Amazon is the nation’s second-largest retailer, trailing only Walmart.
What has made Amazon such an amazing success story? Founder and CEO Bezos puts it in three simple words: “Obsess over customers.” To its core, the company is relentlessly customer driven. “The thing that drives everything is creating genuine value for customers,” says Bezos. Amazon believes that if it does what’s good for customers, profits will follow. So the company starts with the customer and works backward. Rather than asking what it can do with its current capabilities, Amazon first asks: Who are our customers? What do they need? Then it develops whatever capabilities are required to meet those customer needs.
At Amazon, every decision is made with an eye toward improving the Amazon.com customer experience. In fact, at many Amazon meetings, the most influential figure in the room is “the empty chair”—literally an empty chair at the table that represents the all-important customer. At times, the empty chair isn’t empty but is occupied by a “Customer Experience Bar Raiser,” an employee who is specially trained to represent customers’ interests.
Amazon’s obsession with serving the needs of its customers drives the company to take risks and innovate in ways that other companies don’t. For example, when it noted that its book-buying customers needed better access to e-books and other digital content, Amazon developed the Kindle e-reader, its first-ever original product. The Kindle took more than four years and a whole new set of skills to develop. But Amazon’s start-with-the-customer thinking paid off handsomely. The Kindle is one of the company’s best-selling products, and Amazon.com now sells more e-books than hardcovers and paperbacks combined. What’s more, the company’s growing line of Kindle Fire tablets now leads the market for low-priced tablet computers. Thus, what started as an effort to improve the customer experience now gives Amazon a powerful presence in the burgeoning world of digital, mobile, and social media. Not only does the Kindle allow access to e-books, music, videos, and apps sold by Amazon, it makes interacting online with the digital giant easier than ever. Customers use their Kindle tablets to shop at Amazon.com and interact with the company on its blogs and social media pages.
Amazon wants to deliver a special online experience to every customer. Most Amazon.com regulars feel a surprisingly strong relationship with the company, especially given the almost complete lack of actual human interaction. Amazon obsesses over making each customer’s experience uniquely personal. For example, the Amazon.com site greets customers with their very own home pages, complete with personalized recommendations. Amazon was the first company to sift through each customer’s past purchases and browsing histories and the purchasing patterns of customers with similar profiles to come up with personalized site content. Amazon wants to personalize the shopping experience for each individual customer. If it has 300 million customers, it reasons, it should have 300 million stores.
Visitors to Amazon.com receive a unique blend of benefits: huge selection, good value, low prices, and convenience. But it’s the “discovery” factor that makes the buying experience really special. Once on the Amazon.com site, you’re compelled to stay for a while—looking, learning, and discovering. To create even greater selection and discovery for customers, Amazon allows competing retailers—from mom-and-pop operations to Marks & Spencer—to sell their products on Amazon.com through the Amazon Marketplace, creating a virtual shopping mall of incredible proportions. The broader selection attracts more customers, and everyone benefits. Last year, Amazon customers bought billions of items from tens of thousands of third-party Amazon Marketplace sellers worldwide, accounting for close to 50 percent of Amazon’s unit sales.
Amazon also makes the order delivery experience a whiz with its Amazon Prime service. For $99 a year, Prime members can receive free two-day shipping for all eligible purchases plus unlimited streaming of movies and TV shows with Prime Instant Video and access to borrowing e-books from the Kindle Owners’ Lending Library. Amazon is moving rapidly toward same-day delivery. It recently launched Prime Now, which offers speedy two-hour free delivery of tens of thousands of items in several large metropolitan areas (or one-hour delivery for a $7.99 fee). “In the past six weeks my husband and I have made an embarrassing number of orders through Amazon Prime Now,” says one excited customer. “It’s cheap, easy, and insanely fast.”
Amazon does much more than just sell goods online. It engages customers and creates direct, personalized, and highly satisfying customer online buying experiences.
More than just a place to buy things, Amazon.com has become a kind of online community in which customers can browse for products, research purchase alternatives, share opinions and reviews with other visitors, and chat online with authors and experts. In this way, Amazon does much more than just sell goods online. It engages customers and creates direct, personalized customer relationships and satisfying online experiences. Year after year, Amazon places at or near the top of almost every customer satisfaction ranking, regardless of industry.
Based on its powerful growth, many analysts have speculated that Amazon will become the Walmart of the web. In fact, some argue, it already is. Although Walmart’s total sales of $482 billion dwarf Amazon’s $107 billion in sales, Amazon’s online sales are nearly eight times greater than Walmart’s. And Amazon’s e-commerce revenue is growing at a faster rate than Walmart’s. So online, it’s Walmart that’s chasing Amazon. Put another way, Walmart wants to become the Amazon of the web, not the other way around. However, despite its mammoth proportions, to catch Amazon online, Walmart will have to match the superb Amazon.com online customer experience, and that won’t be easy.
Thus, Amazon has become the poster child for direct and digital marketing. “The reason I’m so obsessed with . . . the customer experience is that I believe [our success] has been driven exclusively by that experience,” says Jeff Bezos. It all starts with customer value. If Amazon creates superior value for customers, it will earn their business and loyalty, and success will follow in terms of company sales and returns. As Bezos puts it, “When things get complicated, we simplify them by asking, ‘What’s best for the customer?’ We believe that if we do that, things will work out in the long term.”
MANY OF THE MARKETING and promotion tools that we’ve examined in previous chapters were developed in the context of mass marketing : targeting broad markets with standardized messages and offers distributed through intermediaries. Today, however, with the trend toward narrower targeting and the surge in digital and social media technologies, many companies are adopting direct marketing , either as a primary marketing approach or as a supplement to other approaches. In this section, we explore the exploding world of direct marketing and its fastest-growing form—digital marketing using online, social media, and mobile marketing channels.