Operation Management: Amazon Customer Satisfaction Analysis Report

This report provides a comprehensive analysis of Amazon's operations management, with a primary focus on customer satisfaction as a key operational issue. It defines crucial terms like operations management and customer satisfaction, explores Amazon's successful operational systems, and examines customer satisfaction models such as SERVQUAL and Kano models. The report emphasizes the importance of customer loyalty, satisfaction, and retention in maintaining profitability, especially given the competitive nature of the e-commerce market. It also addresses the statement of the problem, analyzing the factors that influence customer satisfaction and loyalty, the workable proposals and recommendations for improvement, a critical analysis of these recommendations, including alternative solutions like the Net Promoter Score, and potential barriers to implementation. The report covers Amazon's customer experience, the challenges it faces, and the strategies it employs to enhance customer care and personalization, including the use of online customer care and email systems, and the Mayday button. Finally, the report highlights the importance of responding to customer feedback and utilizing various customer satisfaction measuring strategies to maintain a competitive edge in the online retail market.

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OPERATION MANAGEMENT: AMAZON CUSTOMER SATISFACTION
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Table of Contents
1.0. Executive Summary..............................................................................................................3
2.0. Introduction...........................................................................................................................3
2.1. Background information on customer experience in the company...................................4
3.0. Statement of the Problem and Analysis................................................................................5
4.0. Workable Proposals Recommendations and Realistic Implementations Plan.....................7
5.0. Critical Analysis of the recommendations............................................................................8
5.1. Alternative solution that can be adopted by the company and their relative merits.........9
5.2. Potential barriers to the implementation.........................................................................10
6.0. Conclusion..........................................................................................................................10
7.0. Appendices.........................................................................................................................12
8.0. List of References...............................................................................................................14

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1.0. Executive Summary
The purpose of this report is to study and evaluate the operation management of Amazon with a
major focus on the customer satisfaction as the primary OM issue affecting the company. The
article looks at the definitions of the various terms such as operation management and customer
satisfaction. It looks at the Operations Management system that led it to its success. The paper
also looks at different conventional models such as the functionality used determining customer
satisfaction together with the models used by Amazon. The report also looks at other models
such as SERVAQUAL and Kano models of customer satisfactions. It reports that building
customer loyalty increases customer satisfaction. Customer’s loyalty is more important than
customer satisfaction. Due to increased technological change, many customers tend to be
captured by potential rival companies. To retain a customer, then a company should focus more
on customer loyalty, satisfaction, and retention to ensure it sustains and improves the company
profitability.
2.0. Introduction
Operations Management refers to a process of designing and controlling of raw materials in
conjunction with labor into desirable end products and services (Harvey et al. 2016, p. 89). It
also includes the supply chain and delivery system of both raw materials and the products.
Amazon’s operation management encompasses the following areas; designing of goods and
services that are in alignment with the customer needs and delivering them at time of needs as
pointed out by (Sun et al., 2013, p. 78), an aspect that leads to customer satisfaction. Satisfaction
in simple terms is definable as a convinced assurance in fulfillment of a particular individual

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need (Vanitha 2012, p. 6). Customers’ level of acceptance of a good and service differ regarding
their expectations. Therefore, Customer satisfaction means the market acceptance of a particular
product. Customer’s satisfaction measurement is important in every business because it provides
unbiased data to the company. It creates the tracking changes that have taken place in the firm
over a period.
2.1. Background information on customer experience in the company
Amazon is an international online business that came into creation in 1994 due to the idea that
revolutionary of the internet would create a large market to reach customers in the local and
global business environment (Panagitelis et al., 2013, p. 90). Amazon is a customer- service-
based company, mostly offering online reading books as well as other product delivery services.
According to the (ACSI) American Customer Satisfaction Index, Amazon has been named by a
client as the best organization due to its high level of customer satisfaction.(Lee et al., 2014) This
article looks at the customer satisfaction taking into account the models and theories used by the
Even though many different companies are offering online retail, Amazon Company has stand
out to be among the top with the company creating a versed number of products and services that
are reachable to customers. However, the company is affected by environmental factors related
to regions or country of operation as well as the external factors involving the organization and
the government laws and policies that often determine the terms and conditions of the business
within the states of operation as pointed out by Goldsmith (2010, p. 56).
Amazon has created an online customer care and personalization. The company has also
established an email system that facilitates the conversation between the company and the client.
Chua (2011) denotes that Amazon created Amazon’s Mayday button that allows live video chat;

