The Art of Delivering Happiness
The Tony Hsieh CX Template
As most of you may be aware, one of the tallest industry leaders that Customer Experience (CX) professionals looked up to – Tony Hsieh – passed away unfortunately last week. As one of those growing CX professionals myself, I revisited some of the stuff I had collected in my repository on Tony’s customer philosophy and approach at Zappos over the years. Following which, I decided to pen down a crisp reference piece that can probably serve as a ‘CX Template’ for professionals focused on delivering WOW Customer Experiences (which should be everybody really). Here goes…
Secret Snippets shared by Tony Tsieh
On Delivering a Brand powered by CX: “If it’s something that creates a great customer experience, choose to do it, because we believe that in the long run, little things keep the customer in mind will end up paying short dividends”
On Right Culture: Zappos employees understand that customer experience is a priority for the whole company, not just a department. “We focus on making sure we have a great service-focused culture. If you get the culture right, then a lot of really amazing things happen on their own.”
On Hiring Believers: “We make sure that employees are here for more than just a paycheck. We want employees that believe in our long term vision, and want to be part of our culture. As it turns out, on average, less than 1% of people end up taking the (bootcamp $2000) offer.”
On Marketing Costs: “A lot of customers will order 5 different pairs of shoes, try them on with five different outfits in the comfort of their living rooms, and then send back the ones that don’t fit or they simply don’t like - free of charge. The additional shipping costs are expensive for us, but really we view those costs as a marketing expense.”
CX Design Principles
In this section we look at some of their marquee customer-focused initiatives that serve as “design principles for CX” and understand why they did what they did and how they did it so well
A) 10 Core Values
Zappos has ten core values that guide every activity at the company and form the heart of their business model and culture
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
These values are set up to reflect everything Zappos does, including how they interact with customers, how they interact with each other, how they interact with vendors and business partners
How these values drive the company has been well covered in Tony Hsieh’s book ‘Delivering Happiness’: https://www.amazon.in/Delivering-Happiness-Profits-Passion-Purpose-ebook/dp/B00FOT936Y. I would strongly recommend it as a must-read for every CX professional
B) The New Hire Bootcamp
Zappos has designed a 4-week induction program, in which new employees go over the company history, the importance of customer service and the long term vision of the company. They’re even on the phone for two weeks in the call centre, taking calls from customers
But what’s even more unique about the training course is that after the first week they make an offer to the class. Not an offer to skip the course, or take some additional holiday. They offer everyone $2,000 to quit. They only want to retain people who are looking beyond the paycheck
Even after the initial training is over, employees take 200 hours of classes—with the company, covering everything from the basics of business to advanced Twitter use—and read at least 9 business books a year
C) The Culture Book as Employee Experience (EX) Bible:
Zappos releases a culture book every year. You can check it out here at: https://www.zapposinsights.com/culture-book/digital-version
It acts as a medium for the employees to freely express themselves, and a way everyone can get a pulse of where the company’s culture and core values stand. Above all, because the company believes culture is an essential part of the business, it has become the brand book
D) Word-of-Mouth Marketing
Their philosophy has been to take most of the money out of paid media advertising and invest it into customer service and the customer experience initiatives instead; thereby letting their customers do the marketing for Zappos through word of mouth. Zappos employees have been always encouraged to participate on social media platforms to share their experiences about working at the company and their experiences with customers. These personal posts help spread their culture and mission, and magnify the customer-centric philosophy that govern not only strategy, but the entire company’s purpose
E) Telephone as a Brand Device
According to Hsieh – “As unsexy and low tech as it may sound, our belief is that the telephone is one of the best branding devices out there. You have the customer’s undivided attention for five to ten minutes, and if you get the interaction right, what we’ve found is that the customer remembers the experience for a very long time and tells his or her friends about it. Too many companies think of their call centers as an expense to minimize.”
