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birth of a brand / zappos.com /
Zappos.com / Boasing an impressive blend of
brand advocacy and ‘wow facor’ is US online
retailer Zappos, famed for delivering a dose
of happiness wih every pair of size 5 Dolce &
Gabbana’s / CEO Tony Hsieh explains how they
built a brand from the fet up /
In market on the web, it seemed like a good bet to make
the late ‘90s, all types of different internet
from an investment point of view.
companies were being started. At the time, I had
formed a small investment fund called Venture Frogs Over time, it became evident that out of all the
with Zappos’ current COO/CFO, Alfred. We invested companies we invested in, Zappos was the most
in 20 or so different internet companies and Zappos promising and the most fun. Within a year, I ended
happened to be one of them. up spending more time with the company and joined
full time. It was an exciting period for me. After selling
To tell the truth, the idea of selling shoes online didn’t
LinkExchange (the previous company I co-founded)
have me jumping for joy. I’ve never been a shoe person
to Microsoft, I realised how important culture was to
myself. But after some due diligence, I learned that in
building a business for the long-term, so Zappos became
the US alone, it was a $40 billion market and 5% (or $2
another chance to grow a company based on that.
billion) was being done by paper mail-order catalogues.
Knowing the untapped possibilities of targeting that
contagious 62 / 63
The brand of culture and customer experience
So what does company culture have to do with servicing
our customers? Our goal is to build the Zappos brand
to be about the very best customer service and the very
best customer experience. To do this, our #1 priority
is company culture. Our belief is that if you get the
culture right, most of the other stuff, like delivering great
customer service and building an enduring brand, will
happen naturally on its own.
The Zappos culture is defined by our 10 core values:
1 / Deliver WOW Through Service
2 / Embrace and Drive Change
3 / Create Fun and a Little Weirdness
4 / Be Adventurous, Creative, and Open-Minded
take the opposite approach and focus on them even
5 / Pursue Growth and Learning
more. It may take several years down the line to see the
6 / Build Open and Honest Relationships With Communication return on investment, but the long term rewards tend to
speak for themselves.
7 / Build a Positive Team and Family Spirit
Some might argue that a model that considers
8 / Do More With Less
customer service and culture as investments (rather
9 / Be Passionate and Determined than expenses) can’t be sustainable. But over the
last few months, we’ve achieved a couple of the most
10 / Be Humble
important goals we set for ourselves during the early
days of Zappos.
At the end of 2008, we hit $1 billion in gross
merchandise sales, a goal that was originally set for
In a world where most companies are looking to reduce 2010. And in January 2009, we made FORTUNE
the number of customer contacts they have in order to Magazine’s ‘100 Best Companies To Work For’
reduce expenses, we take the opposite approach and list, debuting at #23. It made us the highest ranking
view each contact as an investment towards building a newcomer for the year.
long-term relationship with the customer.
We hadn’t planned all of those things from the Hello, how can I wow you today?
beginning. However, we found that investing more into
Over the years we have tried to come up with new ways
the customer experience and customer service fueled
to ensure that culture and customer service remain top
our growth of repeat purchases and word-of-mouth.
priorities at Zappos. We believe the process has to
We started with zero sales in 1999, and now almost start from the very beginning, including recruiting and
ten years later, we have close to 10 million customers. training.
On any given day, about 75% of our orders are from
Every one of our employees in our headquarters – from
our CFO to an assistant buyer in merchandising – is
required to answer phone calls and graduate from a four
When times are tough, the tough give good service week course in Customer Loyalty training. Afterwards,
Over the last ten years, we’ve seen the market fluctuate there is also a week of working at our fulfillment
between good times and bad. In boom times, it’s easy to warehouse in Kentucky.
make spur of the moment decisions and see their short- During the training course, all employees are offered
term benefits. But it’s in unpredictable times when long- $2000 to leave the company, one of the ways to see if
term investments (like customer service and company they’ve begun to understand the mindset of our culture,
culture) seem to pay off. Usually, those budgets are or if they’re just here to collect a paycheck. When we
often the first to be cut during an economic crunch. We
birth of a brand / zappos.com /
our blogs, we keep our customers up-to-date with
ZAPPOS CULTURE BOOK /
everything going on with Zappos and in turn, we get
to engage in interesting exchanges with them too. Our
recruit, we see a lot of talented people that would
blogs actually reveal a lot about the Zappos brand so I
immediately make an impact on our top or bottom
invite you to visit them at http://blogs.zappos.com.
