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

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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.

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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

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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

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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.”

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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

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“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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