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this has delighted many consumers since it allows face-to-face communication. The email
system allows dialogue hence has created a robust personalization of the company and the client.
Through this system, a customer can review the books and other products while in connection
with the customer care personnel. Amazon has ensured improved customer care program by
allowing every employee to spend at least two days at the customer care service desk for every
two years. With the program, most of the employees at the company have a great customer care
skills and knowledge required to ensure quality care. The functionality of Amazon allows it to
perform direct marketing to the consumer. The website has a “cookie” that can recognize a
customer and provide guidance and recommends to the customer depending on the customer’s
history of purchase. However, there are still challenges with customer experience with customer
satisfaction remaining the primary focal point to address as it is recording a decrease with time as
depicted in table 1.
3.0. Statement of the Problem and Analysis
Amazon is a globally recognized retail company that should have an interactive technology that
powerfully serves its high valued customers at low cost (Chua 2011). Amazon has an excellent
merchandise, functionality, content, and price hence a need for a more interactive customer
interaction platform that will give the customers a feeling of loyalty and value to its customers in
the competitive global market. The well-integrated merchandise should allow all customers to
access all products and make healthy choices that meet their needs without technical challenges
with the system (Vanitha 2012, p. 89). It should be able to attend to customers at any time of the
day and anywhere in the world. With this customer will be able to freely make their request at
their will.

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In a systematic study, Maricic, Veljkovic, and Djordjevic (2012) point out that there are different
factors that directly or indirectly control customer satisfaction and loyalty towards the goods and
services offered to them by a business or a company. The factors are always achievable through
intensive research and marketing. Despite the fact that there are many retailers in the e-
commerce business globally, not all of them thrive. However, Amazon is at the top in online
businesses globally coming second after Google Inc. Therefore, it is essential to understand what
the company does to ensure good performance as well as the challenges that need to be address
in the operation management with a focus on customer satisfaction.
Customer satisfaction is viewed to have both company’s internal factors and external factors
(Winker 2014, p. 90). The personal context of the client satisfaction encompasses every aspect of
the enterprise’s products regarding a quality of customer care, packaging of the product,
amortization of the product, the products values and their reliability. The external factors of
customer satisfaction tend to involve a large number of customer choices depending on the
company goods and products that meets their needs.
The constant communication with the customers and effective customer care is as well essential
to enable the company to work towards strategies that will ensure it improves the nature of
customer services it offers to its customers. Amazon offers genuine products to their customers
with high quality and varied features (Winkler 2014, p. 451). These high-quality products tend to
attract a large number of customers who at the end need to get good experience in the process of
service. The company has different subsidiaries in various regions of the globe that aids in
delivering and distributing system of the products to the customers. It thus requires a well
coordinated supply chain management system that can allow all customers to receive their orders
in the shortest time possible.

