The Most Important Person in the Room
It is somewhat of an irony that the most important person in the Amazon conference room when Jeff Bezos holds his staff meetings is an empty chair. Because this empty chair, aptly designated 'The Empty Chair' (Anders, 2012), represents the customer of their wholely online retail business - a customer whom they never really get to meet, whether as a representation at a meeting or as a real customer visiting the store and making purchases. Yet it is this very customer-driven approach that serves as the basis for everything done at the self-proclaimed 'Earth's Most Customer-Centric Company', which has seen Amazon grow and evolve from a simple online bookstore, to the Fortune 500 success that it is today.
The Culture of Metrics
'Amazon tracks its performance against about 500 measurable goals, [and] nearly 80% [of those] relate to customer objectives' (Anders, 2012). By recording every move an Amazon visitor makes, from his/her mouse clicks to the amount of time spent, as well as methods of searching for items, an enormous amount of data is collected and crunched - thus giving the company a window of information about its customers' behaviours, likes and dislikes. By using this knowledge to rethink and review its business strategies, shape its current business structure and methods, as well as innovate for the future, this is the basis of Amazon's 'Culture of Metrics'.
This is what Amazon looked like in 1995:
From human reviews to software-based recommendations
Driven by sharp falls in computing costs, the world has seen a rise in the application and use of computing and communications technologies in the recent decades, leading to the rapid development of applications relevant to the needs of users for business and economic activities (Houghton & Sheehan, 2000). Observing that most visitors used the search tools rather than relying on the editorial reviews originally provided (Chaffey, 2012), Amazon quickly learned to put the power in the hands of the customer. The result is their signature recommendation system.
This signature recommendation system uses metrics data that provides Amazon customers with the knowledge of what other purchases customers with similar interests have made, giving them a more measured recommendation system based on codified, statistical information.
Even third-party sellers have managed to gain certain access to these figures as shown in this instructional video:
Data is King at Amazon
'We are comfortable planting seeds and waiting for them to grow into trees,' says Bezos (Anders, 2012).
What Bezos is referring to is the 'data-driven customer focus', using the insights provided by metrics, that allow him to take risks innovate and experiment with new implementations for the Amazon shopping experience, 'secure in the belief that he's doing the right thing' (Anders, 2012). Every aspect from homepage changes to different algorithms for recommendations are closely observed and tested for effectiveness. If the metric statistics for a particular change show desirable improvement, it is implemented as a new feature.