• September 2010: Branded Culture – Zappos: Creating a Viral Brand Powered by Culture and Service

    I think that I have got a contagious virus. Don’t fret. It’s a happy virus. I

    caught it from a company that I recently visited while in Las Vegas. The

    symptoms are that I want to tell everyone that I meet about this

    company. In the United States, the symptoms are even more visible.

    The virus has resulted in millions of people doing business with this

    company – and wanting to tell others about it as well. This company

    has become unbelievably successful in a short period of time. After just

    10 years in business, it was bought over by Amazon.com for US$1.2b.

    It has been ranked as one of the best places in the USA to work. The

    USA is abuzz with what this company is achieving – and how it is

    achieving it. The name of the company is Zappos.com.

    Branded Culture

    ©2010 TMI Consultancy Sdn Bhd | www.tmimalaysia.com.my.my | Page 2 of 8

    Zappos commenced business in 1999 as an on-line shoe retailer.

    Before you think, “Right, this is one of those internet get-rich-quick

    stories”, let me share some facts with you. Zappos started up in 1999.

    Sales reached US1 billion less than 10 years later. In the last 12

    months, more than 4 million Americans have purchased shoes on-line

    from Zappos. Seventy five percent of orders are from repeat customers.

    Whoa! The “holy grail” for every brand is repeat business and viral word

    of mouth. Zappos has achieved both!

    But let me digress a bit. The Zappos call centre is located in Las Vegas.

    And, believe it or not, it runs 4 tours a day, free of charge! You have to

    book in advance to reserve your place. You will believe it when, like me

    and my TMI Malaysia colleague Arvind Kumar, you go on the tour. And

    Zappos will even take you to the airport if you are in a hurry. WOW!

    You feel that you are about to

    experience something unique when

    you enter the colourful Zappos

    visitor registration lobby. There is a

    popcorn dispenser, free drinks and

    a “giving library.” This consists of

    bookcases well stocked with

    business books that Zappos

    encourages its employees to read.

    The twist is that anyone – employees and visitors – can take the books

    home and keep them. I took one book. I saw one person walk away

    with 5!

    The Zappos office is like nothing that you have seen before. But it’s

    much more than an unusual physical space. Rather, it’s a part of the

    living culture of this amazing organisation. When you go on the tour,

    you will walk through a corridor that is lined with framed “platinum

    records” – like the ones that musicians get when they reach a certain

    level of sales. The Zappos platinum records commemorate their sales

    milestones since start up, e.g., when first time sales hit US$4m in a

    single day, or the date that sales hit US$1b in a year. Underneath the

    framed records, there were caricatures of Zappos employees. Zappos

    appreciates that it is people who create results! If I was a Zappos

    employee, I would feel really special as I walked through this space.

    75% of

    orders are

    from repeat

    business and

    word of

    mouth has

    gone viral!

    Zappos

    appreciates

    that it is

    people who

    create

    results.

    ©2010 TMI Consultancy Sdn Bhd | www.tmimalaysia.com.my.my | Page 3 of 8

    When you enter the call

    centre space, you are

    definitely in a different zone.

    This is where you feel that

    one of Zappos’ core values is

    well and truly alive – Create

    Fun and a Little Weirdness.

    You will feel that the culture is

    about fun, people and, of

    course, shoes! There is a

    WOW wall where colleagues share WOW stories of how their

    colleagues have delivered WOW for them. The meeting room that I saw

    was definitely fun and a bit weirdDand WOW. Apart from the

    whiteboard, it has a rack with kitchen utensils hanging from it. This feels

    like a space which encourages your creative juices to overflow! I’m just

    scratching the surface here and have left out most of the details – there

    is so much to share with you, but so little space in this article! I will give

    you some web addresses to check out at the end of the article.

    So, what is the story behind this

    company’s success? Enter Tony Hsieh,

    the 37 year old CEO who is one of the

    founders of Zappos. Tony is a softspoken,

    low-key CEO. What makes him

    extraordinary is that he has a clear picture

    of how to stack together the building

    blocks to create a great company. The

    Zappos building blocks are pretty simple.

    They are based on the “3Cs” – clothing, customer service and culture. It

    may sound simple, but, as with all good things, the key is not in the

    thinking, but in the discipline of consistently doing.