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In a systematic study, Helm and Tolsdorf (2013) points out the completive global business
environment require drastic, relevant, and easy to use customer interaction systems that will not
only ensure services are delivered but satisfied as well. In other words, it is essential for the
company to design and adopt different customer service methods and unique customer-oriented
strategies to engage the customers and evaluate their response to both the quality of products as
well as the services offered by the company. Amazon thus needs to carry out proper market
research to identify the customer requirements in every region where they are operating as well
as the potential markets that the business can expand into such as developing countries.
According to Panagiotelis, Smith, and Danaher (2013), environmental factors such as
geographical distance, temperature, rainfall pattern, and terrain of a place can be major
destructors to effective supply chain and delivery of goods and services. Prospecting on the
nature of the market will also helps the company to understand the nature of customers to deal
with, duties and customers, and government policies that governs business operations in such
areas.
4.0. Workable Proposals Recommendations and Realistic Implementations Plan
Respond to the feedback as quickly as possible as a necessary initiative that company needs to
adopt to improve its performance towards customers (Lee et al. 2014, p. 8). For the company to
get a strong response to the customer feedback, the company should understand what
information the client is passing as well the most effective strategies that can be used to evaluate
the information and make an informed decision. The company should understand the factors that
led to the customer’s satisfaction or dissatisfaction. During the response to the customers’
concerns, there should be systematic feedback program placed by the company to evaluate their
satisfaction on the solution provided. It should also allow a systematic follow up of the

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implementation of the reply. Through the system, everyone in the company should ensure that
customers’ feedback is upheld to improve the satisfaction and loyalty. Through these reactions,
the product and service are developed and enhanced regarding service and quality.
Other client satisfaction measuring strategies that can be adopted by the company include the
disconfirmation model that is based on the customer’s expectation against their ratings (Winkler
2014, p. 9). The outcome of the purchased item dictates the satisfaction of the product. The Kano
model bases its theory on the product development. The model places customers’ satisfaction in
five categories that are; Attractive, One-Dimensional, Must-Be, Indifferent and Reverse. The
model gives a good insight into the product attributes that are important to the customer.
SERVQUAL is a framework that measures customers’ satisfaction concerning the quality of the
service provided .it used a barometer that gives a gap between customers experience and
expectation. The model is more applicable in the service oriented companies such as hotels and
banks.
5.0. Critical Analysis of the recommendations
Amazon has adopted the Voice of the Customer feedback practice (Panagiotelis et al. 2013, 202).
Amazon receive receives customers information directly from the Amazon customers or through
its merchants. The feedback of the client collection should be a routine of the company. And
thus they should not wait till there is a change in the economy. All feedback collected should
conform to the right methodology to give the best feedback. Most of the ways used in collecting
customer’s feedback are such as qualitative data survey; customers experience data and
information from the sales personnel. Keeping in connection with the client helps to gather
information on the customer’s complaints, suggestions, ideas, and concerns. This collected

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information is helpful in developing the future versions of a product and service. Hence the
company keeps in touch with the customer’s needs. However, Voice of Customer has been
adopted by many other competitors in the global market and provides nothing unique to capture
the attention of customers or understand the dynamics of customer response and feelings towards
the products.
5.1. Alternative solution that can be adopted by the company and their relative
merits
A net promoter score is a tool that is used to measure the loyalty between the customer and the
provider and can be effective when adopted by the company. It is calculated based on the
responses to a single question (Bourne 2016, p. 34). The score is achievable by posing a question
to a customer on how more likely will the customer be able to recommend the product to a friend
at a score rates of 0 to 10. Using the system, those who score 9 to 10 are referable as promoters,
also called the regular customers who are likely to increase the level of their purchases and are
more likely to promote the company product.
Those who give a response that ranges between 0 to 6 are the detractors or the most
disappointed customers who are less likely to evangelize the product to any other clients. The
response from those customers that range between 7 and 8 is referred to as Passive. These are
customers who are satisfied at the moment of the service but can be easily swayed away by the
potential customers. Their characters fall between the Promoters and Detractors. The Net
Promoter Score is calculated by getting the percentage difference between Promoters customers
and Detractors customers. NPS= % of Promoters - % of Detractors (Sun et al. 2013, p.
67) .When the difference is less or closes to zero, then the loyalty is termed as poor while when it
is above seventy to one hundred, then the loyalty is termed as excellent.NPS can be used by

