Building a Customer-Focused Culture
Tony Hsieh
CEO
Zappos at a Glance
• Founded in 1999
• Zappos is powered by service
• Providing the best service and online shopping experience possible.
• Free shipping both ways. 365-day return policy.
• Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service.
• Best selection
• Over 1100 brands.
• Over 150,000 styles.
• Over 800,000 unique UPCs.
• 3 million pairs of shoes.
• Photographed in multiple angles.
• 100% of products inventoried (no drop ship).
• Zappos is a service company that happens to sell shoes, clothing, handbags, eyewear,
watches (and eventually a bunch of other stuff).
Customer service value proposition in action…
Zappos is committed to WOWing each and every customer.
• Customers come…
• 7.4M total purchasing customers (about 2.5% of US population)
• 3.3M have purchased in the last 12 months
• Customers come back…
• On any given day, about 75% of purchases from returning customers
• Repeat customers order >2.5x in the next 12 months
• Customers come back, order more and order more often…
• Repeat customers have higher average order size
• $111.98 – first time customers in Q406
• $143.22 – returning customer in Q406
Word of mouth in action…
Word of mouth enhances marketing investment significantly
• Advertising spending…
• 85% Internet
• 15% Print
• New customers acquired heard about Zappos…
• 44% from Internet
• 43% from word of mouth
• 13% from other
Power of Repeat Customers & Word of Mouth
$1,200
Gross Sales ($ in Ms)
$1,000
$800
$600
$400
$200
$0
Gross Sales
2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008F
1.6
8.6
32
70
184
370
597
850
1,000
5
What is customer service?
Customer Service:
What Customers First See
• 24/7 1-800 number on every page
• Free shipping both ways
• 365-day return policy
Customer Service:
What Customers Experience
• Fast, Accurate Fulfillment
• Friendly, helpful “above and beyond” customer service
• Refer customers to competitors’ web sites
Customer Service:
What We Do Internally
• No call times
• No sales-based performance goals for reps
• Run warehouse 24/7
• Inventory all product (no drop-ship)
• 5 weeks of culture, core values, customer service, and warehouse training for
everyone in Las Vegas
• Culture book
• Interviews and performance reviews are 50% based on core values and
culture fit
10 TIPS
for building a
service-focused culture
TIP #1
Commit to customer service.
Make it part of your mission.
It’s not just a department…
Be true to your mission when making
hard (or easy) decisions.
Zappos.com Mission
To Live and Deliver WOW
• Internally, we have a saying:
• We are a service company that happens to sell _____________________.
shoes
and handbags
and clothing
and eyewear
and watches
and accessories
(and eventually a bunch of other stuff)
12
TIP #2
Come up with committable core values.
Do some soul searching.
Don’t come up with core values
just because they sound good.
Zappos Core Values
1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble
14
TIP #3
Actively manage your culture
based on your core values …
… for every single department.
TIP #4
Make “WOW”
part of your company’s
everyday vocabulary.
TIP #5
Remember that
customer service is
an investment …
… not an expense.
Don’t hide your 1-800 number.
Don’t measure call times.
TIP #6
Trust and empower
your customer service team.
Find people that are passionate about
customer service.
TIP #7
Create a culture book.
TIP #8
Give great service to everyone:
Customers
Employees
Vendors
Investors
TIP #9
Make culture
part of everyone’s
performance review.
TIP #10
Have the entire company
celebrate great service.
Tell stories.
Q&A
• Email me -- tony@zappos.com for:
• Answers to any additional questions not
answered today
• A copy of our culture book
• Tour of our offices when you’re next in
Vegas
• Job opportunities