Tony Hsieh was the CEO of the online shoe and clothing company Zappos. Prior to that he founded the Internet advertising network LinkExchange, which he sold to Microsoft in 1998 for $265 million.
The below is the learnings I took from a talk, based on a book by Tony Hsieh with the same title.
Zappos was built on delivering the best customer service possible. Rather than investing on paid advertising or marketing, invests in creating an exceptional experience for customers drives organic marketing through word-of-mouth. Most of their customers are repeat buyers, and that’s no coincidence.
What does it actually mean to provide the best customer service? How do you understand what customers are actually after? This was Tony’s endeavor and his learnings can be applied to our own businesses and even our day to day lives.
As a Business, Ask Yourself:
- What do customers expect?
- What do customers actually experience?
- What emotions do customers feel?
- What stories do they share with their friends?
- How can company culture foster more memorable moments for the customers?
Interactions that you have with customers aren’t about what you say to them, memorable interactions are about how you made them feel.
People’s emotions stay far longer and bury much deeper on how they perceive your business. This customer centricity should extend to the businesses philosophy itself. By prioritizing the customer experience, companies can build lasting relationships and drive sustainable growth.
Free Shipping Policy
One standout feature of Zappos was their free shipping policy that extended for both delivery and returns. Customers could try on multiple pairs of shoes at home, some of whom often ordered ten or more and returning most. While this might seem counterintuitive due to higher return rates, it encourages customers to explore options they might not have considered. In the end, they spend more money overall because they feel comfortable trying new styles.
A 24/7 Warehouse
Zappos’ Warehouse was up 24/7. This is not the most efficient way to run a warehouse. The efficient route would be to wait for the orders pileup and then deliver, but the aim here was to improve customer experience. Orders were worked on as they came through. Their warehouse was also close to the UPS outlet. Customers could order up until midnight and orders would get delivered to their doorstep 8 hours later. This caused customers to remember Zappos and sharing it with their friends and family.
365 Day Returns Policy
Again rather than restrict customers with deadlines, the 365 day returns policy altered customers’ need to rethink purchasing an item.
Displaying the 1800 Number Upfront
Generally the 1800 number is put deep within a company’s website. This number was placed at the top of every single page on Zappos’ website. Why? The telephone is the best branding device. Get the human interaction right and customers remember you for a very long time. We should think about how do we get more customers to call us? On average, every customers called them atleast once in their lifetime. There we no scripts, no timeline, no pressure. The focus was customer service, to the extent where they would help customers get the shoes from competitor website if their size was not stock. This built a life long relationship with customers.
A Customer Loyalty Team
Their call center was called the Customer Loyalty team. They weren’t classified as customer support, or sales team, but rather their goal was to generate loyalty through memorable human interaction.
Tony founded his first company, LinkExchange in the 90’s and hired his friends during the initial stages resulted in a great company culture, but it faced significant cultural challenges when scaling which him to ultimately selling it to Microsoft.
To deliver exceptional customer service, customer service itself was not the priority, rather it was company culutre. The thought was if the culture right, then employees would translate the company culture into the long term brand and customer service would result as a by product.
Starting from the hiring process itself, it included a purely culture fit segment in the interview. Then performance reviews were 50% based on if employee is living up to the company values.
Everyone went through the customer loyalty department training, including undertaking customer calls for a few weeks. This also acted as a vetting process for employees to show their true selves.
Customer loyalty team members were made an offer at the end of their week 1 of training — Zappos would will pay them for their time and bonus to quit and leave right now. This was done to ensure they believed in the long term vision and were not in just for the money. This initially was to weed out early leavers, but the biggest benefit that occurred was from people who didn’t take up the offer as they had to go back home and think about it, talk to family and confirm their stance — coming back on a Monday fully energized.
Asking employee reviews of the company, segmented by the department. The employees were taught about the brand in the following order: Clothing > Customer Service > Culture. This was based on lifecycle of the customer. Understand what they sell first. Then realize they all about customer service. Then show them the culture and core values as this was what made everything bind together.
