Nick Swinmurn was frustrated—he couldn't find the right pair of Airwalks in all of San Francisco. They were either the right color and wrong size, or vice versa. Then he had an idea: Why not create a place online where people can find the exact shoe they want and have it shipped to them in a few days?
He started small by going to local shoe stores, taking pictures of their inventory, and then posting them online to sell. With each order, Nick would run back to the store, buy the pair, and ship them off.
Enter venture capitalist, Tony Hseih. Nick had contacted Tony with a simple three sentence pitch: “Footwear is a $40 billion industry in the United States, of which catalog sales make up $2 billion. It is likely that e-commerce will continue to grow. And it is likely that people will continue to wear shoes in the foreseeable future.”
Tony went all in on the idea investing everything he had, which included liquidating all of his assets. He believed that this company could do more than deliver shoes but deliver happiness to everyone—and with that, Zappos was born.
Online Retail
1999
These good neighbors make jokes, play, have fun, and always return what they borrow with a thank you note—and maybe a bottle of wine.
While they are not afraid to break the rules a little, they only do so as a way to help others. In fact, they will pretty much do whatever they can to solve a problem, even if that means trying to help someone find an open pizzeria at 2am. At their core, they have a positive and optimistic attitude about everything because the best way to inspire others is to have an inspirational attitude yourself.
For Zappos, it's all about having fun, not taking yourself too seriously, and above all else: Making people happy. With clever lines like "shoes: now conveniently sold in pairs" and emails always ending in "With love, the Zappos Customer Loyalty Team," they are always trying crack a smile.
Read Zappos' welcome email from 2012.
Pop quiz:
Can all your colleagues recite your core values word for word without looking up the answers? Or, would you be comfortable letting any employee speak on behalf of the company? Zappos leadership would happily say yes to both.
This is not just because employees are required to sign a document upon being hired stating that they have read and understood the company's core values. It is because at Zappos, as Co-Founder Tony Hsieh has described: "Our number one priority as a company is company culture, and our whole belief is that if we get the culture right, then most of the other stuff, like delivering great customer service or building a long-term enduring brand will just happen naturally on its own."
As Co-Founder Tony Hsieh describes it: "We decided a long time ago that we didn’t want [the Zappos] brand to be just about shoes, clothing, or even online retailing. We decided that we wanted to build our brand to be about the very best customer service." But to continually deliver on that promise, Zappos has positioned themselves as a premium service brand that:
As a company that is obsessed about customer service, it didn't make sense to Zappos to outsource their core competency. They even rejected the idea of a satellite call center, because, for Co-Founder Tony Hsieh, "it wouldn’t be matching our actions to our words. If we were serious about building our brand around being the best in customer service, customer service had to be the whole company, not just a single department."
In an online world that is dominated by discounts and coupons, Zappos chooses to differentiate themselves as a premium service brand. They see their customers not so much as price-conscious, but as service- and selection-conscious instead. By avoiding anything that directly relates to monetary compensation, they can focus on providing WOW experiences while upholding their brand integrity and the brand integrity of their offered couture brands. While they do offer some price matching, it is only as needed when compared to other premium competitors.
As Tony Hsieh has stated: “Our whole philosophy became ‘let’s take most of the money we would’ve spent on paid advertising and paid marketing and instead of spending it on that, invest it in the customer experience/customer service and then let our customers do the marketing for us through word of mouth, and that became the whole business model..." And as a result, 75% of all Zappos orders are placed by returning customers.
Originally, Zappos would drop ship orders to their customers. It was a simple way to reduce cost and increase profits, but it also left some customers disappointed. As much as 5% of drop shipped orders were either shipped slowly, inaccurately, or went unfulfilled because the manufacturer didn't properly update their inventory feeds.
Even though drop shipping made up 25% of the revenue stream for Zappos, they abandoned the practice and expanded their own warehouse to have full control of their customer's buying experience.
After any order or after certain customer interactions, Zappos sends out email surveys to these customers in order to help calculate their Net Promoter Score and learn more about the experiences the customers received. Questions have included:
Results are then calculated each day and shared with the entire company. Each team member also receives their own individual scores for the calls they specifically handled.
How do you make employees happy to be at work on a Monday morning? Co-founder Tony Hsieh believed that the key to employee happiness was a result of infusing these four principles into a brand's culture:
This culture cocktail creates what Zapponians call 'finding your ikigai' which translates to your 'reason for getting up in the morning.'
Zappos didn't define their values overnight. In fact, over the span of a year, Co-founder Tony Hsieh sought advice from the entire Zappos company asking them (by email) which values they thought were most important. He wanted everyone to ask themselves: 'Who in our company do you think is really successful and what do they do? What are their attributes?'
