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The Amazon Guide to Marketing Budgets

Marketing expenses are not evilBusinessweek has a fascinating excerpt from Brad Stone’s new book about the growth of Amazon, “The Everything Store: Jeff Bezos and the Age of Amazon”.

In particular, one small highlight stood out to me:

“New hires get a backpack with a power adapter, a laptop dock, and orientation materials. When they resign, they’re asked to hand in all that equipment—including the backpack. These practices are also embedded in the sacrosanct leadership principles:

We try not to spend money on things that don’t matter to customers. Frugality breeds resourcefulness, self-sufficiency, and invention. There are no extra points for head count, budget size, or fixed expense.”

This speaks to the heart of what I was talking about the other day in discussing why “more” isn’t always better. More is a good thing for your business, but most often when it’s also good for your customers.

Amazon—and Walmart and Southwest Airlines and Ikea and Charles Schwab and others—differentiate themselves by being “low-cost leaders,” serving their customers’ needs by focusing on offering the best price possible. And they succeed at it because the don’t waste money.

By the same token, companies like Apple, BMW, Mercedes-Benz, and Tiffany’s differentiate themselves with, to borrow a phrase, “insanely great” products. But look at their profit margins and you’ll see that they don’t waste money either. Yes, they spend a lot on developing products and educating the market about those products. But they focus their spending ultimately to better serve customer needs.

There’s no one way to serve your customers (serious business thinkers like Michael Porter
and Michael Treacy & Fred Wiersma argue there are at least three).

But companies usually go wrong when they forget why they do what they do. Political battles, padding headcount, “empire building,” and all that nonsense usually have nothing to do with serving customers more effectively. What separates the very best from most every competitor is that relentless focus on customers, no matter what it costs.

If you’re interested in learning more about the future of e-commerce and marketing via the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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