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Amazon in its drive to emphasizes on its customer's satisfaction, through improving on the
development of their products and services.
5.2. Potential barriers to the implementation
The NPS has received criticism due to lack of causal connection to any correlated activity in the
company as pointed out by Nassar (2015, p. 89). It tends to have the shallow level of prediction
on the future of the customer's loyalty. It also lacks actionable data for responses to customer
feedback making it a difficult task for most companies since it is hard for business to stress on
the client's actions and result without a dominant platform. The robust platform should aid in
collecting, measuring, analyzing and driving the best action as quickly as possible on customer’s
responses. These principles should lie on big data technologies that provide immediate insights
and solutions Helm and Tolsdorf (2013, p. 144). One of the best recommendations is customer
loyalty. Customer loyalty, also known as customer retention is the measurement of how the
customer is willing to spread the quality of the product to another client. Through this, the
company creates new customers. When the process continues, then the number of customers who
purchase those end products also increases. With that large number of clients, the company will
experience growth of sales.
6.0. Conclusion
Continuous listening and understanding the customer’s feedback is critical to every business.
There is no shared client feedback across different companies hence each one should be able to
come up with its method of developing the customer's information about the product. It helps in
creating a product that conforms to every aspect of customer need. These clients need help the
company to capitalize on the regular customer. Every company should understand that customer

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loyalty depends on the company’s brand. There are no shared customer satisfaction tracks, so
each company should be able to create one of its own that is able to give it the best data to
analyze the customers’ current and future expectations.
Building customer loyalty increases customer satisfaction. Customer’s loyalty is more important
than customer satisfaction. Due to increased technological change, many customers tend to be
captured by potential rival companies. To retain a customer, then a company should focus more
on customer loyalty, satisfaction, and retention to ensure it sustains and improves the company
profitability. The best ways are the company to create a system that will show the customer that
is always on the thought of the enterprise. The company can create a system to remember them
during special occasions such as birthday by sending a short message. Amazon should also strive
to empower the customers with knowledge on how to make online purchases.

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7.0. Appendices
Table 1: Amazon Customer satisfaction rate between 2000-2016 (Adopted from Lee, & Park
2016)
Year Rate of customer satisfaction
2000 62.6%
2012 61%
2014 59%
2016 56.7%
Table 2: Evaluation criteria to be filled by the customer
Criteria of evaluation
Evaluation Rate
Good Fair Low
Company reputation
Production functionality description
Friendly support to the query of customers
Was the product delivered in time
The speed and quality of the technical support
Are the products description and usage instructions clear
and easy to understand

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Table 3: customer performance category and their respective score rates
Category Detractors Passive Promoters
Score Rate 0-6 7-8 9-10

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8.0. List of References
Bourne, P. 2016. Customer Satisfaction of Policing the Jamaican Society: Using SERVQUAL to
Evaluate Customer Satisfaction. Journal of Healthcare Communications, 1(3).
Chris Adalikwu 2012. Customer relationship management and customer satisfaction. African
Journal Of Business Management, 6(22).
Chua, A. 2011. How Web 2.0 supports customer relationship management in Amazon.
International Journal of Electronic Customer Relationship Management, 5(3/4), p.288.
Göb, R. 2011. Comment on ‘Modern analysis of customer satisfaction surveys: comparison of
models and integrated analysis’. Applied Stochastic Models in Business and Industry, 27(5),
pp.481-483.
Goldsmith, R. 2010. The Goals of Customer Relationship Management. International Journal of
Customer Relationship Marketing and Management, 1(1), pp.16-27.
Harvey, J., Heineke, J. & Lewis, M. 2016. Editorial for Journal of Operations Management
special issue on “Professional Service Operations Management (PSOM)”. Journal of Operations
Management, 42-43, pp.4-8.
Helm, S. & Tolsdorf, J. 2013. How Does Corporate Reputation Affect Customer Loyalty in a
Corporate Crisis?. Journal of Contingencies and Crisis Management, 21(3), pp.144-152.
Lee, E. & Park, C. 2016. Does advertising exposure prior to customer satisfaction survey
enhance customer satisfaction ratings?. Marketing Letters, 26(4), pp.513-523.