BIRTH OF A BRAND / ZAPPOS

Zappos.com / This article appeared in Contagous issue Eighteen. Contagous is an intelligence resource for the global marketing communiy focusing on non-tradiional media and emergng technologes www.contagiousmagazine.com For more information please contac Harry Gayner on +44 (0) 20 7575 1822 or harry@contagiousmagazine.com

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 repeat customers. 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 culture. 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. www.zappos.com 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 general: www.zapposinsights.com 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 operations.

BIRTH OF A BRAND / ZAPPOS

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BIRTH OF A BRAND / ZAPPOS Document Transcript