Podcast: How Zappos made millions on Culture and Customer Service

We live in a time where the good guys can win — Tony Hsieh, CEO, Zappos (CLICK IMAGE ABOVE FOR HIS PODCAST)

I enjoyed this podcast discussing the extraordinarily successful online retailer Zappos. Why care about Zappos? Amazon bought them for a very cool $880 million in late 2009. Zappos was bought due to its success with CRM and good old fashioned customer service. Also note their success in a highly commoditised clothing retail industry segment. Not exactly a place that you would think first about buying shares in a company for future growth.

The Zappos success story is a confluence of entrepreneurship, clear brand values and autonomy given to line staff turning personal interactions over the phone, email or chat into real time acquisition and retention strategy. All three elements work together collectively or the system fails.

The autonomy, in particular, resonates with MyCMO’s portfolio management approach to marketing and customer service. Give employees the tools and the trust to make decisions, be accountable, and come up with creative ways to drive revenue. That is where Zappos separates itself from other conservative and risk averse business models.

Here are a few snippets I gleaned from a second podcast from Zappos employees. My notes below…

Home made CRM tool

Zappos developed their own home made CRM tool. It was further developed by user feedback from employees to make their lives easier to serve customers (not a purchase decision dictated from the ivory towers by someone not doing the work). Methods used include collected informal feedback from internal email, weekly dev team meetings to assess new ideas and trends. Keeping an ongoing communication pipeline maintains currency.

Customer Call Center

No quotas or call time limits. Want people to put own personalities to work. Good service = allowing natural speech.

Extensive hiring process picking right people. Once in the business, we show them trust, they don’t abuse time on call. The CEO prefers not hiring MBAs, “People with MBAs come from rigid academic perspectives and there is a lack of creativity we find with them. Many solutions are counter intuitive

Reason for encouraging customers to call when other businesses want to avoid calls? Phone is a branding device and relationship builder. Personal and emotional connections made via phone, email or chat…75% of business is repeat business from word of mouth or returning customers

Zappos encourages uninhibited chat. This goes against AHT call center best practice metrics. One call took 4 hours. They look at these metrics but do not obsess. One person with an overly long customer service call was recently promoted.

Management and Work Culture

Affects of economy on sentiment and on buyer mood. Zappos had a recent layoff. Accept this is part of business. Culture does not change despite layoffs. Zappos grew in 2009 vs. other retailers.

How does Zappos management handle the business? The CEO is passionate about culture and service. Shy person will not stick out in meeting. Maintains his brand values. Open to approach by staff. Has the trust of his staff.

Zappos CEO believes companies do not do enough to make employees happier with culture. One of the key indicators for bad culture, according to Tony Hsieh, is if you start thinking that you would not want anything to do with the people you work with outside of work. Yep, makes sense to me.

What are competitors doing wrong? We focus on ourselves primarily, but maintaining values and allowing autonomy of line staff to resolve customer needs in a timely manner.

In 2005, asked staff to vet 36 values and agree on a top 10. The whole company had a say on what core values should be.

Zappos (Brand) Values

Zappos attributes its customer engagement through its Zappos Core values that include:

  • Passion and determination
  • Embracing and driving change
  • Building a positive team and family spirit
  • Doing more with less
  • Pursuing growth and learning
  • Fun/weirdness
  • Adventure and open-mindedness
  • Being humble

…and if you want to read more on Tony Hsieh and the culture of happiness leading to profits here is another good article to checkout.


Rick Speciale

MyCMO – Director

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