Building a Customer-Focused Culture Tony
Hsieh CEO

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

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

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

Power of Repeat Customers &
Word of Mouth

What is customer service?

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

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

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

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

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

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