Building a Customer-Focused Culture Tony Hsieh CEO

Zappos at a Glance Founded in 1999 Zappos is powered by service Providing the best service and online shopping experience possible. Free shipping both ways. 365-day return policy. Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service. Best selection Over 1100 brands. Over 150,000 styles. Over 800,000 unique UPCs. 3 million pairs of shoes. Photographed in multiple angles. 100% of products inventoried (no drop ship). Zappos is a service company that happens to sell shoes, clothing, handbags, eyewear, watches (and eventually a bunch of other stuff).

Founded in 1999

Zappos is powered by service

Providing the best service and online shopping experience possible.

Free shipping both ways. 365-day return policy.

Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service.

Best selection

Over 1100 brands.

Over 150,000 styles.

Over 800,000 unique UPCs.

3 million pairs of shoes.

Photographed in multiple angles.

100% of products inventoried (no drop ship).

Zappos is a service company that happens to sell shoes, clothing, handbags, eyewear, watches (and eventually a bunch of other stuff).

Customer service value proposition in action… Zappos is committed to WOWing each and every customer. Customers come… 7.4M total purchasing customers (about 2.5% of US population) 3.3M have purchased in the last 12 months Customers come back… On any given day, about 75% of purchases from returning customers Repeat customers order >2.5x in the next 12 months Customers come back, order more and order more often… Repeat customers have higher average order size $111.98 – first time customers in Q406 $143.22 – returning customer in Q406

Zappos is committed to WOWing each and every customer.

Customers come…

7.4M total purchasing customers (about 2.5% of US population)

3.3M have purchased in the last 12 months

Customers come back…

On any given day, about 75% of purchases from returning customers

Repeat customers order >2.5x in the next 12 months

Customers come back, order more and order more often…

Repeat customers have higher average order size

$111.98 – first time customers in Q406

$143.22 – returning customer in Q406

Word of mouth in action… Word of mouth enhances marketing investment significantly Advertising spending… 85% Internet 15% Print New customers acquired heard about Zappos… 44% from Internet 43% from word of mouth 13% from other

Word of mouth enhances marketing investment significantly

Advertising spending…

85% Internet

15% Print

New customers acquired heard about Zappos…

44% from Internet

43% from word of mouth

13% from other

Power of Repeat Customers & Word of Mouth

What is customer service?

Customer Service: What Customers First See 24/7 1-800 number on every page Free shipping both ways 365-day return policy

24/7 1-800 number on every page

Free shipping both ways

365-day return policy

Customer Service: What Customers Experience Fast, Accurate Fulfillment Friendly, helpful “above and beyond” customer service Refer customers to competitors’ web sites

Fast, Accurate Fulfillment

Friendly, helpful “above and beyond” customer service

Refer customers to competitors’ web sites

Customer Service: What We Do Internally No call times No sales-based performance goals for reps Run warehouse 24/7 Inventory all product (no drop-ship) 5 weeks of culture, core values, customer service, and warehouse training for everyone in Las Vegas Culture book Interviews and performance reviews are 50% based on core values and culture fit

No call times

No sales-based performance goals for reps

Run warehouse 24/7

Inventory all product (no drop-ship)

5 weeks of culture, core values, customer service, and warehouse training for everyone in Las Vegas

Culture book

Interviews and performance reviews are 50% based on core values and culture fit

10 TIPS for building a service-focused culture

TIP #1 Commit to customer service. Make it part of your mission. It’s not just a department… Be true to your mission when making hard (or easy) decisions.

Zappos.com Mission To Live and Deliver WOW Internally, we have a saying: We are a service company that happens to sell _____________________. shoes and handbags and clothing and eyewear and watches and accessories (and eventually a bunch of other stuff)

To Live and Deliver WOW

Internally, we have a saying:

We are a service company that happens to sell _____________________.

shoes

and handbags

and clothing

and eyewear

and watches

and accessories

(and eventually a bunch of other stuff)

TIP #2 Come up with committable core values. Do some soul searching. Don’t come up with core values just because they sound good.

Zappos Core Values Deliver WOW Through Service Embrace and Drive Change Create Fun and a Little Weirdness Be Adventurous, Creative, and Open-Minded Pursue Growth and Learning Build Open and Honest Relationships With Communication Build a Positive Team and Family Spirit Do More with Less Be Passionate and Determined Be Humble

Deliver WOW Through Service

Embrace and Drive Change

Create Fun and a Little Weirdness

Be Adventurous, Creative, and Open-Minded

Pursue Growth and Learning

Build Open and Honest Relationships With Communication

Build a Positive Team and Family Spirit

Do More with Less

Be Passionate and Determined

Be Humble

TIP #3 Actively manage your culture based on your core values … … for every single department.

TIP #4 Make “WOW” part of your company’s everyday vocabulary.

TIP #5 Remember that customer service is an investment … … not an expense. Don’t hide your 1-800 number. Don’t measure call times.

TIP #6 Trust and empower your customer service team. Find people that are passionate about customer service.

TIP #7 Create a culture book.

TIP #8 Give great service to everyone: Customers Employees Vendors Investors

TIP #9 Make culture part of everyone’s performance review.

TIP #10 Have the entire company celebrate great service. Tell stories.

Q&A Email me -- [email_address] for: Answers to any additional questions not answered today A copy of our culture book Tour of our offices when you’re next in Vegas Job opportunities

Email me -- [email_address] for:

Answers to any additional questions not answered today

A copy of our culture book

Tour of our offices when you’re next in Vegas

Job opportunities