Back to basics: For a good time, call Zappos.com

Posted by Chris Flanagan on July 29, 2008

Four million pairs of shoes of all shapes, sizes, colors and trends currently reside in a warehouse in Kentucky. Twenty-four hours a day the shoes are being shipped out to consumers all across the country to the comfort of their own homes. Don't like the pair once they arrive? No problem. You can ship them back, free-of-charge. That's the allure of online retailer Zappos.com.

Tony Hsieh is Zappos.com's rising star CEO and he'll be sharing his story at the BIF-4 summit in October. His back-to-basics approach to company building has propelled Zappos to the near billion dollar mark in revenue sales.

How did he do it?

If you go back in time, 'the customer is always right' was the retailing innovation of Wisconsin-born merchant Harry Gordon Selfridge who founded Selfridge’s department store in London in 1909. This traditional business mantra, once thought to ensure good customer service, has lost some of its appeal in a retail era dominated by volume, speed, and impersonality. But Hsiehf ound a way to return to the basics of keeping the customer happy. He does it by focusing on his 1,600 employees.

“Any business depends on making sure you hire great people—passionate, smart people who are open-minded and creative,” he said during a recent BIF interview.

Most store clerks today have minimal product knowledge and scant interest in the retailing success of the companies that employ them. With the rise of online shopping and the increased number of overseas call centers, the likelihood of creating a positive customer experience seems slim. But Zappos.com refuses to settle for mediocre customer relations.

The remarkable success of the company begins with a month-long training program that indoctrinates new employees into its set of ten “core values.” After a week of training, each employee is offered a “quit-now bonus”—a week’s pay, plus a $2,000 bonus to quit now. Two to three percent of employees take the offer, and Hsieh considers the expenditure worthwhile because he knows that the remaining ninety percent are true-blue Zappos.com. They are described by pleased customers as friendly, fun, and intelligent people who listen more than they talk and who go out of their way to personalize the online footwear purchasing experience.

In Hsieh’s mind, each customer call is a branding opportunity in which Zappos.com has the full attention of the customer. This is why the happy, creative, and loyal employee is so crucial. “We don’t have scripts, and we encourage employees to let their real personalities shine when a customer calls,” Hsieh explains. Hsieh considers himself a CEO “who likes to have fun and challenge conventional wisdom,” one who stays connected to employees and customers through Twitter, where he has attracted over 8,000 enthusiastic followers. He is refreshingly straightforward, unassuming, and entertaining in his company blog: customers can read his latest Power Point presentation or the fuzzy details of a photo shoot involving him and a pair of thigh-high boots. The “wow” experience Zappos.com hopes to offer its customers clearly starts with the CEO and filters outward. Hsieh zealously concentrates on the emotional side of the business, promoting the Zappos.com lifestyle as much as its product lines. He wants his employees to be passionate about the company to the point where they think about it during their shower and commute times.

“There is no clear separation between work and play,” he says. “At Zappos.com, employees hang out with each other outside the office, and a lot of the best ideas happen over drinks or dinner.”

All of this feel-good company culture has earned major dividends. When Hsieh took over the business in 2000, gross merchandise sales were $1.6 million a year. In 2007, they were $840 million, and the $1 billion goal Zappos.com set for itself in 2008 is in sight.

Far too often, innovation in customer service means embracing new technology. Everything from ATM’s at the register, to coupons on demand, to self-service web portals. It seems that many companies have lost sight of what legendary designer Charles Eames called the ‘particular purpose.’

Yet Tony Hsieh has done something different. He hasn't reinvented a business model - instead, he's innovated to get things right.

Don't miss Tony Hsieh share his story at the BIF-4 Collaborative Innovation Summit on October 15 and 16, 2008. Full lineup and registration details are here.

Related

• Watch Tony Hsieh's recent Nightline segment Internet Shoe Shop's Unique Step