Zappos Preso 2009-09-17 Colloquy Loyalty Summit


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Zappos Preso 2009-09-17 Colloquy Loyalty Summit

  1. 1. Confidential Delivering Happiness Alfred Lin – COO/CFO Follow me on Twitter: COLLOQUY Loyalty Summit September 17, 2009
  2. 2. Confidential Slide #2
  3. 3. Confidential Slide #3 A Little About Me (Alfred) My Background – 1994-1995: Pizza business in college – 1996-1998: LinkExchange (online advertising) Sold to Microsoft for $265 million – 1999: Venture Frogs, LLC (angel investment fund) Invested in Tellme Networks & – 2001-2005: Tellme Networks (ip telephony) Sold to Microsoft for $800 million – 2005-Today:
  4. 4. Confidential Slide #4 Zappos at a Glance Corporate Background – Founded in 1999 – 1400 employees (half in Las Vegas headquarters, half in Kentucky)  #23 in FORTUNE MAGAZINE’s “100 Best Companies To Work For”  Highest debut for a newcomer in 2009 – Zappos is “Powered by Service”  Providing the best online shopping experience possible.  Fast, Free Shipping. Free return shipping. 365-day return policy.  Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service. – Best selection  Over 1,000 brands, over 200,000 styles, over 900,000 unique UPCs.  4 million items in warehouse  100% of products inventoried (no drop ship). – Zappos is a service company that happens to sell clothing, shoes, handbags, eyewear, watches (and eventually a bunch of other stuff).
  5. 5. Confidential Slide #5 Recent Recognition: Nice to have but we pay more attention to our customers. • TV Stories – Oprah (2008/2009) – ABC Nightline (2008) – 60 Minutes (2007) • Fortune “100 Best Companies to Work For” – #23 (2009) – Highest ranking newcomer to list • Fast Company “50 Most Innovative Companies” – #20 (2009) • BusinessWeek Top 25 “Customer Service Champs” – #7 (2009)
  6. 6. Confidential Slide #6 Customer service value proposition in action… Zappos is committed to WOWing every customer. – Customers come… • Over 10 million total purchasing customers • Over 4 million 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 • $123.86 – first time customers in Q407 • $156.27 – returning customer in Q407
  7. 7. Confidential Slide #7 Power of repeat customers and word of mouth... 2000 2001 2002 2003 2004 2005 2006 2007 2008 Gross Sales 1.6 8.6 32 70 184 370 597 841 1014 $0 $200 $400 $600 $800 $1,000 GrossSales$M's
  8. 8. Confidential Slide #8 Customer Service: Establishing a personal emotional connection with the customer See Experience Feel What customers first see on Zappos web site? What customers experience after their order? What we do to establish a personal emotional connection? • Great selection • Easy to navigate web site • 24/7 800 # on every page • Free shipping • Free return shipping • 365-day return policy • Fast, Accurate Fulfillment • Most customers are “surprise”- upgraded to overnight shipping • Friendly, helpful “above and beyond” customer service • Occasionally direct customers to competitors’ web sites • Manage Call Center Differently • No call times • No sales-based performance goals for reps • Manage Fulfillment Differently • Run warehouse 24/7 • Inventory all product (no drop- ship) • Manage Culture Differently • Interviews and performance reviews are 50% based on core values and culture fit • 5 weeks of culture, customer service, and warehouse training for everyone in Las Vegas • Offer $2,000 for trainees to quit • Culture book
  9. 9. Confidential Slide #9
  10. 10. Confidential Slide #10 2009 is about Owning the 3 C’s: Clothing, Customer Service, Culture Customer Service Clothing Culture
  11. 11. Confidential Slide #11 Clothing
  12. 12. Confidential Slide #12 Customer Service
  13. 13. Confidential Slide #13 Culture
  14. 14. Confidential Slide #14 2009 is about Owning the 3 C’s: Clothing, Customer Service, Culture Customer Service Clothing Culture
  15. 15. Confidential Slide #15 Delivering Happiness (customers and employees) “People may not remember exactly what you did or what you said, but they will always remember how you made them feel.”
