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A Shoe-In
for Best Retailer
Zappos.com steps up the online customer experience
BY SAMANTHA OLLER || soller@cspnet.com
A
wise man once said, “If you make customers unhappy in the physical world, they
might each tell six friends. If you make
customers unhappy on the Internet, they can each
tell 6,000 friends.”
That man, Jeff Bezos, president and CEO of
Amazon.com, hit on the fact that e-commerce is an
amplified version of retail: open whenever you want
it, everything available for a price and to everyone
in the world. At the same time, the ease of sharing
a poor customer experience is infinitely easier and
faster. All it takes for good and bad is an Internet
connection.
Perhaps it’s not surprising, then, that consumer
surveys continue to rank e-retailers among the tops
in delivering great customer service. Consider the
latest National Retail Federation (NRF)/American
Express Customers’ Choice survey, an annual poll
that asks consumers one question: “Thinking of all
the different retail formats (store, catalog, Internet
or home shopping), which retailer delivers the best
customer service?”
The poll, conducted by BIGresearch, ranked Zappos.com first, followed by Amazon.com at second
and Overstock.com at fourth. All three e-retailers
have made the top five for the past four years, outranking admired brick-and-mortars such as Nordstrom and supermarket chain Wegmans.
Martin P. Block, Ph.D., a professor in the Integrated Marketing Communications division of
the Medill School of Journalism at Northwestern
University in Evanston, Ill., oversaw the survey
results. He says the perception that these online
retailers provide great “customer service” is thanks
in part to technology—for example, their ability to
immediately show how much inventory is in stock
while a consumer is making a selection, and the ease
of returning a purchase.
Indeed, most Internet retailers have taken Amazon.com’s approach to creating a great customer
experience: Let technology lubricate the transaction
“We’ve learned over
the years to hire
slowly and fire
quickly.”
JANE JUDD Zappos.com
and minimize the involvement of people, minimizing the cost of supporting the transaction.
But there’s a phenomenon that as consumers
transact more often online, the more they desire “at
least a backstop of human involvement,” says loyalty
marketing expert Bill Hanifin, president of Hanifin
Loyalty LLC, Pompano Beach, Fla.
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The Zappos.com customer who returns
merchandise frequently is more
profitable than the one who keeps her
purchase. According to the company,
that repeat returner is more willing
to experiment with new purchases
because she knows the process—free
shipping both ways—is painless.
THE UNUSUAL SUSPECTS: The typical Zappos.com customer loyalty rep does not typically
bring traditional contact center experience. In fact, the company prefers not to hire such
recruits, who are often engrained with industry practices such as call time limits and quotas.
One online retailer that has successfully merged the technological and
human sides of e-commerce is Zappos.
com of Henderson, Nev. The online
shoe and fashion retailer—whose
tagline is “powered by service”—has
an approach that demands constant
human involvement, is likely more
expensive in the long term and can be
tough for lesser companies to sustain,
says Hanifin. But for Zappos.com, it’s
the differentiator.
“They’ve made it really clear in
their brand promise that ‘You can get
to us,’ ” he says. “The warmth of customer service—you could even call it
‘high touch,’ even though they’re in
an online environment.”
Investing in employees’ happiness
provides the catalyst for a great customer experience, which in turn rings
up the sales. Repeat sales provide 75%
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of Zappos.com’s revenue, which grew
from zilch to more than $1.2 billion in
only 10 years.
It’s this “flywheel” that many
c-store retailers who have built—or
who are in the process of building—
a strong company culture take such
pains to perfect. Examining how
Zappos.com does it in the pressure
cooker of online retail provides some
useful best practices.
‘HIRE SLOWLY, FIRE QUICKLY’
When you are a subsidiary of Amazon.
com and have access to its considerable
technological resources, success should
be all but guaranteed. But for Zappos.
com, success came before Bezos and
Zappos’ CEO Tony Hsieh struck a
$1.2-billion bargain in 2009.
Hsieh—a 37-year-old business
and technology savant who also co-
founded LinkExchange—has always
believed happy employees held the
secret to business success. He just
wrapped up a promotional book tour
for “Delivering Happiness: A Path
to Profits, Passion and Purpose,” a
record of his personal and business
life lessons. The book’s main message:
A strong company culture leads to
happier, more productive employees,
which leads to happier customers and,
ultimately, increased profits.
“Tony says it best: If you treat
employees correctly, everything else
falls in place, and we all strongly
believe that,” says Jane Judd, senior
manager of Zappos’ customer loyalty
team.
