How Amazon Aims to Keep You Clicking

Maintaining good customer "experience" is key, even when it's an outside merchant making the sale

By Heather Green

A warehouse worker assembles orders in Lexington, Ky. John Chiasson

This year's list of customer service champs.

Last summer, Lisa Dias was poking around the Amazon.com (AMZN) Web site for books that could help her start a home business. The 45-year-old found a used workbook for would-be entrepreneurs that sounded promising and was described as "like new." The seller wasn't Amazon itself, but one of the merchants that market through its Web site. Still, Dias went ahead and dished out $24.95 for the paperback.

When the book arrived at her New Jersey home, though, it wasn't anywhere close to new. The worksheets were already filled in with someone else's scrawlings. She felt burned but didn't do anything about it until November. She first tried the merchant and didn't get any response. Then Dias called Amazon. The company immediately gave her a refund, without her having to return the book. She's still a bit baffled that Amazon paid her money the company never received in the first place. "I felt like they stood up for me," says Dias.

For the most part, Amazon has earned a reputation for strong service by letting customers get what they want without ever talking to an employee. Sales clerks are nonexistent. Orders ship with a few mouse clicks. Packages arrive on doorsteps quickly. It all happens with monotonous regularity even as the number of customers has doubled in the past five years to 88 million. But when things go wrong at Amazon—and they occasionally do—the company's employees get involved. That may be where Amazon stands out most markedly from other companies, and helps explain how the company earned the No. 1 spot on BusinessWeek's customer service ranking this year.

One recent February day in Manhattan, Jeff Bezos, Amazon's excitable 45-year-old founder and chief executive, sat still long enough to explain the ideas behind his company's approach. He talked about the distinctions Amazon makes between customer experience and customer service. The latter is only when customers deal with Amazon employees—and Bezos wants that to be the exception rather than the rule. "Internally, customer service is a component of customer experience," he says. "Customer experience includes having the lowest price, having the fastest delivery, having it reliable enough so that you don't need to contact [anyone]. Then you save customer service for those truly unusual situations. You know, I got my book and it's missing pages 47 through 58," he says, breaking into a booming laugh.

Fixing customers' problems builds loyalty with people like Dias, says Bezos. But it's also a good way to spot recurring issues that need to be addressed more systematically. Outside merchants, like the one Dias dealt with, are a prime example. For years, Amazon has allowed other retailers to sell through its Web site to broaden the selection of products it offers. But these companies can be an Achilles' heel. At eBay (EBAY), which also lets merchants sell through its site, there have been complaints about poor service and fraud.

QUALITY CONTROLS

So Bezos is trying something that no other retailer has been able to pull off: He wants to bring the quality of service from Amazon's outside merchants up to the same level as its own. The company has long let customers rate their experience with merchants, as they can on eBay. But Amazon also has instituted many internal safeguards to track the behavior of merchants. For instance, retailers have to use an e-mail service on the Amazon site to communicate with customers so Amazon can monitor conversations.