Service Untitled

Tony Hsieh is the CEO of Zappos, a $800 million a year online retailer that sells shoes, handbags, and more. The company started in 1999 with almost no sales and is on track to do more than $1 billion sales in 2008.

In addition to being a very successful retailer, Zappos is a well known customer service company. They have a great reputation (see my post about them here) and really do go out of their way to provide the best customer service possible.

This is the first part of a three part interview with Tony Hsieh. In this part, Tony talks about what Zappos does, how big they are, how many report customers they have, the company’s “wow” philosophy, and a bit about their very generous return and exchange policies.

Question: For those that aren’t familiar with it, what is Zappos? What do you do?
Answer: We started out as an online retailer of just footwear. We actually sell a lot more than just shoes. We sell bags and clothing, sunglasses, watches, and other accessories. We’re hoping ten years from now people won’t even realize we started selling shoes online. We really just want the Zappos brand to be about the absolute best customer service and a great customer experience.

Question: Most people don’t realize how big Zappos is. How many employees do you have? What are your sales expected to be this year?
Answer: Right now we have close to 1,400 employees. In terms of our growth versus net sales, we’ve actually grown quite rapidly. We started out in 1999 with basically no sales. For 2007, we are projecting to did over $800 million in gross merchandise sales. We have a little over 6.5 million customers, so that comes up to a little over 2% of the US population.

Question: Are a lot of those customers repeat customers?
Answer: Yeah. On any given day, roughly 75% of orders are from repeat customers. The main driver of our growth has been from repeat customers and word of mouth.

As I was interviewing Tony, a siren went off and people starting yelling and screaming. It was an employee’s anniversary at the company. I asked him if he used an office.

I am actually right in the middle of the floor in a cubicle just like everyone else. One of the things that we really try to promote is a team and family atmosphere and open door policies. The best way to do that is not have the door in the first place.

Question: Could you tell me about the “Wow” philosophy at Zappos?
Answer: As I mentioned earlier, we really want our brand to be about the best customer service. Our goal with every interaction is for the customer to walk away saying “wow” that was the best experience I ever had. That applies to everything we do in all of our departments. It’s why we provide free shipping and free return shipping. We have a 365 day return policy. We run our call center very differently from most call centers. Most call centers measure average handle time and essentially what that means is people are trying to get off the phone with the customer as quickly as possible. At Zappos, if someone spends an hour on the phone with a customer and it doesn’t result in a sale, all we care about is that they went above and beyond for the customer.

An example of that would be if a customer is looking for a specific pair of shoes that we don’t have available on our web site. Our call center reps are actually trained to look on competitor web sites and try to find the shoe for that customer. If they are able to direct the customer to the competitor’s web site, we know that we will be losing that individual sale, but it really just goes to building our brand of providing the very best service.

Questions: Zappos is well known for extremely generous return and exchange policies. Besides the 365 day return policy and the free shipping, is there anything else you would like to add about those?
Answer: Policies are one thing and our policies you just mentioned are definitely a foundation. But ultimately, it comes down to when you actually do need to call us or email us for any type of help, whether our representatives go above and beyond (and whether they actually want to).

For us, the only way to provide great service is to really have a great company culture. We actually focus lots of our time on making sure that company culture is the number one priority for everyone in the company. We believe that happy employees can deliver above and beyond service for the customer. Ultimately what we want is for customers to feel like they have an emotional connection with Zappos.