For Zappos—ranked sixth on Fortune’s 100 Best Companies to Work
For list—this path starts with hiring
employees who are a strong match
with the company culture, which can
be summed up by 10 core values, led
by “deliver ‘wow’ through service.”
(See “Zappos’ 10 Steps to Greatness,”
p. 94.) They act as a touchstone in
the employee selection process.
“Making them commitable, and
really aligning around those core
values, filters into whatever business
you’re doing, whether you’re brickand-mortar or online,” says Judd.
“Even with our core values, it’s not
something dictated by Tony on down.
It’s up to everyone, when hired here, to
Zappos’ 10 Steps
to Greatness
At one time, the number of core values
that defined Zappos’ company culture
numbered 37. To simplify this, employees agreed on 10 values that power the
retailer’s engine; they are listed below,
along with sample questions from Zappos’
interview assessment guide to determine
cultural fit.
1. Deliver wow through service. “Give
an example of a time you went above
and beyond, and why did you do it? Any
regrets?”
2. Embrace and drive change. “Did you
ever have an unpopular or minority viewpoint and, if so, did you stand up for it?”
3. Create fun and a little weirdness. “On
a scale of one to 10, how weird are you?”
4. Be adventurous, creative and openminded. “What was the best mistake you
made on the job?”
5. Pursue growth and learning. “What
is the last book you read? Would you
recommend it to me?”
6. Build open and honest relationships
with communication. “Describe a time
you had to present unpleasant information to someone.”
7. Build a positive team and family spirit.
“When was a time you ‘took one for the
team’ even though it wasn’t your responsibility?”
8. Do more with less. “Give me an
example of a time you took on more than
what was required to improve a process.”
9. Be passionate and determined. “If all
jobs paid the same, what would you be
doing?”
10. Be humble. “What was your last
position called? Was that an appropriate
title?”
Source: Zappos.com
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maintain our culture and core values.”
The hiring process is divided into
three stages. The first two are conducted by phone, with a recruiter
checking for fit to the core values and
familiarity with Zappos; then a hiring manager determines technical fit.
Last comes an on-site interview, which
includes a tour of Zappos’ headquarters; a more intensive review of basic
and technical skills, and cultural fit;
and lunch with the team.
Zappos has no talk
time limits or call
quotas for its customer
loyalty reps, because
both prevent them from
fully “engaging with the
customer.” Just recently,
the department fielded
its longest customer
call on record: 8 hours
and 26 minutes.
The ability of a potential hire to
mesh socially with his or her coworkers is paramount at Zappos; the
company evaluates how engaging
and friendly an interviewee is not
only during the tour and lunch, but
also—if they are flying in from out of
town—on the ride from the airport in
the Zappos shuttle bus.
All new hires, regardless of their
position—from customer service
reps to senior vice presidents—
undergo customer loyalty training,
which includes how to interact with
customers and ensure a good retail
experience. During Christmas and
other high call times, employees from
other departments of the company
are asked to help field customer
calls, live texts from Zappos.com and
e-mails. It’s simply an expression of
the company culture: Everyone serves
the customer.
“It doesn’t matter what department; we all work in tandem,” says
Judd. “In the customer loyalty department, we have to be helpful, fast and
efficient on the phones. But our great
merchandisers have to have the brand
and styles people want to shop for, and
marketing has to make sure they’re
branding well. Then our warehouse
has to be very efficient, and pick, pack
and ship very quickly. We all know
how to support each other and depend
on each other so much for making
sure the experience is wonderful and
the customer is really satisfied.”
During the four-week customerloyalty training process, new recruits
are educated on the history of Zappos,
undergo soft skills and technical training, and bone up on the core values.
Employees from different departments
of the company discuss each core value
and share a story that illustrates how
it relates to his or her job. Next they
enter the “incubation” period, where,
for the next three weeks, they receive
one-on-one coaching.
Only then—after more than a
month and a half of training—are
customer loyalty reps released to “the
floor” to man the phones by themselves.
Even after a recruit receives an official job offer and tackles training, Zappos.com continues to sound out that
culture fit. The company is famous
for offering new hires $3,000 to quit, if
they don’t feel they are a good match.
The offer comes up three times:
during the second week of training,
before “graduation” and then after the
incubation period. “So we’ve given
them a lot of opportunities to really
understand that this is the passion
and culture you want to be a part of,”
says Judd. Last year, only 1% to 2% of
recruits took the money and ran.