F) No Scripts – Letting Personalities Shine in Customer Service
In their customer service delivery, they don’t use scripts because they trust employees to use their best judgment when dealing with each and every customer. According to Tsieh – “We want our reps to let their true personalities shine during each phone call so they can develop a personal emotional connection with the customer.” Some extreme cases have included Zappos hand‐delivering shoes to customers who have lost luggage and to a groom who forgot the shoes for his wedding. Zappos has even sent pizzas to the homes of customers who have tweeted to the company about being hungry.
Unique CX Initiatives
Free Shipping & Returns (viewed as a Marketing Cost): It offers free shipping both ways to make transaction as easy as possible and risk free for customers. And, it offers a 100% Satisfaction Guaranteed 365-day return policy for people who have trouble committing or making up their minds. The customer can print a prepaid shipping label that allows all domestic customers to return the product for free
Easy-To-Find Contact Info: They put the contact information at the top of every single page of their website, because they actually want to talk to customers. And they staff their contact centre 24/7
Unlimited Call Times: At Zappos, they don't measure call times by their agents. Their longest call was almost 6 hours long! They help customers shop, even on their competitors’ websites, encourage them to buy multiple sizes or colors to try (since return shipping is free), and do anything it takes to make the shopping experience memorable
24/7 Warehouse: Going beyond a cost effective strategy to running a delivery business, they run their warehouses 24/7 to create customer Wow – which means getting orders out to their customers as quickly as possible. They also have their warehouse conveniently located just 15 minutes away from the UPS Worldport Hub
Social Media Connect: They pioneered the use of social media to gather customer feedback, at a time when most other companies weren't doing that. When other companies were using Facebook, Twitter and YouTube for promotion, Zappos was using these very social media platforms to gather comments from customers and employees
Easy and Authentic Digital UI/UX: The digital channels (website, app) are streamlined for an easy shopping experience. Products are grouped in specialized segments, with some (like outdoor products) on their own mini‐sites. Customers can view each product from multiple angles thanks to photographs taken at the company’s studio, and Zappos employees make short videos highlighting the product’s features. It analyzes how customers navigate the sites to improve features, adapt search results and plan inventory. It has one of the few live inventory systems on the web. If Zappos displays an item, one can be sure that it is in stock. Once the company sells out of an item, the listing is removed altogether. This helps to reduce customer frustration
Zappos Insights: Zappos’ business model is so successful that the company offers tours and workshops, which cost $5,000 for two days at the company’s headquarters. The company also created Zappos Insights, an online service that allows subscribers to learn more about Zappos’ business practices through blogs and videos. These programs have high profit potential for the company because they are built on what Zappos already does best
The Impact on Zappos Customers – Happiness
75% of the purchases of Zappos come from repeat customers!
Zappos (last known) NPS is 57, while the industry average for Consumer Brands/Retail/E-tail is 50
The average industry merchandise return rate is 35%, but their most profitable customers tend to return 50% of what they purchase! The customers who have the higher return percentages are the most profitable because they have experienced Zappos’ customer service and return policy, which create loyalty to Zappos; leading to purchases more often and spending more on each purchase
Takeaway
The Zappos business model is built around developing long‐term customer relationships via superior CX delivery. It does not compete on price because it believes that customers will want to buy from the store with the best service and selection. The company strives to create a unique and addictive shopping experience and it seems to be succeeding consistently…
To conclude, let me quote Tony Hsieh on Delivering Happiness:
“At Zappos, our higher purpose is delivering happiness. Whether it’s the happiness our customers receive when they get a new pair of shoes or the perfect piece of clothing, or the happiness they get when dealing with a friendly customer rep over the phone, or the happiness our employees feel about being a part of a culture that celebrates their individuality, these are all ways we bring happiness to people’s lives.”
References and Sources
1) Delivering Happiness – Book by Tony Hsieh
2) Zappos Case Study: Daniels Fund Ethics Initiative, University of New Mexico
3) Zappos Customer Service – https://chattermill.com/blog/zappos-customer-service/
4) Zappos NPS: https://customer.guru/net-promoter-score/zappos-com
5) CX Lessons and Zappos Repeat Customers: https://www.customerguru.in/million-dollar-cex-lessons-from-tony-hsieh-ceo-and-founder-of-zappos/