Shortly after enjoying the most lucrative holiday shopping season in its short history, the world of online commerce experienced two commercial events which may be even more important to its future.
Amazon.com's cooperative advertising program and HotJobs.com's Super Bowl ad offer two starkly contrasting views of customer management, foreshadowing different strategies that will likely have a profound impact on the electronic marketplace.
Amazon has made itself into one of the most popular destinations on the Internet by offering a huge array of books without parking lot hassles and cash register lines. In addition, site visitors have come to rely on the reviews and recommendations of the site's staff. In such areas as "What We're Reading" and "Destined for Greatness," the site offers advice that is supposed to be candid and free from commercial influence. And until recently it was.
Amazon launched a new cooperative advertising program in which book publishers paid the site for favored treatment of their titles. For fees as high as $12,500, such publishers as Random House, IDG Books Worldwide and Simon & Schuster bought the online equivalent of front-table space or shelf-end spots in bookstore chains. There was just one problem: at Amazon, premium sales locations were the same spots where the site's staff was supposed to be offering unbiased advice.
Not surprisingly, site visitors rebelled. Initially, the company refused to back down, saying that it had adequately insulated editorial decisions from advertising pressures. Customers persisted with their objections, however, and the site finally paid attention. It revised its policy to disclose when publishers pay to feature their titles. In addition, the site's president, Jeff Bezos, announced a revised returns policy in an effort to mitigate the bad taste left in customer's mouths. Now, the company will accept any book for return "no matter how dog-eared or worn it is." This newfound flexibility may make returning a book easier, but it will not easily repair the tattered loyalty of the site's customers.
Ironically, Amazon hurt its bottom line by being more concerned with the profit expectations of Wall Street than with the trust of its customers. It then compounded that error by initially dismissing customers' objections, and by agreeing to correct the problem only after the tide of complaints grew too loud for it to ignore. Although an Amazon spokesman would later say "We're always listening to our customers and it was clear that our customers had a higher expectation for us than the physical bookselling world," the company's actions failed to show that understanding until it was too late.
HotJobs.com faced a similar crisis with its customers, but it reacted with adroit understanding. HotJobs bet the bank on a 30-second commercial to air in front of one of the world's largest television audiences. With $4 million in revenues last year, the site spent $1.6 million to buy air time and another $500,000 to create the ad. The company felt it had no other choice. "We're not one of the three or four biggest sites, so we weren't going to get the coverage we need to compete by doing what everyone else was doing," says Richard Johnson, president of HotJobs. "No other site had been on broadcast television yet, going after Joe America who's looking for a job. That's what we decided to do, and in name recognition, we went from being a small Internet company to a nationally recognized brand in two weeks," he said.
Indeed, by most accounts, the HotJobs ad was of championship caliber. The spot appeared in the second quarter of the Super Bowl and within seconds, the site saw a huge surge in traffic. According to Johnson, by the end of the game, HotJobs was on a track to record 35 million visitors -- a 7,000% increase in its traffic. That's when its systems overloaded, and access to the site slowed to a crawl. The television ad had succeeded beyond the site's wildest dreams, but within 24 hours, those results had become simply too much of a good thing.
Realizing that brand development is ultimately a measure of customer management, Mr. Johnson took immediate and substantial action. Within the first 24 hours after the ad ran, the site had acknowledged its miscalculation to it customers.
The apology, which was signed by Mr. Johnson and posted on the site's home page, said, "We would like to thank you for visiting our site, and apologize for our slow site performance. The amount of traffic we have received from the Super Bowl was clearly greater than we anticipated. We are working around the clock to alleviate the problems and appreciate your patience and cooperation." In addition, the site quickly moved to upgrade its capacity, enabling it to accommodate 10 million visitors within seven days of the ad and 20 million visitors within a week of that.
Unlike Amazon, HotJobs realized that its growth depends as much on how it deals with adversity as it does with how it manages success. In today's fast-paced business environment, even the best companies will stumble and make mistakes. The most successful enterprises, will be those that understand how to fix a problem and turn it into a positive event. Although the jury is still out for these two sites, I think it will ultimately favor HotJobs and its "customer friendly" approach because in cyberspace as well as in earthbound storefronts, the jury is always composed of customers.