“One thing we’ve learned over the
years is to hire slowly and fire quickly,”
she says. “We want to make sure we
have the best candidates.” In theory, it
also prevents the thousands of dollars
in pay and benefits—Zappos provides
free health coverage and lunch to all
employees—that would have been
wasted on a hire who’s not dedicated.
EDUCATION AS REWARD
A specific turnover figure for the
customer loyalty team at Zappos
isn’t available, although Judd says it
Zappos’ trick for handling unhappy
customers? It empowers customer
loyalty reps to choose the best way
to satisfy the customer—whether it
involves free merchandise, flowers or
some other gesture—and ensure they
communicate that capability clearly to
the disgruntled shopper.
is below the national industry average. That said, “We always feel we can
do better,” she says, which is partly
why the company focuses so much on
employee training and development.
Zappos has a “pipeline team”—
essentially, a corporate training department—that offers free courses to all
employees, ranging from grammar
basics to finance 101. In the corporate
lobby, employees and visitors can pick
from a free library of business bibles,
such as Jim Collins’ “Good to Great”
and Spencer Johnson’s “Who Moved
My Cheese?”
Continuing the theme, Zappos
does not offer bonuses to customer
loyalty reps based on the amount of
merchandise they sell, but it does recognize achievements such as perfect
attendance. Rather than reward these
employees upfront with money, Zappos offers them the chance to burnish
their education by learning a new skill
set. Customer loyalty alone has 20 different ones, including the ability to
conduct a live chat, which then results
in a small bump in salary.
Co-workers in each department
toast their high performers in
quarterly recognition happy hours.
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Amazon.com should help bring lower
shipping costs to Zappos.com, which
are an expensive but necessary flourish. According to Zappos, its profit
margins—typically 50% on a pair of
shoes—shrink to 35% after operational
costs are factored in.
LINE ’EM UP: Zappos.com’s two fulfillment centers are located in Shepherdsville, Ky., due to
the city’s central U.S. location. The centers operate 24 hours a day, 365 days a year.
Employee cohesiveness is so important that managers are encouraged to
spend 10% to 20% of their time outside the office socializing with their
subordinates. According to the company, this practice has helped increase
productivity by 20% to 100%, simply
by building greater trust.
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This spirit of bonhomie trickles
down into employee interactions
with customers.
“Reps try to make a personal and
emotional connection and really
build those long-term relationships,”
says Judd. “If a dog’s barking, we’d
say, ‘Oh my gosh, I have a dog. What
kind of dog do you have?’ and really
capitalize on building a relationship
with that customer.”
Unlike the typical contact center,
Zappos has no talk time limits or call
quotas for its customer loyalty reps,
because both prevent them from
fully “engaging with the customer,”
says Judd.
Just recently, the department fielded
its longest customer call on record: 8
hours and 26 minutes. In addition,
each rep is empowered to satisfy any disgruntled customer
through a variety of means, including sending flowers,
cookies or giving out a free pair of shoes.
Hanifin of Hanifin Loyalty says this generosity of
time wins e-retailers such as Zappos competitive leeway. He cites another online retailer, a California-based
nutritional supplement provider, Hammer Nutrition
Ltd., for its similar practice of spending as much time as
necessary with customers to resolve their questions. “It
makes you less price-sensitive,” he says, “but the only way
a company works that way is if the owners have a passion
for their customer base.”
It’s an approach, he acknowledges, that won’t exactly
translate at a brick-and-mortar business such as a c-store,
where manpower is limited. But the concept of connecting
with customers on a meaningful personal level, whenever
possible, does.
Measuring the customer loyalty team’s ability to deliver
“wow”—an invented term and an ambiguous concept—
seems dicey, but Zappos tackles it by following the Net
Promoter score system from Satmetrix Systems Inc.,
which asks customers, on a scale of one to 10, to rate
how likely they would be to recommend the service to a
colleague or friend.
Despite free health coverage and lunches, the average Zappos
hourly employee earns only $23,000 each year.
Separately, the company asks customers how likely, if
they owned their own service company, they would be to
hire that customer loyalty rep. Finally, it conducts “fullcircle feedback,” during which the loyalty team listens to
past calls and provides feedback and coaching.
Interestingly, Zappos and Amazon.com’s customer
service teams do not formally collaborate on best practices
such as this. As Judd explains, “We look to Amazon being
more of the science, and Zappos being the art. They have
a lot of great experience with technology, and so it’s been
great to pick their brains and collaborate on different things.
They do the same for us with the personal and emotional
connection we create with our customers.”
The Zappos culture continues to serve as the company’s
“compass and navigation system,” says Judd, leading it—
■
one shoe in front of the next—to greater rewards.
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