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Customer Satisfaction: A Hidden Growth Catalyst for Amazon.com, Inc. (AMZN)

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A few weeks ago, Amazon.com, Inc. (NASDAQ:AMZN) scored high on good reputation among customers according to two studies from Foresee and Harris Interactive. Many see Amazon.com, Inc. (NASDAQ:AMZN) as more than a ‘tech’ firm, because of the way the company has dealt with its customers and its commitment to social responsibility. In this article, I shall take a look at how Amazon’s good reputation among customers as reported by the two analysts will help investors to ensure long term returns.

Amazon.com Inc. (AMZN)

Amazon, for the eighth consecutive year, has ranked among the top five in various criteria of consumer satisfaction-reaching 88 points-its highest score in this index. The annual survey “Holiday E-Retail Satisfaction Index” conducted by ForeSee questioned the level of satisfaction of 24,000 consumers with their online shopping during the holidays of Thanksgiving and Christmas. Amazon.com, Inc. (NASDAQ:AMZN) stands firm among the best scores since the list was launched in 2005. According to ForeSee, the company is “the perfect example” of an organization that provides quality services to its customers.

This score is important, especially for investors: highly satisfied customers say they are 67% more likely to consider the company next time they buy a similar product, demonstrating the importance of customer satisfaction to revenue loyalty and for the future of business.

Over the past seven years, online spending has risen in tandem with customer satisfaction. Let’s look at how this relates to Amazon. The 2012 Holiday Shopping Season went very well for Amazon.com, Inc. (NASDAQ:AMZN). Cyber Monday was huge for the company. More than 26.5 million items were purchased on Cyber Monday, which equates to a whopping 306 items sold every second. This growth is nearly double that of 2010, when 13.7 million items were sold.

One of the main reasons for this success was due to high customer satisfaction. ForeSee’s annual Holiday E-Retail Satisfaction Indexshowed that Amazon matched a record high score of 88 out of 100.





Amazon.com, Inc. (NASDAQ:AMZN) ranked the highest under two dimensions: Emotional Appeal and Products & Services. Apple Inc. (NASDAQ:AAPL) ranked the highest under two dimensions as well: Financial Performance and Vision & Leadership. Google Inc (NASDAQ:GOOG) ranked the highest under only one dimension, Workplace Environment. Whole Foods Market, Inc. (NASDAQ:WFM) ranked the highest under the dimension of Social Responsibility. For an investor, it is clear that Amazon ranks highest under the most important dimension, Products & Services. Ranking highest under Emotional Appeal, people will only return to buy products and services on Amazon. This survey is enough to let investors know that Amazon.com, Inc. (NASDAQ:AMZN) is the most future proof company in the world, as it sells not only its won products but also the products of others.

Competitors

Apple sells only its own products and ranks high on Financial Performance; something that we have noticed isn’t true in recent times. iPhone sales have not been impressive and Apple’s stock fell down from a high of $700+ to less than $400. Larry Freed, president and CEO of ForeSee said that Apple needs to improve the user experience of its website and also increase the its amount of features. The Apple Online Store lost three points compared to the previous year, featuring one of the largest falls in the year. Apple scored 80 points in the rankings, its lowest level in four years.

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