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While all retailers claim to deliver good customer service, a recent incident proved that online shoe retailer

“That’s not a company policy for us, but it really was the right thing to do. Our philosophy is to do what’s right for the customer even if it doesn’t relate to a sale or if it costs a little bit more. We just want to go above and beyond for our customer,” Zappos’ CEO Tony Hsieh said at the eTail 2007 conference in Washington, D.C., held Aug. 6-8.

This is just one example of how the Henderson, Nev.-based company has transitioned the best practice of good customer service beyond an operating expense and into a strategic investment.

“Customer service is an investment, not an expense. We began upholding this philosophy when we first started as a company [in 1999],” Hsieh said during the session, “Top 10 Lessons Learned in E-Commerce.”

“Some think that if a shopper is only buying a $10 book, maybe you shouldn’t talk to that customer,” he said. “But we think that is the wrong approach. It’s not about maximizing that one phone call and that one transaction.”

Zappos, which brought in $597 million in sales in 2006, may be well-known for its vast assortment of shoes that range from hard-to-find sizes to “vegetarian” styles, as well as its free-shipping incentive. More importantly, the company strives to uphold its reputation for building lifelong customer relationships. “If someone is looking for a pair of shoes that’s out of stock, we will direct them to a competitor’s site,” Hsieh said. “While people may find this approach surprising, we know the next time they need shoes, Zappos will be the first place they look.”

To uphold this philosophy, it’s critical to manage your company culture, he noted. For example, everyone that is hired at Zappos, regardless of position, attends a four-week training program that discusses company history, culture and philosophies. They also work the phones to get to know customers.

Finally, they are sent to the company’s Kentucky warehouse for a week to learn different operations. “It gets everyone on the same page,” he said.

Hsieh also said that since Zappos is constantly focused on good customer service, the company doesn’t worry about competitors. “It takes the focus away [from our goal],” he said. “As long as word of mouth and the frequency of purchases are up, focusing on what competitors are doing is just a distraction.”

Hsieh also advised attendees to focus more on repeat customers. “Don’t worry so much on getting new customers,” he said. “If they are truly excited about what you are offering, they will tell friends.”

As the aforementioned example proves, Zappos representatives are certainly giving customers something to talk about. After a long day at a sales conference, Hsieh and some colleagues anonymously dialed the Zappos call center to see what would happen if they asked for a pizza delivery to the Santa Monica area.

“The rep put him on hold and came back a few minutes later with a list of the five closest pizza places in Santa Monica,” he said.

“If you get the culture right, you don’t need to come up with a policy and procedure for everything. And if that were a real customer, I’m sure it would be a story that would be relayed to all of their friends.”