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A leading innovation and marketing blog from Braden Kelley of Business Strategy Innovation

Monday, October 27, 2008

BiF-4 Insights - Tony Hsieh - Zappos.com



We have a Kentucky warehouse with 4 million pairs of shoes.

Importance of striking an emotional connection with customers.

Tony started LinkExchange before selling it to Microsoft:
  • Sold it because it went from five people to 100 people

  • Hired people without the thought of cultural fit

  • After the sale, formed an investment fund and invested in 20 companies including Zappos.com

Now we have 9 million customers and a focus on having the best customer service:
  • We sell clothing, handbags, and electronics now

  • We also look at Virgin for inspiration

  • We give a lot of customers free upgrades to overnight shipping

  • Our number one growth driver is repeat sales and word-of-mouth (WOM)

  • We want to talk to our customers (we put an 800# on all of our web pages)

  • We run our warehouse 24/7 to maximize speed even though it is not the most cost effective way to operate it

  • We are focused on building lifelong relationships, not on maximizing transactions

Our number one priority is not customer service, it's company culture:
  • No call scripts, we hire well and trust our employees to serve the customers

  • Get the culture right to better control brand and customer service rather than planning every process

  • Treat customers like people (funeral and flowers story)

  • We do two different sets of interviews

    • Hiring manager and team

    • HR team does culture fit interview

    • Have to pass both interviews

  • We will also fire people if they are harming the culture

  • Everybody goes through the same four weeks of training, then weeks on the phone and one week in the warehouse in Kentucky

    • We have even fired people during training

Story about customer purchasing a wallet, trying it, and returning it:
  • The person left $150 in the wallet when they returned it

  • The person had been blaming their kids for the $150 disappearing

  • Warehouse worker sent letter to customer about the $150

  • Woman was very grateful and stopped thinking her kids took it

Core Values should be things you are willing to commit to, including your hire/fire decisions.

For more information on the talk, go here.

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