1999: Selection (of shoes)
2003: Customer Service
2005: Culture and Core Values as their Platform
2007: Personal Emotional Connection
2009: Delivering Happiness
Several key take-aways for smart business people:
A strong brand is constantly evolving, but not changing directions. This is critical. You probably don’t want or need to re-invent your brand, but you also can’t be stagnant. (It’s also interesting to see how a brand’s logo can evolve over time.)
Strong brands tend to move up Maslow’s Hierarchy of Human Needs. Zappos continues to move in a more humanistic direction. They’ve always been about people, but now they are moving upward to a more meaningful connection with their customers and employees. Delivering happiness is a tall order, but simply holding that intention will create new opportunities to wow their customers and employees and lead to greater loyalty.
For anyone interested in the power of brand loyalty and how to build a business for the long-term, Zappos is an ideal company to study. Zappos demonstrates that many of the intangible qualities of business like values, culture and willingness are more important than many transactional-oriented executives care to believe. Otherwise, why would anyone care about a shoe e-tailer? And how could they grow by approximately 7,800% annually for the last nine years?
Jim Collins in Good to Great, clearly spelled out the attributes of great leaders. Level 5 leaders, as Collins calls them, exemplify a seemingly incongruous mix of personal humility and professional will.
Humility + Will = Level 5
“Level 5 Leaders are a study in duality: modest and willful, humble and fearless,” Collins explains. They don’t allow their egos to interfere with their primary focus on the larger goal of building a great company. Collins clarifies that Level 5 leaders are usually highly ambitious, but their ambition is directed for the good of the institution, not themselves.
At Zappos, you won’t find any sacrosanct corner offices reserved for the higher ups. Zappos executives are fondly referred to as “Monkeys” and sit in what is aptly named “Monkey Row.” Here, CEO Tony Hsieh sits in an open cubicle among other executives, and encourages his employees to throw peanut shells on the floor of his workspace. Hsieh sends a subtle yet clear message that he’s not more important than anyone else in the company.
Collins further explains, “The good-to-great leaders never wanted to become larger-than-life heroes. They never aspired to be put on a pedestal or become unreachable icons. They were seemingly ordinary people quietly producing extraordinary results.” Aligned with this core principle, Hsieh openly advertises his email address and encourages people to drop him a message. You might be skeptical, thinking that your message would go unanswered, lost in a flood of emails. Hsieh, however, means what he says and stands by his word.
How can a CEO of a billion dollar company be so responsive? According to Collins, it’s because Level 5 leaders have a “ferocious resolve” to do whatever it takes to make the company great. And by his very nature, Hsieh embodies the perfect balance between personal humility and professional will, leading Zappos’s transformation into the great company it is today.
Can you imagine a day at the office where you might be asked to shave the head of your co-worker? Or better yet, how about taking a razor to the mane of your CEO? Leave it to the folks at Zappos to create not just a day, but an annual event called the Bald & Blue Head Shaving Day.
Social grooming is a means through which animals, including humans, who live in proximity can bond, build and reinforce social relationships. CEO Tony Hsieh explained that what originally started out as a dare evolved into a fun team building activity. Now every year, Zapponians line up and get groomed, all in the name of team spirit.
The benefits? Research has shown that social grooming is positively associated with relationship satisfaction and trust. For Zappos, relationships built on trust are the bedrock of their organization.
Watch this short clip on social grooming, the Zappos way.
Jobs are everywhere. We clock in and clock out, putting in the bare minimum just to get the work done. Sometimes though, we find a career where we have a deeper vested interest in our work, motivated by achievement and advancement. Yet if we’re lucky, we’ll eventually find our calling where work becomes our life mission, and our life mission becomes work.
Online retailer Zappos is on a mission to inspire their family of employees to a higher calling. Since the beginning, they weren’t satisfied hiring people just looking for a job to pay the bills. Under their visionary leader Tony Hsieh, the company made a bold organizational move in 1994, relocating their headquarters from San Francisco to Las Vegas, to align themselves with people looking for a career.
Hsieh wrote in Inc. Magazine, “We were having a hard time finding good customer service people in San Francisco. Las Vegas has a lot of call centers and lots of people who want to do customer service as a career.”
Zappos embraces a singular vision—to provide the best customer service—and attracts people who share this passion. But the folks at Zappos aren’t satisfied knowing that their employees are committed to a career in customer service. They constantly strive to inspire their employees to find their true calling—to find personal meaning in their work guided by a higher purpose.