As a result, by listening to and collaborating with the entire organization, the Zappos leadership:
See how Zappos' values compare to the top 10 most common values.
Little things matter—and they also add up quickly. So imagine if every employee made just one small improvement every week to better reflect your company's core values. For Zappos, by the end of a year, that would add up to over 50,000 small changes.
In an open letter to all Zapponians, Zappos leadership challenged their employees to do just that. It didn't have to be a drastic change—it could be as simple as adding a sentence to a job application form, an email template, or a website page to make it sound more fun. The point was to empower everyone to constantly re-examine everything that is being done and to take ownership over how the company can best live their values.
If you want your employees to live the brand's values by build customer relationships through "open and honest communication"—that openness and honesty needs to start at the leadership level. At Zappos, leadership believes that too much information is better than too little information, so they share everything they can through:
As Zappos outgrew their first headquarters in San Francisco, they needed to make a decision on where they would permanently set up home base. Even though downtown Las Vegas wasn't the cheapest option, they chose to relocate there because it aligned most with their culture:
Like most jobs, you wake up, go to work, and log into your computer. In that way, Zappos is no different. However, there is one additional step at Zappos that is required: You need to play the Face Game.
At one time, invites were even sent to the team members asking them to lunch with a subject line that read: "You got faced."
When Zappos says they only hire people they want to spend time with, they are very serious about creating opportunities for those times to be had—inside and outside of work.
For Zappos, that means letting employees make their workspace a home away from home, with pictures, streamers, balloons, and pretty much anything that brings a smile to their faces. Even Zappos leaders have lush green foliage dangling from the ceiling above their cubicles, which is referred to as 'Monkey Row.'
And their boardrooms are themed after Hollywood movies and stars, like Elvis, Betty White, and James Bond. The Up boardroom has balloons painted on the walls, a mailbox with the names 'Carl' and 'Ellie,' as well as, tennis balls on the bottoms of the tables and chairs.
By giving Zapponians full ownership over their workspace, it eases anxiety, increases ingenuity, while bringing smiles to their employees faces.
There are no offices at Zappos and everyone has the same size desk and cubicle. That includes all leaders who could be found centrally located in an open space on the third floor of the Zappos headquarters.
Fun doesn't have to cost a lot. While Zappos does have extravagant parties and brings the occasional camel into the office, they also have fun with the tightest of budgets. The Zappos full-time team of Fungineers are always looking for simple ways to break up the day and bring happiness to their coworkers with:
Four massage chairs surrounded by a giant fishbowl await employees in the official Zappos Nap Room Aquarium. Zapponians can use this room on breaks, at lunch, or anytime they can't keep their eyes open. While it may seem like a perk to just attract millennials, studies show a 10 to 20-minute nap at work actually increases creativity, intelligence, alertness, memory retention, and performance.
Working with vendors never has to be a lose/win scenario. At Zappos, both parties can move forward together as winners if they approach the relationship with honesty, transparency, and happiness. To keep vendor relationships long Zappos follows these guidelines:
Remember highschool yearbooks? Well, Zappos has something just like that. Every year, Zappos creates the Zappos Culture Book, an uncensored tell-all that includes how each employee personally defines the company culture. Employees email the CEO short essays of 100-500 words answering these questions:
All unedited responses—yes, the good and the bad—are included along with highlights and photos from the year. It's their very own time capsule to see how their strengths and weaknesses have evolved over time. The book is then shared, not only with employees, but with literally anyone interested in the Zappos culture. Go ahead and buy your own copy on Amazon.
It feels good to be recognized, especially by your peers, so Zappos devised ways for employees to recognize each other. Recognition doesn't have to be for extravagant gestures, Zapponians are recognized for opening doors, remembering birthdays, and sometimes for just always having a smile on their face through several types of programs:
It might not literally take 5 seconds, but the Zappos Five Second Happiness Survey comes close. Every month Zappos employees are surveyed to measure their happiness levels. Zapponians answer these five questions with a response of either 'definitely,' 'sometimes,' or 'not at all,' along with an option to leave comments:
The survey is anonymous but anyone who chooses to sign their name is personally responded to by the Zappos leadership team. With an average response rate of 60 to 85%, results are calculated within a week. All scores and comments (good and bad) are shared with the entire company. Included in the report, Zapponians are updated on any changes that came about as a result of past surveys.
Salaries at Zappos tend to be more towards the median level of competitive salaries, hovering around the 75th percentile. As Donavan Roberson, Zappos Insights Culture Evangelist, explains: “We invest that 25 percent difference into activities that build our culture. Some might say that we are taking a hit in salary, but we are building a culture dedicated to the happiness of our people. When a person’s life comes to an end, that person doesn’t look back and think, ‘Okay, how much money did I make per year?’ The person is thinking, ‘How was my life; how was my every day; how much did I enjoy my job; what did I accomplish; what did I learn?’ These are the things that are much more important to people than salary.”
