Delivering Happiness One Customer at A Time
On my flight home from Toronto to Calgary tonight I read an amazing book by Tony Hseih, the CEO of online shoe retailer Zappos.com.
Zappos is one of my favorite Internet companies and it’s no doubt that Tony is one of the truly great entrepreneurs of this generation. At 24 he sold LinkExchange for $265 million to Microsoft and then became the CEO of Zappos.com, where in 10 years he grew revenue from next to nothing to over $1 billion in sales. Recently they sold to Amazon for $1.2 billion; it’s a pretty amazing story to say the least.
In the book, Tony breaks down how they built Zappos.com from the ground up and argues that their chief competitive advantage was their unique company culture all around giving customers an unforgettable experience. He talks about how the core mission of the company was customer service, and how customer service shouldn’t just be the responsibility of a division, but should be the responsibility of every employee in the organization.
He talks about their unconventional hiring practices and how they indoctrinated people into the culture by focusing on employee happiness and development before anything else. Most companies focus first on looking after their shareholders, then customers, then employees. In Zappos case, they focus on things in the exact opposite order: they focus first on looking after employees, who in turn look after customers, who in turn look after shareholders :).
To back it up, here’s some interesting best practices that Zappos uses:
— After they hire someone, the new hire is given an opportunity to take a $2,000 cheque to NOT join the company. This ensures people aren’t just coming to the company for a paycheck.
— Salary raises are tied to a structured personal development curriculum which include internal courses on zappos culture, customer service, business development, etc.
— Zappos employees are trained to find and direct customers to competitive sites if a customer is looking for something that is out of stock at Zappos.
— Zappos regularly surprise upgrades shipping for free so customers receive their shoes in under 24 hours. Imagine ordering shoes at midnight and having them show up at your door in the morning.
— Zappos pays for shipping to and from the customer and has a 365 day return policy. Customers regularly order 4 or 5 shoes, try them on and then send the ones back that don’t fit.
— 75% of Zappos daily sales are from existing customers. For this reason, they take what they would normally spend on marketing and put it into customer service. Tony argues that the best form of marketing is providing great service to existing customers who go on to tell their friends and family about their amazing experience. Zappos mostly achieves this through telephone support; building customer relationships one customer service call at a time. Call center employees don’t have a script and are empowered to do anything to ensure the customer has an amazing experience.
50 years ago, building a brand was about deciding who you wanted your company to be, what you wanted your company to stand for, and then spending as much money on advertising to make sure consumers got the message.
Times have changed, with how connected we are to each other we’re moving closer and closer to an open and transparent society. We’ll all soon be completely naked. It doesn’t matter what your advertising says about your company. Your brand is the bi-product of the thousands of conversations customers, employees, vendors, etc. are having about your company.
So what can we learn from this little shoe company? Caring about customers can make a difference. In Zappos case it was just a little over a billion dollars worth of it :).