To achieve this, Zappos employs a full-time on-site personal coach, Dr. Vik, who invites employees to take a seat on the royal “throne” for a one-on-one consultation. He regularly tells his guests, “You are worth a billion dollars. Come have a seat and take your life to the next level!” With Dr. Vik’s guidance, employees are empowered to reach their full potential across their work and personal lives.
How many companies employ a full-time personal coach? Most businesses would view this as an unnecessary expense and immediately reject the idea.
Yet Zappos understands that a company’s employees—their people—are a reflection of the brand itself. When employees find their true calling, work is greatly satisfying and meaningful. Their enthusiasm and passion is infectious. And the customers are first to take notice.
Businesses aggressively strive to establish trust with their customers, but oftentimes neglect the need to cultivate trust in their own workplaces. Economist John Helliwell researched the determinants of workplace happiness, and found that trust is the greatest contributor, beating out pay, workload, or perks. A one-point increase on the trust scale can mean the equivalent of the psychological benefits associated with a 40% wage increase.
Online retailer Zappos embraces trust as an essential ingredient in cultivating an enthusiastic and happy workplace. Zappos made its inaugural debut at #23 on Fortune Magazine’s List of “100 Best Companies to Work for,” making them the highest-ranking initiate for 2009. For Zappos, trust is a core business value, established through a steadfast commitment to transparency.
Here are 5 ways that Zappos champions trust within their organization:
The Culture Book: Zappos publishes an annual book, a compilation of employees’ thoughts and reflections on the Zappos culture. Every submission is included and edited only for spelling and typos. The book is given to potential hires for an unfiltered look into the Zappos culture, inclusive of the good, the bad, and the beautiful.
The “Ask Anything” Newsletter: Employees can literally ask anything about the company, even and especially about financials. Answers are compiled and published in a monthly newsletter.
Extranet for Vendors: Vendors can log in and view insider data such as inventories and sales. When asked if Zappos worries whether the information will get into the hands of competitors, CEO Tony Hsieh is not concerned. He is confident that the benefits outweigh the risks, by providing vendors a critical window into their business, promoting a sense of control, and above all else, building relationships based on trust.
Company Tours–Come One, Come All: Zappos has an open door policy and offers everyone a tour of their company headquarters. When reporters visit the headquarters, there’s no official algorithm that dictates who they can speak to and who they cannot. When you have nothing to hide, every employee is authorized to speak to his or her own experience.
Twitter: Zappos actively encourages its employees to join Twitter, and in fact, offers Twitter class as part of their employee orientation. With over 400 employees tweeting, Zappos policy is more of a non-policy: “Be real and use your best judgment.” Hsieh understands the power of Twitter, not just as a way to cultivate transparency, but also to empower employees and strengthen ties within the organization. Hsieh tweeted: “Twittering is like hugging. Just because it’s hard to measure the return on investment doesn’t mean there isn’t value there.”
When employees feel trusted, they tend to be happier. The pay off for companies? Greater productivity and less turnover. And when employees are satisfied, customers tend to be satisfied too. So what do you have to hide?
Tony Hsieh, CEO of Zappos, knows a thing or two about the power of word of mouth. In the beginning, Hsieh made a critical decision to invest the majority of his marketing and advertising budget into the customer experience.
Over 80 percent of Zappos customers hear about the brand through word of mouth or online advertising. Once customers place their first order and experience Zappos’s stellar customer service, they usually come again.
Today, 75 percent of sales come from repeat customers. And it’s those happy customers who gladly share their enthusiasm about the brand with others.
What’s makes Zappos talk worthy? Zappos loves their customers and will go to great lengths to make them happy. Here, “P-E-C” or “Personal Emotional Connection” with the customer reigns.
Customer loyalty reps send hundreds of thank you cards to customers every week—not the automated email variety, but personalized notes handwritten on paper.
While most companies would see this as an unnecessary expense, Zappos understands the value of building relationships with its customers.
The bar has been permanently raised. Companies like Zappos, L.L. Bean, and Amazon.com have set a new standard in customer service. There’s simply no going back, but apparently many retailers still haven’t received the memo.
I recently purchased a gift card at the clothing retailer Forever 21. When I submitted the order, I waited for my confirmation receipt via email. I waited several days but nothing came. A week passed; still no word. I logged into my account online to double check that my order was placed. The order was listed but no other information was provided.
I called the customer service center. Apparently, I missed the fine print that my order would be received within 5 to 10 business days. When I asked when it was supposed to ship, the rep replied, “I don’t have that information.” To prevent further delay, I inquired how I could change the shipping address to ensure my niece would receive her gift before graduation day. I was told, “You can’t change the order once it’s been submitted.” Even though the order hasn’t been shipped? The rep repeated, “You can’t change the order.”