    The Zappos

    culture is

    anchored

    around

    delivering

    the very best

    customer

    experience

    3 building

    blocks to

    create a

    great

    company

    ©2010 TMI Consultancy Sdn Bhd | www.tmimalaysia.com.my.my | Page 4 of 8

    Let’s get the easy part out of the way with the first “C” – clothing.

    Zappos is fundamentally an on-line shoe retailer. It offers the widest

    range of shoes available on the planet. Go to www.zappos.com to

    check out their range.

    Let’s move on to the second “C” – customer service. This is where it

    starts to get interesting. Zappos does not spend much money on

    advertising. Rather, it allocates that money towards providing the best

    customer service and the best customer experience.

    Just imagine. You want to buy a pair of shoes for someone special in

    your life. This is a pretty personal thing, agreed? Zappos makes it easy

    for you by offering a great website, a 365 day return policy and free

    shipping both ways. In other words, you may order 5 different pairs of

    shoes from your laptop while you are watching Oprah on TV. They are

    shipped, often overnight, to you for free. You try them on and decide to

    return 4 pairs, or even all of them. No problem, you can do that for free

    as well!

    While only about 5% of sales come through the call centre, Zappos

    believes that the phone is one of its best branding tools. Zappos

    receives thousands of emails and calls a day. The company sees each

    contact as an opportunity to build the Zappos brand. Tony Hsieh has

    said that every interaction is seen through the branding lens rather than

    through the expense minimization lens. This philosophy has led to the

    call centre being run differently.

    Three examples:

    First, there are no scripts. Employees are empowered to deliver WOW.

    For example, one of the “Customer Loyalty Representatives” (the

    people who man the phones at the Zappos call centre) may choose to

    answer the phone with, “I hope you are having a Zappo-licious day, this

    is Andrea speaking.”

    Second, there are no guidelines on maximum call handling times. The

    longest phone call went for over 7 hours! (That’s what I call a choosy

    customer!).

    Every

    contact is an

    opportunity

    to build the

    Zappos

    brand

    ©2010 TMI Consultancy Sdn Bhd | www.tmimalaysia.com.my.my | Page 5 of 8

    Third, Zappos aims to deliver a “PEC” – a Personal Emotional

    Connection – to every customer. For example, let’s say there is this

    customer whose name is Ismail. Andrea from the Zappos call centre

    picks up the call. Ismail explains that he needs a particular pair of shoes

    to be delivered by next Thursday, as he is heading off to the Bahamas

    with his family on Friday. Andrea will create a PEC by engaging in

    conversation and sharing in Ismail’s excitement. The conversation

    proceeds, “Wow, the Bahamas, and you are staying at the Hilton! That

    sounds great! Ismail, I tell you what. I will put you onto a VIP upgrade

    so that you will receive your shoes within 24 hours or less. I hope that

    you and your family have a great time – and enjoy your new shoes!”

    Once the call is over, Andrea takes one of the selection of Zappos

    greeting cards and hand-writes a note to Ismail: “Hi Ismail, Just to

    confirm that your new shoes will be delivered to you on overnight

    upgrade – which means you will get your shoes before you receive this

    note in the mail! Have a great time with your family in the Bahamas. All

    the best from the Zappos team. Zappo-licious feelings, Andrea.”

    Now, after this experience, how do you think Ismail is feeling? Do you

    think that he will talk to other people about his experience? Do you think

    that he will want to buy from Zappos again? The answers are “yes” and

    “yes”! And, by this time, there is a good chance that Ismail has caught

    the Zappos virus!!

    Let’s take a bird’s eye view of what is happening here. Tony Hsieh not

    only wants to give customers what they want, but he also has two more

    things on his viral brand-building to-do list: 1. Create an emotional

    connection with customers so that they 2. Tell stories to lots of others

    about their experiences with Zappos. Emotion plays a huge role in

    branding. With a very keen understanding of this, Tony says, “People

    may not remember exactly what you did or what you said, but they will

    always remember how you made them feel.” You may now be getting

    some clues as to why millions of people have caught the Zappos virus!

    While Zappos says that it is “powered by service”, the company’s

    success is turbo-charged by its culture – the third “C” of the “3Cs”. In

    fact, Tony Hsieh has said that having the very best company culture is

    the number one priority for Zappos. The company has 10 core values.

