Building a CustomerFocused Culture Tony Hsieh CEO Zappos

Building a Customer-Focused Culture Tony Hsieh CEO

Zappos at a Glance • Founded in 1999 • Zappos is powered by service • Providing the best service and online shopping experience possible. • Free shipping both ways. 365 -day return policy. • Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service. • Best selection • Over 1100 brands. • Over 150, 000 styles. • Over 800, 000 unique UPCs. • 3 million pairs of shoes. • Photographed in multiple angles. • 100% of products inventoried (no drop ship). • Zappos is a service company that happens to sell shoes, clothing, handbags, eyewear, watches (and eventually a bunch of other stuff).

Customer service value proposition in action… Zappos is committed to WOWing each and every customer. • Customers come… • 7. 4 M total purchasing customers (about 2. 5% of US population) • 3. 3 M have purchased in the last 12 months • Customers come back… • On any given day, about 75% of purchases from returning customers • Repeat customers order >2. 5 x in the next 12 months • Customers come back, order more and order more often… • Repeat customers have higher average order size • $111. 98 – first time customers in Q 406 • $143. 22 – returning customer in Q 406

Word of mouth in action… Word of mouth enhances marketing investment significantly • Advertising spending… • 85% Internet • 15% Print • New customers acquired heard about Zappos… • 44% from Internet • 43% from word of mouth • 13% from other

Power of Repeat Customers & Word of Mouth 5

What is customer service?

Customer Service: What Customers First See • 24/7 1 -800 number on every page • Free shipping both ways • 365 -day return policy

Customer Service: What Customers Experience • Fast, Accurate Fulfillment • Friendly, helpful “above and beyond” customer service • Refer customers to competitors’ web sites

Customer Service: What We Do Internally • No call times • No sales-based performance goals for reps • Run warehouse 24/7 • Inventory all product (no drop-ship) • 5 weeks of culture, core values, customer service, and warehouse training for everyone in Las Vegas • Culture book • Interviews and performance reviews are 50% based on core values and culture fit

10 TIPS for building a service-focused culture

TIP #1 Commit to customer service. Make it part of your mission. It’s not just a department… Be true to your mission when making hard (or easy) decisions.

Zappos. com Mission To Live and Deliver WOW • Internally, we have a saying: • We are a service company that happens to sell ___________. shoes and handbags and clothing and eyewear and watches and accessories (and eventually a bunch of other stuff) 12

TIP #2 Come up with committable core values. Do some soul searching. Don’t come up with core values just because they sound good.

Zappos Core Values 1. Deliver WOW Through Service 2. Embrace and Drive Change 3. Create Fun and a Little Weirdness 4. Be Adventurous, Creative, and Open-Minded 5. Pursue Growth and Learning 6. Build Open and Honest Relationships With Communication 7. Build a Positive Team and Family Spirit 8. Do More with Less 9. Be Passionate and Determined 10. Be Humble 14

TIP #3 Actively manage your culture based on your core values … … for every single department.

TIP #4 Make “WOW” part of your company’s everyday vocabulary.

TIP #5 Remember that customer service is an investment … … not an expense. Don’t hide your 1 -800 number. Don’t measure call times.

TIP #6 Trust and empower your customer service team. Find people that are passionate about customer service.

TIP #7 Create a culture book.

TIP #8 Give great service to everyone: Customers Employees Vendors Investors

TIP #9 Make culture part of everyone’s performance review.

TIP #10 Have the entire company celebrate great service. Tell stories.

Q&A • Email me -- tony@zappos. com for: • Answers to any additional questions not answered today • A copy of our culture book • Tour offices when you’re next in Vegas • Job opportunities