Amazon’s Bezos: Losing Money Is Okay, So Long As The Customer Is Happy

April 13, 2013

For a multi-billions dollar company one would assume being able to articulate how you’re both immediately profitable and making shareholders a great deal of money would be high on the priority list. Not the case for Amazon’s CEO Jeff Bezos who explains to shareholders that caring for customers over shareholder profits can be, well, profitable.

That’s a hard sell considering Amazon lost $39 million in the fiscal year of 2012.

But Bezos emphasizes the need to be a proactive, customer oriented, company in his annual letter to Amazon shareholders:

When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader.

One could point two Amazon Web Service, the company’s cloud offering, as an example. The product, as Bezos outlines, launched 159 new services and features in 2012 alone. That alone is impressive enough, but the service also actively monitors a user’s account, informing them of best practices and how to save more money all in an arena it dominates.

And it’s the money aspect that Bezos really drives home. He’s proud that Amazon is actively going out of its way to either be the best deal for customers or, literally, their money back. For example, Amazon’s automation system keeps an eye out for sub-par performance, and, in one instance among many, found that its video streaming service was preforming sub-par for a customer. That customer got their $2.99 back without any questions. As All Things D notes, that customer was Henry Blodget, founder of Business Insider. While it’s true Blodget and Bezos go way back and still interact (Bezos just invested $5 million in Blodget’s Business Insider website) it’s still an impressive feat.

Books could, and are, written about how important customer service is in business, but regularly telling investors that losing money to build a loyal base may be uncomfortable for some. The question, then, is can shareholders hold out long enough for both their interests and the interest of their customers align?

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