Obsess Over Customers
The letter opens its business review with a section literally titled 'Obsess Over Customers.' The starting point was offering something customers simply could not get any other way: more selection than any physical store (a bookstore that would occupy six football fields), searchable, open every hour of every day.
Then relentless improvement: 1-Click shopping, gift certificates, more reviews and recommendations, and dramatically lower prices. Each change increased customer value directly rather than extracting more from them.
The payoff mechanism is spelled out: word of mouth was Amazon's most powerful customer acquisition tool. Obsessing over customers wasn't altruism, it was the growth engine. Repeat purchases plus word of mouth made Amazon the leader in online bookselling.
“Word of mouth remains the most powerful customer acquisition tool we have.”
Key idea
Offer something customers cannot get any other way, keep improving it, and word of mouth becomes your cheapest and strongest acquisition channel.