line, but we will pass on hiring them if they don’t fit our
A couple of years ago at the SXSW Interactive
conference, I started using Twitter. I found that it was a
When customers call our Customer Loyalty Reps, we
great way to find out what was going on during the day
actually encourage our staff to stay on the phone to
at the conference as well as figuring out what parties
deliver the best service possible, even if this means
to go to at night.
going to an alternative website to look for a product that
we might not have in stock and directing the customer
‘Policies like fre returns, fre
there. Our employees are empowered to do whatever
they think is right for the customer, including sending
shipping upgrades and a 365-day
out free replacement shoes, ordering flowers for a
return policy are all very expensive,
customer that just had a loss in the family, or helping
find the phone number of a local pizza joint.
but we view those expenses as
These all point to our goal: to WOW the customer
marketing dollars, because they
at every point of the Zappos experience. Policies like
drive word of mouth...’
free returns, free shipping upgrades and a 365-day
return policy are all very expensive, but we view those
expenses as marketing dollars, because they drive
word of mouth.
After the conference, I introduced it to my friends in
Traditional retailers may put a significant amount of Vegas (where I now live) as well as my friends in San
their marketing budget towards advertising (especially Francisco (where I used to live). I found it was a great
offline), but we’ve chosen to keep that as lean as way to find out what was happening and for meeting
possible. Zappos may run an occasional print or TV ad, up with friends in Vegas. I also felt more connected
but it’s mostly to get our name out rather than directly with my friends in San Francisco, because I got to hear
drive sales. Advertising can help drive sales, but it about their lives every day.
doesn’t really help improve the customer experience,
After using it with just my close friends for about a
and that’s what we care much more about.
year, I realized how much Twitter had allowed me to
form more personal connections with everyone, so we
It’s the personal connections that count decided to introduce it to Zappos as a way of growing
I’ve been asked what I like best, and least, about the our company culture. We’ve found that it’s been great
internet. To me, the answers to both are the same: it’s for building more intimate bonds with both employees
always there. But one of the things that excites me most and customers, essentially an opportunity to learn about
about the internet is that it provides so many new ways each other in a way they otherwise couldn’t have.
to form personal connections with our customers. Another way we get to share what the Zappos culture
Even though a large part of our communications with is like is through our employee Twitter page, which we
customers happens over the phone, we continue to make publicly accessible to the world:
develop new ways to interact with people. Through http://twitter.zappos.com/employee_tweets
contagious 64 / 65
AIRPORT TRAY INSERT /
Welcome to Zappos Air, have a safe flight
Open and honest relationships
We hope, ten years from now, people won’t even realise
One thing we’ve always believed in at Zappos is
we started out selling shoes online. In the last few years,
transparency. Many years ago, we created a series of
we’ve expanded into other product categories that
online tools for our partners and vendors to gain visibility
include clothing, accessories, electronics, and home
to sales and inventory data. This was at a time when such
goods. We’re really not a retailer that sells things, but a
practices were considered risky, but it was done with
service company that happens to sell things.
the intention of creating an atmosphere of openness
and honesty. Over time, the strong relationships we’ve We’ve even had customers ask if we would start an
developed have validated transparency as part of our airline. Based on what we’ve set our core values and
core values. long term vision to be, 30 years from now, I wouldn’t
rule out a Zappos Airlines that’s just about delivering
‘We’re really not a retailer that sells the very best customer service in the industry.
Ultimately, Zappos is about delivering happiness,
things, but a service company that whether to customers (through great customer service)
happens to sell things.’ or to employees (by building a great company culture).
We think we’re at the very beginning of what’s possible.
The past ten years have been an amazing ride, and
We also take the same approach with our customers,
we’re excited to see what the next ten will bring!
who are encouraged to post reviews of products
they’ve bought for public display on our website. We
don’t care whether the reviews are positive or negative,
Tony Hsieh is CEO of Zappos.com
as long as they are honest.
Extending this practice to other parts of our business,
last year we launched our ‘Zappos Insights’ subscription
service that offers inside access to articles, videos and
discussions on how we manage our culture, customer
service, marketing, training, hiring and business in
Through initiatives like this, we’ve found that the more
open and honest we are, the more we get to learn from
our partners, vendors and competitors. It not only helps
to build the individual businesses involved, but it also
helps to build relationships that create opportunities
we might not have seen otherwise. For example, we
now provide backend fulfillment services for several of
our vendor partners. This would never have happened
if we hadn’t offered for them to tour our warehouse