CRM for Hotels

Best Practices: Customer Relationship Management According to Amazon.com. Part I

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2 March 2012 at 11:00, by

Amazon

In my previous post, “Journey to the Center of CRM” we looked at the three main components of CRM: operational, analytical and collaborative. Today I will give an example of an effective data storage and proper data analysis as the basic elements that a business uses to undertake sales, marketing and services. My focus is the most visible part, or the sales experience that Amazon.com offers to its clients as an example of excellence in cross sales and up-selling. What follows is a study on the main points of client relations that have converted this business into a model of cross sales.  I have divided the points into three categories for easier analysis:

  • Basic elements
  • The search and sale process
  •  Post-sale

1. Basic elements

Along with very competitive prices and a great variety of products, another fundamental element is the recommendations algorithm, or item-to-item collaborative filtering, as well as the architecture and usability of the website. The first element is essential for offering appropriate recommendations, while the second facilitates the process of acquiring additional products. These two elements allow for the purchase of more products, thereby gaining more users and more product providers. This in turn generates even more cross-selling, a greater variety of products and more users. Customers buy, comment or simply visit the website, and Amazon can make effective recommendations.

1.1 Recommendation Algorithm

This is the basis for the personalization of the website, where recommendations and special deals are offered, depending on the customer. Two elements distinguish the algorithm used by Amazon. The first not only analyzes the data but can make recommendations automatically and in real time. The second deals not only with accumulating similar customers, but finding similar products, based on previous searchers both for that same user and all others, taking in pages visited, wish-list products, comments and purchases.

1.2 Website architecture and usability

It is interesting to see how the elements of the initial web page are designed in a way that makes it extremely easy and intuitive to both search for and buy products. On the upper left part of the page, one can search for products by category or simply enter them, and to the right is the shopping cart and the wish list. The recommendations, offers and deals are clearly separated from the search box, allowing rapid access to the customer who knows what he wants to buy and does not want waste time. As a result, the perception is not one of a bombardment of products to sell more, but rather of an additional service. A second important element is the easy navigation between the shopping cart for purchases and the search for other categories. There is a great flexibility that allows for the addition of different products to the cart where they can be saved, while one returns to search for more and subsequently add or subtract products in the cart. The client can return days later and cancel or confirm those items.  Moreover, there is a “continue” box suggested at the bottom of the cart (in the product search!), where it is explained that “continue” does not mean “pay” but that you can review the cart again, before paying. What results from this incredible flexibility is that users add a larger number of products to the purchase list, a list that continually shows (to the client, but more importantly to Amazon itself) the desired products, even though in the end they do not all end up being bought.

2. The search and sale on the website

To be effective, a cross-selling policy has to offer the customer an added value that the customer perceives as such. That added value ranges from the rational to the irrational. The client can perceive value in one extreme as much as the other. One can highlight three categories of “value” in Amazon. The first is the great personalization of recommendations offered, suggestions that can help save time in some cases or in others can introduce needed products that the customer did not know even existed. The second category of “value” is the tangibility of all the special offers, discounts and bargains. The third category is the way in which the recommendations, products and offers are presented to the client.

And now the most interest part has arrived. In the next post I will talk about the strategy behind Amazon’s personalization of recommendations and offers, and the importance of “how” and “when” to present those recommendations.

Idiso Digital

Idiso Digital

Marketing & Distribution Services

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