Zappos.com CEO Tony Hsieh said the successful formula for his online shoe store is a matter of making sure customers come back and spread positive words about the site’s service.
“We really think of the Zappos brand as a brand with the absolute best customer service,” Hsieh told his audience at the Association of National Advertisers Brand Innovation Conference in New York City yesterday.
That could be a prime reason for Zappos’ meteoric rise in revenue, from $1.6 million in 2000 to $800 million last year, with projections to top $900 million this year.
Its business is largely based on repeat business and word-of-mouth, and Hsieh claims that one in 38 U.S. consumers have bought shoes or other accessories from Zappos.com.
Zappos.com keeps its customer happy with free shipping on initial orders and returns, a 365-day return policy and a promise of next-day delivery. That last feature “creates a ‘Wow’ moment for our customers,” Hsieh said.
There are no call times or sales-based performance for phone representatives, who undergo five weeks of training for their jobs. Customer interaction with those reps is the online retailer’s “best branding opportunity,” according to Hsieh.
If Zappos.com doesn’t have a shoe in stock, they are trained to scan three competitors’ sites to help the customer find that shoe in the right size. Performance reviews are based 50% on employees’ fitting in to its customer-conscious milieu. “If our brand is about customer service, the company culture should be about customer service,” Hsieh said.
In one case, a woman returned a pair of shoes she bought for her husband, who had since died in a car accident. The Zappos.com rep sent flowers to the man’s funeral, inspiring a testimonial from the woman to her fellow mourners.
Hsieh boils the building brands that matter down to four principles, starting with having a vision.
“Whatever you’re doing needs to be meaningful. Do something you’re passionate about,” he said.
The second principle is focusing on repeat customers. Zappos’s training regimen covers that, but it took a few missteps along the way. It spent $75,000 for a billboard behind home plate at the San Francisco Giants’ PacBell Park one season with an underwhelming response: it identified three customers who called as a result. It also experimented early on with a $10 discount for each customer’s first purchase, but found they never came back for seconds.
“Unless you’re Wal-Mart, the low-ice game is hard to win,” Hsieh observed.
Transparency through sharing sales data openly with its 1,500 vendors has helped Zappos manage its business, according to Hsieh, who said that feedback far outweighs any potential disadvantage from competitors accessing the same information about markdowns.
The conclusive principle, according to Hsieh, was creating the right culture. At Zappos.com, employees annually are charged to write briefly about what the company means to them. The resulting book the company compiles also contains comments from vendors and customers.
“This book serves as a handbook,” said Hsieh.
Network
