Amazon is one of the most successful companies in history. The tech giant, which generated $100 billion in profits in 2015 alone, is the largest online retailer and fourth most valuable public company in the world.
So what makes Amazon such an incredible success? Given the breadth of their offering — over 300 million items —, it’s obviously not a unique product.
Amazon got to where it is today by prioritizing one thing above everything else: the customer experience.
Banks should learn from Amazon’s example to improve the banking customer experience and build loyalty. Starting with their growth strategy.
Long-term gains > short-term gains
As surprising as it sounds, Amazon did not turn a profit for the first 4-5 years. Although this initially frustrated shareholders, CEO Jeff Bezos stood by this strategy in a 1997 letter:
“We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions…. We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.” – Jeff Bezos
Amazon understands what many companies don’t: Providing an incredible customer experience pays dividends in the long run. And Amazon is still reaping the benefits of this strategy today.
Banks should follow in Amazon’s footsteps. Although it may be tempting to aim for short-term market gains, the problem with this strategy is that the competition will eventually catch up. And when they do, there’s only one way to stand out: with an incredible customer experience.
Banks that prioritize the customer experience today will reap long-term benefits for years to come.
Personalization breeds loyalty
Amazon embodies the mantra know your customer. The company uses machine learning algorithms to understand each customer’s preferences and suggest relevant products and services that match their interests. This strategy is so successful, Amazon recently reported that 35% of its revenue is generated from its product recommendation system.
Banks need their own version of Amazon’s “Recommended for You” feature. By better understanding customer purchase histories and preferences, banks can provide the same kinds of personalized product recommendations that convert sales and increase customer satisfaction and loyalty. Banks can use the same kind of AI algorithms to analyze customer transaction data and glean new insights about customer purchase habits and life events.
Be a one-stop banking shop
Another driver of Amazon’s incredible success is the sheer breadth of its product offering. The company sells everything from groceries to hardware to children’s toys and everything in between, even offering its own line of products, AmazonBasics.
And what Amazon doesn’t offer, it enables partner merchants to sell through the Amazon Marketplace. What this means is that customers almost never need to shop elsewhere. They can buy (almost) literally everything they need on Amazon.
Banks can capture more market share by providing a wide variety of products and services like Amazon does. But that doesn’t mean they need to build every product on their own. Like Amazon’s Marketplace, banks can partner with other financial institutions to provide products and services they don’t offer internally. By doing this, they can become a central hub where customers can get all their banking services.
Banks like UK challenger Starling Bank are already doing this. Earlier this year, Starling Bank partnered with fellow UK fintech firm TransferWise to give customers access to affordable international money transfers.
An incredible customer experience starts with omni-channel
When it comes to incredible customer experiences, Amazon sets a very high bar. Not only can customers access Amazon on any device (from a laptop or tablet, mobile phone, or even the Amazon Echo), but they can also switch devices and maintain the same seamless shopping session. Customers don’t need to sign in again or repeat actions after switching devices. Amazon makes the shopping experience effortless wherever their customers are.
The same is true of their customer service. When customers have a question or a problem, they can instantly reach a customer service agent by phone, email, or live chat. And in every channel, Amazon’s customer service is legendary. Ask any Amazon customer why they buy from Amazon, and almost everyone will tell you a story about a great experience they had with Amazon’s customer service.
Banks are increasingly recognizing the value of this kind of customer-centric, omni-channel service, but very few are actually delivering on the promise. This needs to change, and soon.
Banks need to step up their game
Today, with tech giants like Amazon, Apple, Google and Facebook providing seamless, personalized experiences, customer expectations are on the rise. Companies have to keep up with these rising expectations, or their customers will go elsewhere.
This is especially true for banking. A recent survey found that 1 in 3 banking customers would be willing to switch banks in the next 90 days, and 73% would be more interested in new financial service products from tech companies like Amazon than from a traditional bank.
To beat this trend, banks need to offer Amazon levels of ease and personalization.
Of course, this kind of digital transformation takes time, hard work, and unwavering dedication to customer-centricity, but the end result will be worth it. Banks that take the Amazon approach will enjoy Amazon-level success.