Tony Hsieh, CEO, Zappos.com
Tony Hsieh has been speaking a lot lately at conferences. And when you hear the story of Zappos.com and it’s rise from $1.6 million in revenues in 2000 to $1 billion in revenues at the end of 2008, you can understand why people want to hear about it.
What was refreshing for me was the amazing level of openness that Tony conveyed in his talk. They are so confident that they are building a great company, that they are not afraid to open the kimono.
I introduced Tony by sharing two personal stories that point out the power of Word of Mouth for the Zappos.com brand. I’ve actually never bought anything from Zappos personally, but my house is full of empty Zappos boxes, as my wife is a big promoter of their selection and service. I also shared a photo that one of our Satmetrix employees gave to me from his first visit to their facility in Henderson, Nevada, outside Las Vegas. The company gives tours of the facility, and ends the tour with a nice surprise. I won’t spoil it for those of you who have yet to visit there. I may check it out next time I’m in Vegas.
The brand simply inspired storytelling, and Tony explained that this is not entirely by accident. They focus deeply on the company culture (which is all about being the very best at customer service). And as Tony said, if you get the culture right, all the other good stuff follows…including good Word of Mouth and high Net Promoter Scores. Their NPS as measured internally has been running between 80-90%...which is pretty remarkable. But the balance of the discussion made it clear that they do a lot of specific things differently to generate so many promoters.
Tony talked about how “everyone is a little bit weird.” I personally identified with this a lot. I’ve got my quirks, and most of the people I know and love do to. People who don’t have quirks, or who mask them, are honestly not that interesting to me. That’s a big part of what makes us real and human…and I think it’s a bit of secret sauce in how Zappos is connecting emotionally with their customers.
They embrace this “differentness” in everything they do.
First of all with employees. Employees are encouraged to be themselves. They spend a lot of time selecting the right employees, making sure their values are customer service oriented. Then they put them all (everyone) through the same 5 week hands-on training program. They even offer to pay employees a sort of “departure bonus” after the first week of training if they don’t believe Zappos.com is the place for them. Tony explained that these practices help to get really committed individuals who are wired to fit with the company’s service-oriented culture. And it also allows them to unleash that creative energy at every point of customer interaction (without lots of complex policies and procedures). Now that’s different!
Process was next. They obviously do have processes…but again they seem to think of it differently. For example, they call their customer service team the “customer loyalty team.” That’s the ultimate goal right? You may service an automobile, but with people your goal is to make them loyal. How to do this? Well, their support team doesn’t “upsell,” they don’t measure call time, and if they don’t have the product in stock, the members of the loyalty team are encouraged to check 3 competitor websites to help the customer get what they want. Different, right?
Marketing and branding is different too. I loved it when Tony said that they have their 800 number at the top of every web page on their site. This contrasts radically with companies who are thinking of customer service as a cost, and try to make it hard to figure out how to call in for service. As Tony put it, the telephone is the best marketing tool out there. You get your customer’s undivided attention for 5 or 10 minutes to make a connection with them, and to establish who you are and what your brand is all about. Different again!
He wrapped up by reinforcing the 4 core things that he thinks companies need to get right to have a successful strategy:
- Vision: theirs is to deliver the best customer service. That’s it.
- Repeat Customers (not advertising): This is a big connection to the Net Promoter philosophy. Tony explained that they were forced to focus on repeat customers early on because of the dot com bust, but it has turned into one of their core metrics. They have gone from 20% repeat customers in the first 12 months, to over 50% today.
- Transparency: They are committed to being open and honest about who they are, and you can get a copy of the Zappos.com culture book (with messages from every employee), or connect directly with Tony online in blogs on twitter, you name it. They are committed to being open and honest.
- Culture: Their culture is their brand, and so it is for every company. Tony believes they are just 2 sides of the same coin.
Well put, Tony. Thanks for an inspiring and different view of how a company can operate.
Use the link below to download the presentation from our Case Study Library:
http://www.netpromoter.com/netpromoter_community/docs/DOC-1041
(view case studies requires brief registration)
Let’s Look at Advertising vs. Word of Mouth: Today Can advertising really be effective for long term growth? Companies can’t advertise their way out of trouble they have to focus on the customer’s experience. You can see this hold true when you look at the US auto industry and companies like Sprint both of which spend large advertising dollars but it has not resulted in increased sales. Today, the best customer service is now online retail where companies who invest in the customer experience, not advertising, are leading the way. For example look at companies like Overstock, Amazon, and Zappos.Deploying a Successful Net Promoter® Strategy: One theme that is consistent among the leading companies is that Net Promoter is really about a holistic approach that is part of the entire organization, not just the score. To truly be successful implementing a Net Promoter discipline requires change across the organization. Based on our findings, companies that are able to implement change management will be successful with their Net Promoter programs. Companies need to move away from business processes that do not work for them and learn how to create a radical shift in the organization.