  16. 16. Confidential Slide #16 CULTURE “Committable Core Values”
  17. 17. Confidential Slide #17 Zappos 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 5. Pursue Growth and Learning 6. Build Open and Honest Relationships With Communication 7. Build a Positive Team and Family Spirit 8. Do More with Less 9. Be Passionate and Determined 10. Be Humble
  18. 18. Confidential Slide #18 “That’s great for Zappos but it would never work at my company…”
  19. 19. Confidential Slide #19 It doesn’t matter what your core values are…as long as you commit to them. ALIGNMENT
  20. 20. Confidential 7 Steps For Building A Brand That Matters
  21. 21. Confidential Slide #21 Step #1 DECIDE if you’re trying to build a long term sustainable brand Requires more patience with revenues & profits in order to lay the foundation Decide sooner rather than later
  22. 22. Confidential Slide #22 Step #2 FIGURE OUT VALUES & CULTURE
  23. 23. Confidential Slide #23 VALUES & CULTURE Figure out values & culture sooner rather than later • What are your PERSONAL core values? • What are the COMPANY’s core values? • Start EARLY. • It is surprisingly HARDER than you think. • It doesn’t MATTER what the values are. • The most important thing is ALIGNMENT. • …LIVE the BRAND.
  24. 24. Confidential Slide #24 Step #3 COMMIT TO TRANSPARENCY “Be real and you have nothing to fear” Your culture is your brand Don’t try to be someone you are not
  25. 25. Confidential Slide #25 Zappos commitment to transparency: – – “Ask Anything” newsletter – Extranet for vendors – Tours & reporter visits –
  26. 26. Confidential Slide #26 Step #4 VISION “Whatever you’re thinking, think bigger.” Does the vision have meaning? Chase the vision, not the money…
  27. 27. Confidential Slide #27 VISION “Don’t chase the paper, chase the dream.” Sean Combs aka “Puff Daddy” to rapper Biggie Smalls aka “Notorious B.I.G.” in Notorious
  28. 28. Confidential Slide #28 ENTREPRENEURS: “What would you be passionate about doing for 10 years even if you never made a dime?”
  29. 29. Confidential Slide #29 EMPLOYEES: What’s the larger vision and greater purpose in their work beyond money or profits?
  30. 30. Confidential Slide #30 VISION MOTIVATION vs. INSPIRATION
  31. 31. Confidential Slide #31 Evolution of Zappos Brand / Vision – 1999 Selection “The World’s Largest Shoe Store” – 2003 Service & Selection Stopped drop shipping forgoing 25% of sales at the time – 2005 Culture & Core Values as a platform “Zappos is a service company that just happens to sell shoes...” – 2007 Personal Emotional Connection “Powered by Service” – 2009 Delivering Happiness
  32. 32. Confidential Slide #32 Step #5 BUILD RELATIONSHIPS (not networking) Be INTERESTED rather than trying to be INTERESTING
  33. 33. Confidential Slide #33 Step #6 BUILD YOUR TEAM “If you want to go quickly, go alone. If you want to go far, go together.” (Al Gore quoting African proverb) Hire slowly / Fire quickly
  34. 34. Confidential Slide #34 Great companies have all 3 elements… Visionary Artist Scientist
  35. 35. Confidential Slide #35 Step #7 THINK LONG TERM Repeat customers Customer service There is no “get rich quick” formula “Overnight” successes are years in the making (both personally and in business)
  36. 36. Confidential TAKE A STEP BACK What is your goal in life?
  37. 37. Confidential Slide #37 WHAT IS YOUR GOAL IN LIFE? Grow Company Get a Great Job Boyfriend/ Girlfriend Be Healthy Retire Early Make Money Find Soul Mate Run Faster Spend Time w/ Family Buy A Home Get Married Run A Marathon why? why? why? why? why? why? why? why? HAPPINESS why? why? why? why?
  38. 38. Confidential Slide #38 RESEARCH HAS SHOWN: HAPPINESS People are very bad at predicting what will bring them sustained happiness. “When I get ___, I will be happy.” “When I achieve ___, I will be happy.”
