The Zappos Experience: 5 Principles to Inspire, Engage and Wow

The Zappos Experience:Five Principles to Inspire, Engage and WowJoseph Michelli, Ph.DA precept of medical ethics is “Primum Non Nocere” which when translated from the Latin means, “First do no harm.In business, a similar precept for success should be “First, get it Right for Your Customer.” 1. Serve a Perfect Fit 2. Make it Effortlessly Swift 3. Step Into the Personal 4. S T R E T C H 5. Play to Win Sponsored by

The Zappos Experience: Five Principles to Inspire, Engage and Wow “Stop Trying to Delight Your Customer” Matthew Dixon, Karen Freeman, and Nicholas Toman, Harvard Business Review (2010) “Conventional wisdom holds that to increase loyalty, companies must ‘delight’ customers by exceeding service expectations. A large scale study of contact-center and self-service interactions, however, finds that what customers really want (but rarely get) is just a satisfactory solution to their service issue.” The authors of “Stop Trying to Delight Your Customer” base their views on research they conducted involving 75,000 customers who had interacted with call-centers or self-service portals like on-line chat, email, or voice mail prompts. The findings of their study are quite illustrative around 3 key questions: 1) How important is customer service to loyalty? 2) Which customer service activities increase loyalty, and which ones do not? and 3) Can companies increase loyalty without raising their customer service operating costs? In a nutshell, Harvard Business Review found: • Delighting customers isn’t the first priority for building loyalty, • Reducing your customer’s effort to get their problem solved does make them more loyal, and • Acting to reduce your customer’s effort can reduce service costs. Five suggestions to consider for reducing customer effort: 1. Don’t just resolve the current issue but also head off the next, 2. Create tools for customer service professionals to handle the emotional side of customer interaction, 3. Minimize channel switching by increasing self-service “stickiness.” For example, make changes on your website so that customers can get a problem resolved at that level, 4. Use feedback from disgruntled or struggling customers to reduce customer effort, and 5. Empower (and incentivize) the front line to deliver a low-effort experience. Page 2

The Zappos Experience: Five Principles to Inspire, Engage and Wow If that isn’t enough to think about, let me throw out a way of measuring customer effort through a simple tool called the CES or Customer Effort Score. The CES is a single question to ask your customers: How much effort did you personally have to put forth to handle your request? Respondents can choose from 1 (very low effort) to 5 (very high effort). Going Beyond Ease Once reduced customer effort is achieved, there are great opportunities for customer delight that emerge by forming “personal emotional connections.” Brands become both beloved and legendary when they elevate from the “ease” of transaction to the “joy” of interaction. Over the course of my career, I have been fortunate to work with and write about companies who decrease customer effort and consistently achieve consumer delight. These companies include Starbucks, the Ritz-Carlton Hotel Company, UCLA Health System, and most recently the online retailer Zappos. Case Study: By creating an unorthodox service culture that connects with employees, customers, and all stakeholders, Zappos leadership has built a business that among other things has:  Gone from virtually no sales to $1 billion in annual gross merchandise sales in a 10 year span, with minimal advertising.  Been recognized as one of FORTUNE Magazine’s top ten best places to work.  Established Zappos as a leader in social networking strategy and execution.  Led to the company being sold to Amazon.com for approximately 1 billion dollars.  Achieved skyrocketing sales, an enviable work environment, and won awards as a “world class customer experience provider Page 3

