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✈️ Surprising Lessons From Amazon's "Customer Obsession"

✈️ Surprising Lessons From Amazon's "Customer Obsession"

Yong-Soo Chung
May 03, 2023

Welcome to First Class Founders, your favorite destination to learn proven strategies to start & grow your online business each week.

Here's what we've got for you on today's flight:

🚗 Nailing Your Customer Journey
🎁 Deep Dive into Loyalty Programs
🤯 Homeless to Self-Made Billionaire
💸 Revealing Urban EDC's Top Customers
👎🏼 How Amazon's Customer Service Failed

Get ready — we're about to take-off!

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✈️ Episode Itinerary

Jeff Bezos, Founder of Amazon, is worth $125 Billion.

And, the one thing he is famously known for is his "customer obsession." In fact, Amazon strives to be 'Earth's most customer-centric company.' And yet, my own experience revealed a different side of Amazon.

Today, I want to take a slight detour and talk about an incident that happened to me, which had me re-evaluating my understanding of good customer service. Particularly, since it has to do with my interactions with Amazon, which prides itself as the Earth's most customer-centric company.

My run-in with Amazon taught me five valuable business lessons. I will share with you both the journey that led me to this understanding and the lessons we can all learn from.

By the end of this episode, you'll have a firm grasp of a few key principles to help you treat your customers right.

Get ready to take notes... let's get down to business!

Surprising Lessons Learned From Amazon's "Customer Obsession"

Inside today's episode, you'll learn:

Amazon's Customer Obsession (2:19)
Communicate Issues Properly with Customers (6:15)
Design a User Journey That Makes Sense (8:03)
Who Owns the Customer Journey? (11:51)
Don't Lie To Your Customers (15:58)
Treat Your Loyal Customers Like Royalty, Not Crap (21:44)

💡 Newsletter Special: Today's episode is a bit of me ranting, so as a thank you for being a loyal newsletter subscriber, I want to do something special to give back.

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🥨 Growth Snack of the Week:

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John Paul Dejoria went from being homeless to becoming a self-made billionaire.

He's best known as a co-founder of the Paul Mitchell line of hair products and The Patrón Spirits Company. He's often described as a living example of the American Dream.

He often cites that one of the keys to his business success is to focus on selling to his potential customers just once.

Once he has a customer, he sells to them, repeatedly, over and over again.

In other words, John Paul Dejoria loves repeat customers.

And how do you nurture your customers to keep coming back to you?

Through incredible products, a great customer journey, and an amazing loyalty program.

Today, I'll dive deep into how I set up the loyalty program for my e-commerce company Urban EDC resulting in our top 20 customers' lifetime value (LTV) being over $20,000.

Let's get down to business!

Today's episode on Amazon got my wheels turning about customer loyalty. Why?

I'm easily one of Amazon's most valuable customers:

Low return rate
Prime membership
Customer for 20 years
Spent $36,708 in 2022 alone

My Lifetime Value (LTV) is easily over $100,000.

Heck, my entire business practically runs on supplies from Amazon.

Makes me a little sick knowing how much I spent with them.

One of the biggest lessons learned from today's episode is to treat your loyal customers like royalty, not crap. (21:44)

💡 Lesson: Treat your loyal customers like royalty, not crap.

Customer Lifetime Value at Urban EDC:

At my company Urban EDC, our top 20 customers have spent over $20,000 in lifetime value (LTV). Say whaaaat?!

Yes, it's true — here's the proof taken straight from my analytics dashboard:

Two of our customers have spent over $50,000 with us:

To put that into perspective, a new Tesla Model Y now costs $46,990.

So what is the biggest contributing factor to these crazy high numbers?

Our loyalty program.

Before I break down our loyalty program, let's dig into why you need should segment your customers and treat them differently.

It's All About Trust:

Imagine you meet someone new for the first time at a bar. You have a couple drinks and maybe a few good laughs here and there. But then, later that night, that same person asks you if they could borrow $100.

Would you say yes?

Now, let's say your childhood friend growing up asked you if they could borrow $100.

Now, would you say yes?

We make important decisions based on trust in our daily lives. So why would business work differently?

With each individual customer, you need to treat your customers differently. It's the way we build relationships with others.

Trust is the single most important factor when our team is deciding what to do with a tricky customer situation.

Say we shipped out a package and it was "lost" but the tracking says delivered.

What do we do? Should we blindly take our customer's word and ship out a replacement? Or should we dig deeper and investigate further?

