I recently attended a conference where the keynote speaker was successful entrepreneur Tony Hsieh, CEO of the successful online apparel shop Zappos.com. In 1999, at the age of 24, Tony Hsieh sold LinkExchange, the company he co-founded, to Microsoft for $265 million. He then joined us as an advisor and investor, and eventually became CEO, where he helped us grow from almost no sales to over $1 billion in gross merchandise sales annually, while simultaneously making Fortune magazines annual Best Companies to Work For list. In November 2009, Zappos.com, Inc. was acquired by Amazon.com in a deal valued at $1.2 billion on the day of closing. I was very interested to know what makes Zappos so unique.
Tony shared with the audience that he views things differently than most. He perceives Zappos as not a shoe company but rather a service company that happens to sell shoes. One of the key things I heard Tony say was that they take funds that are typically set aside for advertising and apply it to customer service. In 2008 over $1 billion of sales was done with repeating customers and word of mouth. What was it that makes people come back to buy things at Zappos? Tony stated it was because they consider customer service as the number one priority. This is nothing new to sales and marketing. I think we have all heard this before but what Zappos does differently is apply it to their corporate culture. Instead of viewing customer service as what the customer receives they view it as to what the customer experiences. Because Zappos is an online store their phone service is vital for success. They have their number in big numbers on every page of their website so people can easily find it and call. They recognize that the customer service must be good. But the people who call don’t often result in a sale and this is not the focus of the call center. Instead Zappos uses the call center as a branding opportunity. Yes sales do happen through the call center but that is not the call center’s primary focus. This is a very different way of looking at a call service center. They also provide overnight shipping anywhere in the U.S. They recognize this is expensive but it adds to the customer experience and out paces competitors. Zappos considers the extra costs as a marketing cost rather than an additional expense.
You would think the mantra in the company is all about customer service. It is a strong component of what Zappos is all about but the larger priority is creating a strong corporate culture and they work on maintaining, nurturing and protecting it. Zappos human resources department has an interview on culture for new employees to see if they are a good fit. Once they are accepted by Zappos the new hires go through a 5 week training course and once the training is complete they are given a choice to either join the company or be given $3,000 on the spot to leave. This process weeds out those who are focusing on the paycheck and not committed to the Zappos culture. Internal annual performance reviews value 50% based on culture and growth within the company. They want employees to contribute to the success of the Zappos culture with recommendations and initiatives. All new hire training covers history of the Zappos culture and experience in their call center. Customer service is not just a department but part of the whole company. All have to answer calls and understand the skills it takes which include executives, accountants, IT and other non-customer service related departments. When customers get the perfect fit of all of these it equals happiness. If customers get what they want and have a tremendous experience they feel happy. Therefore Zappos believes they are delivering happiness.
Zappos created 10 core values for their company. Tony stressed that it is important to not make these values meaningless. They must be committable core values. At Zappos they are used for hiring and firing people.
Here are Zappos 10 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
This results in every employee living the brand alignment of value and in doing this it equates to long term sustainable growth. Zappos is now educating other companies on culture with online tools and seminars. Recently a refrigerator company has gone through the training and have seen their sales increase.
Another ingredient for success is to focus on a higher purpose beyond profit. It is important to think bigger than money and focus on what motivates you? Create that vision and chase the vision not the dollar. Perhaps it is being a good parent or good citizen. Tony stated in his talk, “Don’t chase the paper, chase the dream.”
He also pointed out the difference between motivation and inspiration. Motivation can be used to a point and makes up a large part of how leaders relate to their teams. But there also needs to be elements of inspiration that tap into the deeper and stronger soul energies of a person.
With today’s technology and digital aspects of sales there is a difference with high touch compared to high tech. High tech provides broader and faster access to customers and is a good tool. But it is only a tool. High touch provides an emotional connection with people to ensure their experience with a company is top notch. Zappos focuses on the high touch because it believes it makes customers happier. An example of a company that does this well is Cirque de Soleil. They are not in the circus business they are into the experience and emotions business.
Zappos is currently creating a new community building imitative in Las Vegas where they are based. Rather than go the Nike and Google campus model Zappos will integrate their main headquarters into the existing local community and use existing buildings. They plan to build residential businesses and use existing areas to build other business opportunities around Zappos with the Zappos mission. They offer daily tours of their headquarters to anyone interested. They will pick you up from the airport and share their story with anyone willing to listen.
Tony said according to happiness research we are really bad at predicting what will make us happy. For example most think that winning the lottery will provide happiness. But studies have shown that many winners are not happier than they were before. In fact in some instances it has caused more problems than benefits.
Why is happiness so mysterious to attain? It is because our current society messaging values perceived control and progress which are to demonstrate accomplishment which we are told will make us happy. Instead we should focus on connectedness and meaning which give us a sense of community, well being and contentment.
There are three types of happiness: 1. The Rock Star lifestyle with riches and fame where everyone loves you and what you do. This is very rare. 2. Flow which is when someone is in synch with their challenges. Athletes talk about this when they are in the zone. This is not as rare but more sporadic and based on the correct circumstances. 3. A clear understanding of meaning and higher purpose. This is something that can be called upon from an individual at all times and anywhere. This is much more long lasting and sustaining.
But people always aim for rock star. We should reverse our efforts – meaning, flow, rock star. Once we do this happiness will ultimately follow.