The Zappos Experience: Five Principles to Inspire, Engage and Wow Five Principles to Inspire, Engage and WOW In my recently released book The Zappos Experience: 5 Principles to Inspire, Engage and WOW I highlight the following components to Zappos greatness: 1. Serve a Perfect Fit – Most businesses fail to differentiate themselves from the competition because they never take the time to understand what they uniquely value or possess. Rather than emulating the core values of other businesses leaders, Zappos leadership asked their people “what does it take to be a success here?” After securing that honest assessment, leaders used those core values (things like create fun and a little weirdness) to guide all decisions for the company including the selection of applicants who possess those qualities. 2. Make it Effortlessly Swift – Before a company can build an emotional relationship with its customers it has to get the basics right. In today’s world that involves making it easy and quick for customer to get their needs met. This principle focuses on a concept I refer to a “service velocity.” It is not just service speed (because you can have service that is so quick that it is inaccurate) but rather service speed in the direction of desired customer outcomes. 3. Step Into the Personal – Once your company can “get it right” and “make it right” for customers you are satisfying consumers. But satisfaction is just a coupon away from your customer trying a competitor. This business principle emphasizes the importance of leaders developing personal relationships with their staff and in turn inspiring their staff to do the same with customers. 4. S T R E T C H – Many great leaders and companies become irrelevant because they stop growing. They, in essence, lose their entrepreneurial restlessness. This principle examines the need to grow people, products, and service delivery strategies while maintaining a health respect for the processes that led to greatness in the first place. 5. Play to Win – Work and play should not be antithetical. Play without purpose is not a sustainable business approach but a workplace devoid of play is not likely to fuel innovation and collaboration. This leadership principle shows how productivity can be increased through play and through a mirthful work environment. Page 4

The Zappos Experience: Five Principles to Inspire, Engage and Wow Caring For and Caring About In addition to these five principles I dedicate a considerable discussion to a subtle but powerful distinction present at Zappos - caring for versus caring about customers! If you make it effortless for customers you care for them, if you make it personal you care about them. While The Zappos Experience offers a detailed exploration of how Zappos creates a service culture that has catapulted the brand from veritable extinction to game-changing thought leadership, Zappos really offers an opportunity to benchmark our own business practices to see how committed we really are to world class customer-centricity. In essence, are we doing what the best of the best service companies do to engage their employees and their customers. Much of Zappos commitment begins with how well Zappos leadership cares for and about their employees (at Zappos this has led to being chosen among Fortunes best places to work) and it travels out to decisions that affect the daily customer experience. For example, are you willing to spend less on advertising and spend more on expediting service? Are you allowing staff to take the time needed to address customer needs or are you rewarding rapid movement of customers through lines or phone cues (possibly at the expense of accurate service delivery)? If you say you care both for and about those you serve, what do you point to to prove your claim? How do you know how well you are caring? Would your customers assessments align with your responses? In the end, Zappos get it! "Caring for" builds satisfaction --- "caring about" fuels loyalty! Your Opportunities Looking across your business, where might you sprinkle on a little dash of The Zappos Experience? How well are you “making it right” and “forging emotional connections?” What will you do differently tomorrow? Page 5

The Zappos Experience: Five Principles to Inspire, Engage and Wow About Joseph Michelli, Ph.D Joseph A. Michelli, Ph.D., is an internationally sought-after speaker, author, and organizational consultant who transfers his knowledge of exceptional business practices in ways that develop joyful and productive workplaces with a focus on the total customer experience. His insights encourage leaders and frontline workers to grow and invest passionately in all aspects of their lives. Dr. Michelli has been recognized by Focus as “one of the top five Customer Service Influencers to Track in 2011.” Dr. Michellis latest book, The Zappos Experience: 5 Principles to Inspire, Engage, and WOW, is now available. His book, Prescription for Excellence: Leadership Lessons for Creating a World-Class Customer Experience from UCLA Health System was released in May 2011 and achieved number 1bestseller status on the New York Times, Wall Street Journal, USA Today, Publishers Weekly, and Nielson BookScan lists. His prior bestselling books include The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary, The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of The Ritz-Carlton Hotel Company, and When Fish Fly: Lessons for Creating a Vital and Energized Workplace which was co-authored with the owner of the "World Famous" Pike Place Fish Market in Seattle. Dr. Michelli believes his greatest accomplishment is his ability to learn from the laughter and humor of his children, Andrew and Fiona. About Sponsor: Citrix Citrix is transforming how people, businesses and IT work and collaborate in the cloud era. Its portfolio of GoTo cloud services enable people to work from anywhere with anyone by providing simple-to-use cloud-based collaboration, remote access and IT support solutions for every type of business. Learn more at www.citrix.com and www.citrixonline.com. Page 6

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The Zappos Experience: 5 Principles to Inspire, Engage and Wow

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