With every question, I became increasingly frustrated by the customer service rep’s lack of creativity. She was clearly sticking to the rulebook and primed to say “no” with every inquiry.
I asked one final question, “Can I just cancel my order?” Finally, I got a “yes.” The customer service rep replied, “I’ll go ahead and cancel your order. Can I help you with anything else?”
No, you’ve done enough.
Forever 21 needs to take a lesson or two from Zappos. At Zappos, customer service is an art form, not a necessary evil. It’s not relegated to a specific department, but rather cultivated throughout the entire organization.
CEO Tony Hsieh understands the importance of communication and perceives the telephone as “one of the best branding devices available.” Representatives of their Customer Loyalty Team are not evaluated by length of call time or sales-based performance goals. In fact, team members are expected to ensure that the customer’s needs are fulfilled—however long it may take. If Zappos doesn’t have a specific size or style in stock, customers may be directed to competitors’ websites.
Hsieh explained, “People may not remember exactly what you did or what you said, but they will always remember how you made them feel.” So even if a sale is lost in the moment, the investment pays off in the long run.
Forever 21 not only lost a sale, but most of all, a customer. When the bar is raised this high, who can afford to be Forever Mediocre?
A customer returned a wallet she ordered from online retailer Zappos, but unknowingly left $150 in it.
Her search for the missing cash was resolved when she received a letter from the warehouse staff saying, “Thanks for the return! We found $150 in your wallet and thought you might want it back.”
Integrity runs high at Zappos where employees are guided to look beyond personal gain and act in service of the greater good.
CEO Tony Hsieh tells a story about a woman who ordered boots for her husband who was soon after killed in a car accident. She called the customer service line for help with the return and received a bouquet of flowers the next day.
The customer loyalty rep made the decision to order the flowers on company credit, without needing to consult with a supervisor. “At the funeral, the widow told her friends and family about the experience,” Hsieh recounted. “Not only was she a customer for life, but so were those 30 or 40 people at the funeral.”
Zappos doesn’t have specific guidelines to deal with customer service situations. Employees are encouraged to trust their judgment. Most of all, they’re empowered to make decisions from the heart.
Hsieh explains, “We’re not trying to maximize transactions. We’re trying to build a lifelong relationship with our customers.”
If you haven’t jumped on the Twitter bandwagon yet, there is one reason to do so: Tony.
Zappos CEO Tony Hsieh is a visionary leader committed to the pursuit of growth, trust, and most of all, happiness. Twitter, he acknowledges, has helped in his quest to become a better person. According to Tony’s blog, Twitter keeps him accountable to his personal values; encourages him to see life through a funnier, more positive lens; inspires him to make a positive impact on other people’s lives, and serves as a reminder to appreciate the small things in life.
Some of his tweets will make you laugh, and feel oddly yet soothingly reminiscent of “Deep Thoughts” by Jack Handey:
Feeling pensive today and pondering life’s big questions. For example, what does Luke Skywalker do on father’s day?
Going fishing for first time w/ board member. I think they might be taking the whole “teach a man to fish” thing too literally
At a friend’s house and when I walked by a cactus it poked me. Personally, I find that unnecessary and a bit immature.
Others will provide a glimpse into his disarming and self-effacing sense of humor:
At MGM for Britney Spears concert! Wait, did I really just admit that to 500k Twitter followers? I meant I’m at home reading.
At Vegas airport. While in bathroom, I had an AMAZING revelation: Toilet seat covers are shaped exactly the same as life vests!
Others are simple and beautiful inspirational quotes:
“Most folks are about as happy as they make their minds up to be.” – Abraham Lincoln
“In the pursuit of knowledge, something is added every day. In the pursuit of enlightenment, something is dropped every day” -Lao Tzu
Be Humble: “In the beginner’s mind there are many possibilities, but in the expert’s mind there are few.” – Shunryu Suzuki
Others are an amalgam of the above. My all-time favorite Tony tweet, quoting Winnie the Pooh: “If the person you’re talking to isn’t listening, be patient. Maybe he has a small piece of fluff in his ear.”
Tony is a master at building relationships and cultivating community, simply by being himself. He’s found a way to use Twitter to speak to his strengths and inspire legions of followers.
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.)
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.
At the 
Jim Collins in Good to Great, clearly spelled out the attributes of great leaders. Level 5 leaders, as Collins calls them, exemplify a seemingly incongruous mix of personal humility and professional will.
If you haven’t jumped on the Twitter bandwagon yet, there is one reason to do so: Tony.