    The power of

    the “PEC”

    “People may

    not

    remember

    exactly what

    you did or

    said, but

    they will

    always

    remember

    how you

    made them

    feel.”

    ©2010 TMI Consultancy Sdn Bhd | www.tmimalaysia.com.my.my | Page 6 of 8

    These include Deliver WOW Through Service; Create Fun and a Little

    Weirdness and Be Adventurous, Creative, and Open-Minded. Now

    before I hear you groaning and saying, “Core values are a waste of time

    – they are never made real,” read on to learn how to make core values

    come alive.

    Tony Hsieh talks about “Committable Core Values.” Zappos commits to

    its core values by hiring based on them, performance managing based

    on them and, if necessary, firing based on them. Zappos received

    25,000 job applications a year, and employs 300 new people in that

    same time. The company assesses candidates for skills and for cuture

    fit. It does this by asking questions to get examples of how the

    employee has in the past lived by, and is likely to live by, Zappos

    values. That’s just the start of it. Each new employee – from senior

    management down – undergoes a 5 week training program, which

    includes 2 weeks in the call centre. During this time, employees are

    offered US$2,000 if they want to leave the company before the end of

    the induction period. Tony Hsieh said that this is one of the best

    investments the company can make, as it helps to ensure that only

    people who are right for the job will actually take the job.

    The “numbers people” will ask, “What is the ROI on initiatives like the

    Culture Book?” This is where Tony Hsieh thinks differently. He knows

    that you cannot put a short term KPI to building a great brand that is

    propelled forward by the very best company culture. This is where

    many companies fail in their service culture buidling efforts. They are

    driven by short term KPIs. When you think long term like the Tony

    Hsiehs of the world, you appreciate that it may take 2-3 years to get a

    payback on the signficant investment of time and effort in your service

    culture. If you make your service culture your number one priority – just

    as Zappos has done – then you will get a huge payback. It’s a matter of

    feeling comfortable in the “white zone” before your new culture

    becomes “business as usual”.

    When asked, “What’s the best way to build a brand for the long term?”

    Tony Hsieh’s answer is, “In a word, it’s culture. If you get your culture

    right, most of the other stuff – great customer service, branding and

    passionate employees – will happen on its own.” Tony Hsieh sees

    branding and culture as flipsides of the same coin. He appreciates that

    branding is about creating emotional connections. He says in his book

    “Many

    companies

    fail in their

    branding

    efforts as

    they think

    short term.”

    “What’s the

    best way to

    build a brand

    for the long

    term? In a

    word, it’s

    culture.”

    Committable

    core values

    ©2010 TMI Consultancy Sdn Bhd | www.tmimalaysia.com.my.my | Page 7 of 8

    “Delivering Happiness” that a common trap that companies fall into is

    that they try to figure out how to generate a lot of buzz, when really they

    should be focused on building engagement and trust.” And this is

    achieved through the customer experience.

    The final message to you is that there will be only one Zappos. Your

    company will not be a Zappos. Nor should you try to be. It’s a matter of

    taking the golden nugget lessons from Zappos and making them work,

    in an authentic way, for your company. Some of these golden nuggets

    take aways include:

    1. Make building your culture your number one priority – and follow

    through by example.

    2. Be clear on your company’s customer experience.

    3. Be clear on how you want your customers to feel when they deal

    with you.

    4. Use the power of emotion and stories to build customer and

    employee engagementDand plan to make it go viral.

    5. And, from a return on investment point of view, think long term.

    The symptoms of my Zappos virus are that I want to tell you a lot more.

    If you want to learn more about this fabulous company, then I suggest

    that you order Tony’s best selling book, Delivering Happiness, A Path to

    Profits, Passion and Purpose. Go to www.deliveringhappinessbook.com

    for some great resources. Or, if you want to explore more information

    on Zappos, go to http://blogs.zappos.com, www.zapposinsights.com,

    www.zappos.com, or, do a search for Zappos on the internet. You will

    find that Zappos has gone viral. But beware: in doing so, there is a

    chance that you too will catch the Zappos virus that is, in a very happy

    and positive way, striking millions of people around the world.

    Copyright © 2010 by George Aveling

    Share the knowledge! Please feel free to share this knowledge. You

    have permission to distribute and copy this article providing you

    acknowledge George Aveling, CEO of TMI, as the owner of the

    copyright.

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