A Strong Company Culture
Most companies have cultures, or core values, but they generally sound lofty and become meaningless pretty soon. Zappos made them into ‘Committable Core Values’, meaning they were ready to hire and fire based on these values, independent of their job performance. It took over a year to create them which included seeking input from employees themselves.
Some examples of how these values were tested and implemented:
3 | Fun and a little weirdness: Candidates were asked how weird they think they are on a scale of 1 to 10, but it was about how they answered the question. The aim was to let people be same person in the work place and outside of work, which in turn also fosters friendship with colleagues.
4 | Adventurous, creative and open-minded: Candidates were asked how lucky they thought they were. Then they were asked to find the number of faces in a newspaper. Across the paper there were titles spread out saying ‘The answer is 37! and collect an additional $100’. Unlucky people tended to count the faces and didn’t see the titles. People who considered themselves lucky stopped early and took the extra $100.
It is not that people are inherently lucky or unlucky, but luck is mostly about being open to opportunity beyond how the task or situation presents itself.
10 | Test for humbleness: During the face to face interview, the candidates were taken to the office on a shuttle. Later the shuttle driver as asked on how well they were treated by the candidates.
Alignment and Implementation
The core values of a company itself don’t matter all that much, but what matters is having actually committing to them. Truly, be ready to commit to them, for example enforce them through yearly feedbacks, hire and fire based on them. This in the long run changed the default way of thinking within the organization, and employees then were able to make decisions values-aligned decisions for themselves.
The core values are like the DNA that helps a large group birds with simple instructions to fly in unison.
This is helpful to scale the culture as it the company grows.
Chasing the Vision, not the Money
What ever you are thinking, think BIGGER. Instead of thinking about making a lot of money, think about “What you would be passionate about doing everyday for 10 years even if you never made a dime?”. Ironically the money will flow through. Don’t chase the paper, chase the dream.
What generally motivates employees? Incentives, bonuses, fear? It’s generally fear in todays society. Cementing the vision through culture helps motivate an employee, but additionally inspires them.
Think about what is your goal in life? Answer and keep on asking yourself why? Then keep on asking why again and again. Eventually we come to a conclusion what ever we are pursuing, we believe it will make us happier.
Positive psychology states people are very bad at predicting what brings them sustained happiness. Lottery winners don’t end up with sustained happiness, and on the inverse, people who become unexpectedly blind are able to retain their initial happiness after a year. For business, people are inaccurate at predicting what makes them happy. Hence, both the customers and your own employees actually don’t know what they truly want, but know that it’s happiness.
To understand your customers happiness journey, think about:
1. Where does the story begin?
2. Where does the story end?
3. How do you reinforce the good memories?
4. What were the emotions, positive and negative?
5. How can you create more stories and memories?
The Happiness Framework
The following is an excellent framework that one’s happiness can be based on. These can be applied in one’s daily life and also in a workplace.
Perceived Control — feeling of knowing what’s going on, a sense of control over an day full of uncertainty.
Perceived Progress — perception of moving up in life, whether it be small or big steps. In a company this can be showcased through mini-promotions.
Connectedness — the depth of your relationships with friends, and your colleagues or managers
Vision & Meaning — the sense of being part of something bigger than yourself.
The aim is to shift an employees perception of their role from being a job to making it a career, to making it their calling.
Types of Happiness
Knowing what kind of happiness you are pushing for employees can be beneficial to understand.
1. Rockstar — this is simple pleasure of chasing the next high, the next achievement. Often hard to sustain.
2. Flow — being deeply engaged in a task at hand, where the body meets the mind, where time flies. This is occasional, but can be gained through focus.
3. Meaning — seeking a higher purpose, a larger goal, being part of something bigger. This can be made sustainable. Kind of like relying on burning fat on a keto diet vs on sugar rushes.
The proper strategy would be to focus on Meaning first, then layer on Flow for your day to day work. Rockstar should be the icing on the cake.
Customers’ happiness is getting their desired product in a box, or getting great service. For employees, it’s when the core values of the company ties in with their personal values.
Great business are able to combine profits, passion and purpose.
Happiness is about combining pleasure, passion and purpose.
Hence, we can think about happiness as a business model. Think about your business’ higher purpose and then your own higher purpose to guide both yourself and your business to happiness.