How Do You Achieve a 62,400% Growth Rate?

by Scott JeffreyMar 09, 2010

Do you think it’s possible to go from under $2 million in sales to over $1 billion in less than a decade? What would it take? How would you do it?

You can’t do it if you use common thinking. You can’t do it by throwing gobs of money at an advertising budget. (Anyone remember Pets.com?)

You have to be smart, strategic and visionary. You have to adopt core values and live by them. You have to cultivate a culture that perpetuates those values. Most importantly, you have to excite your customers and cultivate loyalty to your brand.

Online retailer Zappos, led by CEO Tony Hsieh, went from $1.6 million in sales in 2000 to over $1 billion in sales this past year. What started out as an online shoe retailer is quickly morphing into a mega-retail clothing powerhouse. How did they do it?

Zappos’s tag line “Powered by Service” says it all. Zappos’s commitment to provide the best online shopping experience has led to a series of unique decisions designed to foster customer loyalty:

• To execute hyper fast order fulfillment, their fulfillment center operates 24/7.
• To ensure consistent fulfillment execution, they house all items in their warehouse (no drop shipping from outside sources).
• To take the risk of shopping online away from their customers, Zappos offers free shipping both ways. (To my knowledge, they were the first to do so.)
• To wow their customers and add the element of surprise, (Principle #7 in Why We Talk) they upgrade most orders to overnight or two-day shipping for free.
• To meet their customers’ diverse needs, they offer a staggering selection of over 1,000 brands and over 200,000 styles.
• To truly be “Powered by Service” their customer service staff goes through a five week training on the Zappos culture, core values and customer service protocol (including sending customers to their competitor’s websites on occasion).
• To ensure friendly, helpful staff aligned with the Zappos culture, they offer new hires $2,000 after the first week of training to leave the program if it’s not a good “fit.” (According to Hsieh, this saves them money in the long run.)
• To fulfill their customer’s higher human needs, Tony Hsieh is committed to delivering happiness to his customers.

I can keep going with this list. Zappos does a lot of things right (which helps explain why Jeff Bezos/Amazon.com just bought them). All of these attributes contribute to 75% of their sales coming from repeat customers.

What are the benefits of loyalty? Retention, more repeat business and positive word of mouth (customers create new customers for you). These are the ingredients needed to achieve a 62,400% growth rate.

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