How Zappos Does Customer Service and Company Culture

One of the highlights of SxSW for me was a keynote delivered by Zappos CEO, Tony Hseh, who also runs a very insightful business blog. Las Vegas-based Zappos started in 1999 by selling shoes online, and has since grown to a $US1 billion per year retailer. It has expanded into clothing, handbags, sunglasses, and numerous other categories. Early on in its life, Zappos made a deliberate decision to re-direct its marketing budget towards delivering exceptional customer service with a great company culture, helping the business to thrive where others have failed. Tony highlighted many deliberate decisions that the company made with the long-term view in mind, such as:

encouraging customers to order as many products as they wanted in order to “try them on,” then offering free return shipping for a full 365 days
only listing products on the site when stock was in their own warehouse (which actually lowered sales by 25% at a time when the company was still in the red)
deciding to run their warehouse operation 24/7 to deliver super-fast turnaround on orders, despite it being an inefficient way to manage fulfillment
encouraging customers to call them about nearly everything. Their call center takes 5,000 calls per day, and employees work independent of scripts, quotas, or call time limits. The longest call to date has been four hours. Zappos views the phone experience as a branding device, and speaks to virtually every customer at least once.
deciding to invest in “surprise” (free) upgrades to overnight shipping for most customers. This means that most orders are delivered within 24 hours, despite the web site indicating it will take 2-5 business days.

Decisions like these are rarely undertaken today in corporate America. Instead, many businesses compete on price instead of service, reign-in customer service expenses as tightly as possible by outsourcing to call centers, and implement key performance metrics like upsell percentages and average call times that agents are expected to meet. Tony shared the story of a late-night outing with a few vendors, where one of their clients had a craving for pizza and decided to half-jokingly call Zappos customer service for help. After a brief pause, the customer service agent researched and provided a list of nearby pizza parlors that were still open. Company Culture Company culture is important from the start. Zappos conducts two separate interviews — one focusing on the applicant’s background and experience, and the second one on cultural fit. Over the years, Zappos has passed on numerous experienced employees for the simple reason that they were wrong for the company culturally. The emphasis on cultural fit extends to the training process, where new employees cycle through work in the Kentucky warehouse and call center, and receive lessons on company history and core values. What are Zappos’ core values?

Deliver WOW through service
Embrace and drive change
Create fun and a little weirdness
Be adventurous, creative, and open-minded
Pursue growth and learning
Build open and honest relationships with communication
Build a positive team and family spirit
Do more with less
Be passionate and determined
Be humble

Nothing on the list is particularly unique, but what makes Zappos different from thousands of other companies is that they live those values, instead of just hanging them on the wall. For example, to exercise their open and honest relationship value, the company opened its extranet to 1,500 outside vendors who can now view what products are in stock, how many are selling, and even what the profit margins are. “Once a company compromises too many times on its core values, the entire culture goes downhill,” says Tony Hseh. Every year, the company reinforces its core values by publishing a 500-page culture book with unedited contributions made by employees and vendors. They distribute it company-wide, as well as to anyone who wants to purchase a copy. The company even opens up its Las Vegas offices for free tours, and welcomes companies like Southwest Airlines to spend time watching Zappos’s call center operations, recruitment practices, and training. Jim Collins, author of Good to Great quotes, “It doesn’t matter what your core values are, as long as you have them and everyone is aligned, moving in the same direction.”

Frequently Asked Questions about Zappos’ Customer Service and Company Culture

What makes Zappos’ customer service unique?

Zappos’ customer service stands out due to its commitment to delivering the best possible experience to its customers. The company empowers its customer service representatives to make decisions that will make customers happy, even if it means going beyond the usual protocols. This includes spending hours on the phone with a customer if necessary, sending flowers to a customer who had a bad day, or even helping a customer find a product on a competitor’s website.

How does Zappos maintain its company culture?

Zappos maintains its company culture through a strong emphasis on its core values. These values, which include delivering WOW through service, being adventurous and open-minded, and building a positive team and family spirit, are deeply ingrained in the company’s operations and decision-making processes. Zappos also invests heavily in employee training and development to ensure that every team member understands and embodies these values.

Why does Zappos place such a high emphasis on company culture?

Zappos believes that a strong company culture is the foundation for delivering exceptional customer service. By creating an environment where employees are happy, motivated, and aligned with the company’s values, Zappos ensures that this positivity is reflected in every customer interaction. The company also believes that a strong culture helps attract and retain top talent.

What is Zappos’ approach to employee training and development?

Zappos invests heavily in employee training and development. New hires undergo a four-week training program that covers the company’s approach to customer service, its core values, and its culture. Employees are also encouraged to pursue ongoing learning and development opportunities, with the company offering a variety of classes and workshops.

How does Zappos’ company culture contribute to its success?

Zappos’ company culture plays a crucial role in its success. By fostering a positive, inclusive, and customer-focused environment, the company ensures that every team member is motivated to deliver the best possible service. This results in high customer satisfaction and loyalty, which in turn drives business growth and profitability.

What are some examples of Zappos’ exceptional customer service?

Zappos is known for going above and beyond to delight its customers. Examples include customer service representatives spending hours on the phone with a customer to ensure their issue is resolved, sending flowers to a customer who had a bad day, and even helping a customer find a product on a competitor’s website.

How does Zappos handle customer complaints?

Zappos handles customer complaints with a focus on resolving the issue to the customer’s satisfaction. The company empowers its customer service representatives to make decisions that will make customers happy, even if it means going beyond the usual protocols.

What is Zappos’ approach to employee engagement?

Zappos places a high emphasis on employee engagement. The company fosters a positive and inclusive work environment, offers a variety of learning and development opportunities, and encourages employees to participate in team-building activities and events.

How does Zappos’ company culture impact its brand image?

Zappos’ company culture is a key part of its brand image. The company’s commitment to delivering exceptional customer service, fostering a positive work environment, and upholding its core values helps build a strong and positive brand image.

What lessons can other companies learn from Zappos’ approach to customer service and company culture?

Other companies can learn the importance of investing in a strong company culture and exceptional customer service from Zappos. By creating an environment where employees are happy and motivated, and by empowering them to deliver the best possible service, companies can drive customer satisfaction and loyalty, and ultimately, business success.