These sticky situations are more common than you think.

Each situation is handled case-by-case based on trust.

We check how long they've been a customer, what their total lifetime value is, how many times they've ordered, past return rates, everything matters.

Breaking Down Urban EDC's Loyalty Program:

Now, let's dive into Urban EDC's loyalty program.

Our customers earn points by taking any of these actions:

Create an account: 200 points
Follow us on Instagram: 10 points
Like our Facebook page: 10 points
Make a purchase: 1 point for every $1 spent

And they can redeem them for gift cards:

$10 Gift Card: 200 points
$25 Gift Card: 400 points
$50 Gift Card: 700 points
$75 Gift Card: 900 points
$100 Gift Card: 1,000 points
$150 Gift Card: 1,300 points
$200 Gift Card: 1,700 points
$250 Gift Card: 2,000 points

Are there any math wizards out there?! If you calculate the discounts based on spend, the rewards get better the more you delay gratification.

This simple rewards structure has worked brilliantly for us.

But, the loyalty program doesn't stop here. We have another loyalty program for high spenders based on lifetime spend, our version of the high-roller tables.

Now, I invite you into our high-roller tables... the VIP Loyalty Program.

VIP Loyalty Program:

This one is quite special. Customers who make it this far are treated like royalty, because, well, they are! (Unlike how Amazon treated me from this week's episode!)

This loyalty program is based on lifetime spend and customers hit a certain status as they level up in their spend with us.

When a customer hits $5,000 lifetime spend, they unlock 24 hour early access to every single Gear Drop event each week.

Now, hold up. You might be thinking: "What's the big deal?"

Allow me to explain how our Gear Drop events work, first.

Each Wednesday, we drop a limited amount of gear on our site.

Like a school of sharks circling a juicy fat tuna, these gear-addicted middle-aged men sit at their desk pressing F5 on their keyboard frantically as if their lives depended on it.

Heck, one time, a man called me on the phone. "Hello?"

He yelled into the phone: "I just told all 4 of my employees at my law firm to stop working and refresh their page to get this darn $500 flashlight... and I still didn't get it. You sure you even had stock??"

Yes, sir, we did. They sold out in 2 seconds. Better luck next time.

If you want to see it in real-time, the frenzy starts at 12pm Pacific Time. Feel free to check it out here but better watch your fingers!

Now, imagine getting 24 hour early access to this frenzy. Yeah, now we're talking.

This is a huge perk that is highly coveted.

Once our customers hit $5,000 in spend, they not only unlock early access, but they enter our VIP loyalty program, where their points start to multiply based on their status level:

Stainless Status: Spend over $5,000Unlock Early Access (24 hours)

Brass Status: Spend over $6,0001.1x Points Multiplier on Purchases

Copper Status: Spend over $7,5001.2x Points Multiplier on Purchases

Bronze Status: Spend over $9,5001.3x Points Multiplier on Purchases

Titanium Status: Spend over $12,0001.4x Points Multiplier on Purchases

Zirconium Status: Spend over $15,0001.5x Points Multiplier on Purchases

Damascus Status: Spend over $18,5001.6x Points Multiplier on Purchases

Mokume Status: Spend over $22,5001.7x Points Multiplier on Purchases

Superconductor Status: Spend over $27,0001.8x Points Multiplier on Purchases

Timascus Status: Spend over $32,0001.9x Points Multiplier on Purchases

Meteorite Status: Spend over $37,5002x Points Multiplier on Purchases

And this is how we've been able to nurture our top 20 customers spending over $20,000 with us. As crazy as these numbers seem, our loyalty program is a hit.

In fact, I was invited to a wedding for one of these 20 customers two years ago.

You know something's working right when you are invited to a wedding for one of your very own top customers!

How to Reward Loyalty As a Creator:

I know what you're thinking: "Yong-Soo, this might work well for e-commerce, but what about for creators?"

I got you.

Here are a few ways you can incentivize loyalty for your customers:

Free coaching call session
Partnerships or collaborations
Discounts or gifts on your courses
Support their work via cross promotions

Feel free to get creative!

Oh by the way, did I already mention today's newsletter special as a thank you gift for your loyalty?

For the next 2 weeks only, get 3 months of First Class Founders Membership for FREE.

You can claim it here.

💡 Lesson: Support your loyal audience by rewarding them with special perks.

That's it! Try this out yourself and let me know on Twitter what you think! (And don't forget to share this snack with your friends!) Hope you enjoyed this week's Growth Snack! 😋

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