The $840 Million Zappos “Secret Sauce” (and How You Can Use It To Supersize Your Empire)

Zappos doesn’t sell shoes.

It sells “WOW.” It says so on their website.

Zappos is a customer service powerhouse, legendary for wowing customers with a maniacal commitment to pleasing every last wish of its clients. One call to Zappos and you’ll know what I mean.

Nick Swinmurn founded the online company in 1999, with the late Tony Hsieh as one of its early investors. It was then known as “” and the idea was simple: “Let’s sell shoes…without letting people try them on first!”

The year 1999 was at the tail end of the Dotcom Bubble—a period characterised by massive and aggressive investments in Internet-related ventures. This bubble would “burst” around 2000-2002 and eviscerate corporate cousins like (the original) “” and “”. But Zappos survived.

Also around that time, Tony Hsieh came into the company as co-CEO. And the rest, as they say, is history.

Zappos would become a darling for investors and competitors, so much so that it caught the eye of Amazon.

In 2009, Zappos was acquired by the online retail giant for $1.2 billion—promising to respect its independence…and its mojo.

And this “mojo” is very much the vision of one man: Tony Hsieh. If you want to understand why Zappos is the way it is, you’d have to get inside the mind of Tony Hsieh—the inimitable but shy character behind the brand.

This post looks into four customer service lessons Tony fiercely believed in to grow from a $1.6 million outfit to a literal unicorn enterprise.

Zappos In Three Lessons

1) Customer Service is the whole company, not a single department.

In 2004, Zappos was looking to expand its call centre operations. It was clear early on that Silicon Valley would be too expensive a place to maintain a contact centre.

Tony and the team looked to other cities for a more affordable setup. They studied taxes, real estate prices, wages and cost of living and determined that Las Vegas would be a good place to establish the call centre.

So while other companies would be satisfied with a satellite call centre operating out of Las Vegas, Zappos uprooted their headquarters and transferred the whole company instead.

Tony said in an HBR article, If we were serious about building our brand around being the best in customer service, customer service had to be the whole company, not just a single department. We decided we needed to move our entire headquarters from San Francisco to wherever we built the call center…

It speaks to the man’s vision and values, doesn’t it?

He was all about one thing: customer service, and he was willing to hire and fire, and even relocate the whole business for it.

There are no silos and no compromises when it comes to this. And it is not just about the Customer Loyalty Team (that’s what they call their customer service). Every Zapponian, from whatever department will give you the absolute best, over-the-top service you will have in your life. It’s in their blood to do so.

2) Every call is “The Call.”

You will know a company’s values by knowing the things it measures.

In a call centre, you would often need to look at the length of each phone call. The shorter the call, the better, because it means a rep can field more calls in a shift. This, ostensibly, is to ensure that problems are dealt with in the soonest possible time. (What this does is pressure the rep to get the caller off the line as fast as possible to not negatively impact her “average handle time.”)

For Zappos, the longest phone call made was almost 6 hours. (The customer kept the rep on the line as she browsed thousands of different shoes.) You can bet this did not have any negative impact on someone’s numbers.

Instead of getting rid of the customer as soon as possible, Tony understood, You have the customer’s undivided attention for five or 10 minutes, and if you get the interaction right, the customer remembers the experience for a very long time and tells his or her friends about it.”

That’s better than any form of advertising that’s just being tuned out.

Also, during the call, Zappos doesn’t upsell, which annoys callers. Nor do they use scripts, because they sound so bottled and insincere. They want each call to have that personal emotional connection (PEC).

And Zappos is building an emotional connection every chance it gets. There’s this story of a customer who forgot to return the shoes she planned to because of a death in the family. Instead of getting some form of penalty, which is what other companies would do to disincentivise unwanted behaviours, a customer rep sent her flowers and consoled her.

She would never buy shoes from anywhere else. prohibit

3) The long-term’s where it’s at.

No matter how you slice it, Zappos’ world-class customer service is very expensive. (That’s why most companies can only pay lip service and not compete.)

At Zappos, all standard shipping in the U.S. is free of charge, with no minimum spend. When you open the box and don’t love what you see, you can simply return it…free of charge. If you’re a savvy one, you can have half a dozen pairs delivered to you, choose from the lot and send back the ones you don’t like…free of charge. And how about a 365-day return policy to go with that?

(And, when the pair you want isn’t available on Zappos, customer service helps you find the pair through other vendors or sites.)

Zappos is not naive, it knows that there will be a lot of returns. But it learned that by removing all the buying risks, customers want to buy more. And they buy more from them. In short, which is in the long run, good customer service is always rewarded.

Tony said, “Usually when marketing departments do their ROI calculations, they assume that the lifetime value of a customer is fixed. We view it as something that can grow if we create positive emotional associations with our brand. To that end, most of our efforts at customer service actually happen after we’ve already made a sale.”

Zappos can, for example, surprise you with an overnight shipping upgrade even when you opted for the standard free shipping.

These three lessons—looking at the whole company as “customer service,” considering each call as the most important one, and looking at the big picture and the long term—are not unique insights from Tony Hsieh or Zappos. Many others know them. But only very few business leaders dare to live them out every day.

With the death of Tony Hsieh, the business and tech community did not only lose a superstar entrepreneur. He was worth $840 million. But to the people he helped, and those callers who got life-changing customer service, he was valued so much more.

Continuing the Commitment To Customer Service

At Kinetic Innovative Staffing, we try to live out the example set by visionaries like Tony Hsieh.

As a remote staffing company, our mission is to find customer service representatives who would embody personal and professional excellence. By helping companies find team members with genuine affection for clients, we help make “world-class customer service” a real thing—a standard to be expected everywhere…not just when you want to buy shoes.

To this end, our company stands behind the competence of remote workers from the Philippines. Filipinos have a proven track record as caring professionals—whether working as nurses, VAs (virtual assistants) or customer service representatives—going above and beyond the call of duty. They bring genuine warmth and care like nobody can.

(Interestingly, when Tony and Zappos were looking to outsource call centre operations, they seriously considered having it in the Philippines or India—before eventually choosing to remain in the U.S.)

At Kinetic, we have a robust database of vetted and experienced Filipino customer service representatives ready for onboarding.

And as proof that world-class customer service doesn’t need to break the bank, having customer representatives working out from the Philippines actually decreases your labour costs by as much as 70%

Talk to us about your customer service rep needs and we’ll help you find the best matches for your organization.

Kinetic Innovative Staffing has been providing hundreds of companies in the Asia Pacific, North America, and Europe with professionals working remotely from the Philippines since 2013. Get in touch to know more.

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