The Email Wars

First you should know I love Zappos.com. When you lead with a tag line of “Powered by Service” and you deliver on service so ridiculously that it sometimes makes me laugh when we order a pair of shoes and they are there the next afternoon (no request for overnight shipping). Really this model is driving them over the top. BUT what have they learned that we cannot only learn from for Ecom business, but for for web service levels and branding?

From the Speech:
1200 brands, 200,000 styles, over 900,000 UPCs.
4 million items in warehouse
100% of products inventoried, no drop ship
7.5 million purchasing customers (2.5% of US Pop)
3.3 have purchased in last 12 months
75% pf purchases are return customers
Repeat customers have higher order size
$111 in first time order – to 143 in returning customer average in Q4 2007

On the way to break the billion dollar mark in sales.

What is customer service:
free ship, free return ship, 365 -day return policy
24/7 / 1-800 number on every page (5000 phone calls a day) in the top left corner of the site on EVERY page – Customer contact is a branding opportunity for them
Fast accurate fulfillment – majority of orders get there next day – surprise customers with no cost next day shipping, even for orders placed after midnight – most orders arrive that day.
Randomly do phone and email surveys to customers
Occasionally even direct customers to other comp site – I actually think this is something that should be done as you might not be the right solution of fit for the customer and you lose the sale, but that short term loss will come back to you in spades for customer service.

Training:
5 weeks of culture, core values, customer service, and warehouse training for everyone, EVERYONE. Even legal, accounting, etc have to take 4 days of customer calls as well. Love it, looking at the long term culture fit and picture.

Culture book: This is something that is put out once a year, all employee submitted content, unedited. Completely open and honest. (passing them out after speech, need to get a copy)

Interviews and performance reviews are 50% based on core values and culture fit
If you are not a culture fit – they need to go – belief if you get the culture right, the rest falls into place
Two sets of interviews: Hiring Manager, then HR afterwards to judge on culture fit. Culture actually improves as the company grows.

THE PLAN: There was not a plan, many mistakes made

Lesson 1. Ecom is built on repeat customers – or most successful businesses no matter ecom or not. Spent more money on BIG advertising, tracked sales, found that 2 sales generated from home plate sponsorship of PAc Bell Park in SF. Realized that focusing your efforts on customers would drive more sales and grow evangalists. From 2001: 20% of customers came back to buy, to 2006 51% are repeat customers.

#2 : Word of mouth works: Customers will talk if service is good

#3: Don’t compete on price: Tested coupons: increased sales, but then as time passed behavior was not as loyal, customers were only price driven and not product and service driven. If they are not going to buy from us as they don’t get a discount, then they are not the right fit for us.

#4: Make sure your inventory is 100% accurate in Real time: If your customers get notifications that order was out of stock, large percentage never shopped with them again. Really why do you want to buy something and get a note later that it is back ordered, out of stock, or not shipping till TDB?

#5: Centrally Locate your distribution: Used to be located in SF and shipped out of offices. Then moved north to ship out of Chico. Then to Kentucky: Reason. you can reach 70% of US pop in 2 days with ground shipping, costs were lower and service was faster. Cost them less and everything else rose with the tide.

#6: Customer Service is an investment not an expense
If you are trying to minize costs, then you can go the scrip and try to limit phone time. But does not win long term

#7: Start Small, Stay Focused
Don’t try to go so big too fast. Mistake so many people make trying to go to market so fast. They learned that the original idea really was not the best idea. Being able to be flexible and able to tweak was better. Did you know that they sell clothing and other products? Well the reason is that they are testing other product sales, learning from behavior, and learning from cust needs to translate to buyers and model. Allowing customers to “Discover” clothing, and slowly ramp up.

#8: Don’t be Secretive and Don’t worry about competitors
Everyone is surprised at how open they are about their business. They have found that sharing the business info with partners has really allowed them to be better. Transparency is key. Having another 1500 pairs of eyes from vendors and partners helps them to run the business and makes the partners more invested in the business

#9: You Need to Actively manage your company culture
Not paying attention to WHO you are hiring and what they are doing impacts company.
They have turned away very qualified people because they are not a culture fit.. Want to make it a place that people WANT to come to work everyday. Trickles down to customers and service levels.
There is not a set process of script for everything. Culture actively creates positive processes.

#10: Be Wary of So-Called Experts: In creating s new business model, they have learned that so many consultants are typically not used to the way that their business happens and culture works, would set them back. They could have made more progress faster if they would have trusted their gut. It is not that all outside consultants are bad, outside perspective is good and can help, but remember that THEY are not running and managing your business.

If you want a tour of the HDQs, call center, HR, etc, just let them know. Email Tony if you want a copy of the culture book. Make sure to include mailing address as it is a REAL paper book.

blogs.zappos.com

Tony Hsieh CEO, Zappos.com – tony@zappos.com

Overview: Tony Hsieh joined Zappos.com full-time in 2000. Under his leadership, Zappos.com has grown gross merchandise sales from $1.6 million in 2000 to over $800 million in 2007. Zappos.com is projecting to do over $1 billion in gross merchandise sales in 2008. Tony focuses on continuing to grow the business at a rapid pace while maintaining the culture and feel of a small company. Tony’s presentation focuses on Zappos.com’s mistakes over the years and how those mistakes have shapedthe company’s growth strategies. Tony will also talk about the importance of building a company culture that can survive for the long term.