  39. 39. Confidential Slide #39 HAPPINESS: • There is a SCIENCE behind many aspects of business including: – conversion – psychology of buying – direct marketing – customer acquisition metrics – repeat customer behavior, etc. • What if you spent just 10% of your time studying and learning the SCIENCE of HAPPINIESS? • How much HAPPIER could you be?
  40. 40. Confidential Slide #40 WHAT IS YOUR GOAL IN LIFE? Grow Company Get a Great Job Boyfriend / Girlfriend Be Healthy Retire Early Make Money Find Soul Mate Run Faster Spend Time w/ Family Buy A Home Get Married Run A Marathon why? why? why? why? why? why? why? why? HAPPINESS why? why? why? why?
  41. 41. Confidential A Few Frameworks On HAPPINESS
  42. 42. Confidential Slide #42 Perceived Control Perceived Progress Connectedness Vision / Meaning (Being part of something bigger than yourself) A Few Different Frameworks of HAPPINESS:
  43. 43. Confidential Slide #43 Maslow’s Hierarchy:
  44. 44. Confidential Slide #44 HAPPINESS = PLEASURE + MEANING
  45. 45. Confidential Slide #45 Rock Star (Pleasure – chasing the next high) Flow (Engagement – time flies) Meaning /Higher Purpose (Being part of something bigger than yourself) 3 TYPES OF HAPPINESS time time time
  46. 46. Confidential Slide #46 RECOMMENDED BOOKS: PEAK Chip Conley TRIBAL LEADERSHIP Dave Logan, John King & Halee Fischer-Wright FOUR HOUR WORK WEEK Tim Ferriss HAPPINESS HYPOTHESIS Jonathan Haidt
  47. 47. Confidential Slide #47 What % of your time do you want to spend learning about the SCIENCE of HAPPINESS? How can the SCIENCE of HAPPINESS help Zappos and yourself personally?
  48. 48. Confidential Slide #48 If the research shows that vision / meaning / higher purpose leads to happiness… What is your company’s higher purpose? What is your higher purpose?
  49. 49. Confidential Slide #49 THANK YOU
  50. 50. Confidential Slide #50 Put a little Zappos in your day… …to contact me or get a tour… – Email for: • A copy of this presentation • Copies of our culture book (need physical mailing address) – Email for: • Tour of our offices when you’re next in Las Vegas (takes about 45-60 minutes and best Monday thru Thursday) • We’ll pick you up from the airport or your hotel in a Zappos Shuttle!
  51. 51. Confidential Delivering HappinessDelivering Happiness
  52. 52. Confidential Slide #52 Legal and Financial Disclaimer P.S. You might be wondering why we need to have a legal and financial disclaimer in this presentation, but you are still reading, so our lawyers, auditors and accountants would really like to make sure we make the following clarifications. Although an audit was underway and almost done, the financial information presented in this slide show was unaudited. We made every effort to present the best information we had at the time. Gross merchandise sales is a non-GAAP metric. We use it to express the total demand across all of our web sites and stores. This number measures the dollar value of the orders placed in the year before accruing for certain items such as returns, and it ignores certain timing cut-offs that are required by GAAP for revenue recognition purposes. If we were a public company, we would have to reconcile gross merchandise sales to the nearest GAAP metric (net sales), but we are currently a private company so the gross merchandise sales number should be viewed just as an interesting number that we want to share with our friends. This presentation contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by the forward-looking statements and assumptions. These risks and uncertainties include, but are not limited to, the risk of economic slowdown, the risk of over or underbuying, the risk of consumers not shopping online or at our web site at the rate we expected, the risk of supplier shortages, the risk of new or growing competition, the risk of a natural or some other type of disaster affecting our fulfillment operations or web servers, and the risk of the world generally coming to an end. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. assumes no obligation and does not intend to update these forward-looking statements. Congratulations on making it through all the fine print. If you enjoy fine print, look for openings on our legal and finance team at
  53. 53. Confidential