Writing letters is hard. I imagine writing letters that you know will be read (and read into) by literally millions of people is even harder. The trick is the opening. If you can nail the opening sentence and plant the seed of your main point with the reader you are well on your way. Jeff Bezos crushed this in his letter to shareholders today. How? Before we do that let’s take a look at an excerpt from Amazon’s 1997 original shareholder letter:
Obsess Over Customers
“From the beginning, our focus has been on offering our customers compelling value. We realized that the Web was, and still is, the World Wide Wait. Therefore, we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store (our store would now occupy 6 football fields), and presented it in a useful, easy-to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience, and in 1997 substantially enhanced our store. We now offer customers gift certificates, 1-ClickSM shopping, and vastly more reviews, content, browsing options, and recommendation features. We dramatically lowered prices, further increasing customer value. Word of mouth remains the most powerful customer acquisition tool we have, and we are grateful for the trust our customers have placed in us. Repeat purchases and word of mouth have combined to make Amazon.com the market leader in online bookselling.”
This paragraph (and the ethos it outlines) is the key to Amazon’s success. Actually, it is the key to every company’s success but this often gets overlooked, oftentimes ironically by those who cover the stock market. How much stuff people buy is what drives companies, the markets, and ultimately the economy. Policy decisions (interest rates, regulations, etc.) serve to slow down or speed up momentum, financial data (earnings, revenue, etc.) serve to keep tally of what has been bought but ultimately how much stuff people are buying determines the health of the market. From whom they buy it determines which companies thrive and which fall by the wayside. Amazon has understood this from day one.
This brings us back to this today’s Amazon shareholder letter’s opening sentence:
To our shareowners:
The American Customer Satisfaction Index recently announced the results of its annual survey, and for the 8th year in a row, customers ranked Amazon #1.
Jeff Bezos chose to lead his letter with a simple statement of fact. In reading this open three things dawned on me:
1– Amazon is reconfirming the power of customer satisfaction in financial results
2– ACSI is the recognized leader in the measurement of customer satisfaction in the mind of the world’s most powerful CEO
3– I’ve been preaching the power of customer satisfaction as an investment factor as well as the power of ACSI’s methodology for 2 years. I’m basically the Jeff Bezos of the ETF industry.
His open was powerful because it shows a business model coming “full circle”. Amazon’s business premise was “If we obsess over the satisfaction of our customers and focus on this as our core business philosophy we will have success selling a shit ton of books.” In the words of several of our recent presidents’ “mission accomplished”. The real lesson of Amazon’s customer focus is how limitless this value is and how well it has translated across business lines. Amazon’s success in commerce, web services, entertainment, etc. has its basis more in Amazon’s ability to provide a superior experience than a superior product. This is a good lesson for any business.
As for me this letter puts a little fuel in my tank. We at Exponential have also stuck our stake in the ground of customer satisfaction. Literally in our relationship with the ACSI and the American Customer Satisfaction ETF (ticker: ACSI) but more importantly in our approach to business. Satisfied customers are more likely to stick around during challenging periods of performance. Satisfied customers are more likely to refer our funds to other advisors. Satisfied customers will lead to Exponential becoming a dominant ETF brand. This is the ethos we live by and while we know it to be our best path forward it is nice to be reminded of this by the most successful company on the planet. Take it from me. After all, I read somewhere I am basically the Jeff Bezos of ETFs.
Posted by: Kevin Quigg 4/19/2018