How eBay rules
(2003) In seven years, eBay has gone from zero customers to nearly 50 million. Seven years! That's about seven million new customers per year.
In seven years, eBay has gone from zilch to more than $700 million in revenue per year. Seven years!
How many companies in the history of the world have grown that quickly and that steadily with a customer base that is considered to be nothing less than fanatical? There are a few in the history of business, but not many like eBay. An overwhelming amount of eBay's success is directly attributable to its passionate, loyal and evangelistic customers -- people who refuse to do business anywhere else but on the de facto auction site of the Internet.
When co-founders Pierre Omidyar and Jeff Skoll set out in 1995 to create an online auction (back then, it was called AuctionWeb), it was not, as the legend goes, to help Omidyar's fiance sell PEZ dispensers. It was to ride the Internet wave that was washing ashore very quickly in Silicon Valley and soon, across the world.
While eBay was considered a successful Internet start-up prior to the arrival of Meg Whitman in 1998, it has been her expert guidance that has made eBay king of the dot-coms. She has guided the company from 170 employees when she arrived to 2,500 in 2002. What was once an online flea market for several categories of used stuff has become a forum for selling 18,000 categories of used and new merchandise in 27 countries. By 2002, eBay transcended all possible scenarios of failure and dissolution to become a model of what to do right in any business.
This is not to say that eBay's rise to the top has been without stumbles. As of this writing, eBay faces thorny issues that some observers say threaten to alienate chunks of its longtime and homegrown customers; namely, letting massive companies like IBM sell products on eBay's virtual Shelves. It was just two years ago that eBay suffered a series of highly public technical outages that threatened to undermine any trust the company had built. The modifications the company makes or proposes to the multitudinous ways eBaysians can buy and sell products flare up in news stories every few months. Somewhere, someone is unhappy with change. But the moral here is this: eBay encourages this type of democracy with its operations. Sure, it's messy but eBay continually envisions itself as a community, a republic, and values customer discourse. The company craves it.
Through it all, it has been Whitman's keen judgment for incorporating customers into all aspects of eBay's planning and decisions that has made the company an evangelism marketing pioneer.
"Meg Whitman is the top of the heap," says Michael Useem, director of Wharton's Center for Leadership and Change Management at the University of Pennsylvania. "She is as well-known and properly respected as any executive on the scene. Here's a pioneer who has built a company into a fully developed form. When the history of this particular era is written, she will be in that history."
What are the elements of Whitman's success in creating customer evangelists for eBay? Let's take a look at Whitman's customer evangelism formula.
1. Customer plus-delta.
eBay is the undisputed master of gathering customer feedback.
Whitman constantly prods the company to incorporate customer
suggestions into company operations, from being able to
accelerate the pace of auctions to quickly changing course or
abandoning new policies altogether very quickly. One
instructive example that Businessweek described: a veteran
seller auctioned a rare eBay jacket to protest a new policy of
referring losing bidders to similar auctions. Whitman and
Omidyar flew to the customer's city, met with him for an hour,
took pages of notes and decided to change the policy two days
later.
"At Hasbro, we used to spend a lot of time trying to pick the next hot toy -- the next Cabbage Patch Kid, or the next Pokemon," Whitman told Fast Company, describing the product creation process at her previous employer. "At eBay, we don't worry about that. Our army of users figures out what's hot before we even know."
In 1999, Whitman launched the "Voice of the Customer" program. Every few months, a dozen loyal customers are flown to company headquarters. While there, Whitman and members of her team meet with the group and discover what's working and what needs more work. The company also gathers thoughts on ideas under development and works through contentious policies. Attendees are asked to keep in touch via regularly scheduled conference calls after they return home. For staying close to customers and hearing what they say in their own words, Whitman & Co. get high marks.
2. Napsterize your knowledge.
Most of eBay's knowledge resides within its vast customer
community, but the company has plenty of inside information,
too. It makes that knowledge available via eBay University,
a day-long seminar the company sponsors at locations around
the country. News.com described it as "a cross between a
traveling business school, an enthusiast's convention and a
religious revival."
Company officials teach the curious and the already indoctrinated how to navigate the site, how to effectively sell products as well learn a notebook's worth of hints and tips from eBay insiders.
3. Build the buzz.
The company's message boards are tacked with 100,000 messages
every week that share tips, hints, glitches and suggestions
for improvement. Anyone can become an eBay expert by trolling
through this vast store of knowledge over the course of a
week. By encouraging customers to talk with one another, they
largely invite others to join the party.
The company also smartly issues press releases when interesting stuff is being sold on the site, such as:
- Golf Foursome With Tiger Woods Offered On eBay Will Raise Money For Disadvantaged Youth
- Shoeless Joe Jackson Baseball Bat Expected to Set Record For Most Valuable Bat Ever Sold
- Historic 19th-Century Levi's Jeans To Be Sold By History Channel On eBay
4. Create community.
Because Whitman is so closely identified as a leader of the
community as opposed to being president and CEO (an unpopular
title these days in this Age of Greed and Excess), hundreds
of eBay enthusiasts lined up for her autograph in June 2002
at eBay Live, the company's first customer/fan convention.
With attendance at 5,500 and attendees flying in from around
the world, the conference was an opportunity for buyers and
sellers to meet in person, all under the eBay umbrella.
"It's like a reunion of people you've never met," one attendee told USA Today.
Whitman -- or just "Meg," as the community calls her -- was clearly the star. One of the hot products at the show: trading cards featuring her and company leaders. Can you say that your company's executives are so popular that customers would clamor for their trading cards?
"What is really interesting about eBay," Whitman told one interviewer, "is that we provide the marketplace, but it is the users who build the company. They bring the product to the site, they merchandise the product and they distribute it once sold."
The eBay community lives online and offline: eBaysians have planned vacations together, chipped in and bought a special item for another member, planned picnics and even spent vacation time doing home repairs for an eBay member in need. After September 11, 2001, eBay community members raised $10 million by donating and bidding on tens of thousands of items in Auction for America, with proceeds going to the families and communities affected.
Meg Whitman has her hands full growing the eBay village into something approaching an entire universe. Her two primary secrets for getting this far:
1. She religiously listens to her customers
2. She constantly encourages community
Customers reward her and the company by passionately spreading the word about eBay. Can you say the same for your customers?