As part of the Sharing Great Calls program at Zappos, team members are encouraged to let their leaders know when they have made a strong personal connection with customers. The leader will then email or call the customer directly to receive additional feedback on the experience.
Zappos receives over 100 Sharing Great Calls examples every week and posts them on the company intranet and also uses them for quality feedback and training purposes.
And in case you're not sure how to approach a customer for feedback, the Zappos message sounds something like this:
"Our Team Member said what a great time she had talking to you! We want to give our Team Members an extra pat on the back, so I have a huge favor to ask of you. It will not take much of your time, but it will help us enormously. Please tell us about the service you received and any points of feedback regarding the conversation you had with our Team Member. "
Zappos created the Panda program in order to combat unscheduled absenteeism and also to reward call center staff who have perfect attendance with additional time off. The program works like this:
To cut down on the amount of errands and tasks their employees have to do on the weekend, Zappos brings in outside service providers to help. Employees drop off their car keys or dry cleaning at the front desk in the morning and by the time they are done with work their clothes are clean and their cars have had an oil change. Employees pay a discounted rate for these services, making the cost to Zappos little to nothing.
With over 30,000 applications submitted annually, Zappos expects applicants to prove they are Zappos material. In order to weed out halfhearted candidates, Zappos purposely adds friction to their application process by:
Anyone who does not make the cut is contacted by a Zappos leader who then offers advice on what applicants can do to improve the way they interview.
To see if candidates truly align with their core values, Zappos developed the Zappos Family Core Values Interview Assessment Guide. This assessment breaks down each core value into several key questions to determine how well the candidate will play with others. Each answer is ranked on a scale of 1 to 5. Questions include:
Download the Zappos Family Core Values Interview Assessment Guide (PDF)
Zappos doesn't just leave it up to the interview to determine if a candidate is a good fit. They also gain insight from anyone who spoke to the candidate during the day.
Applicants often fly into Las Vegas for their full-day of interviews and are picked up by Zappos shuttle drivers. The drivers are asked to evaluate applicants on how well they demonstrated the Zappos values.
Even at the end of a full day of interviews, applicants are then taken out for a night on the town, giving the entire team an opportunity to get to know the candidates as well.
Zappos believes that onboarding is a fundamental experience that forges interdepartmental relationships around a common experience. That is why everyone hired at Zappos, from software engineers to executives, goes through the same onboarding process that the call center team goes through.
This 4-week development course covers the Zappos history, vision, philosophy, and culture. It also includes 2 weeks of answering customer phone calls.
Once training is complete, each new employee is offered $4,000 to quit. This final test is to ensure that everyone is there for the right reasons and not just for a paycheck. This offer is good for up until 3 weeks after new hires start their official jobs, with only about 2% of them taking the offer.
At Zappos, when employees develop a new skill set, they earn a badge. If they earn a new badge, they receive an increase in pay.
It sounds easy but to develop a new skillset and earn a badge takes time and a lot of work. Employees need to take required courses, shadow other employees, read additional materials, and obtain required certifications, if necessary. This is on top of contributing to the Zappos culture and corporate social responsibility functions. All of these steps are clearly mapped out in each employee's progression plans.
Additionally, if employees are interested in different divisions of the company, they can earn badges for those areas as well. Earning those badges gives employees an opportunity to change their jobs completely.
Whether it sounds easy or not, Zappos envisions all employees having the ability to reach senior leadership status within five to seven years at the company. But they are also just as happy if you want to stay exactly the way you are.
The thrill and excitement of a promotion only lasts so long. Even lottery winners will return to their happiness baseline within one year of receiving their fortune. Originally, Zappos would promote deserving employees after 18 months, but changed the practice to promoting deserving employees every six months but in smaller increments. These smaller but more frequent pleasures keeps their employees happy longer.
To help employees better understand the ins and outs of the business, any Zapponian can schedule a several hour shadow session with another employee from a different department. Zappos has found this to be a great way to build relationships across departments while also helping employees learn and pursue new career paths at the company.
At least once a month, a customer loyalty team leader will pull a list of recent calls and have a team member choose which recordings to review. The calls are then graded on a 100-point scale using the Happiness Experience Form which breaks down a call into several parts:
Zapponians are expected to maintain at least a 50-point average and are given additional training if their averages start to slip.
Want to lose some extra weight, write a song, or be a better public speaker? The onsite life coach at Zappos is there to help employees establish short-term 30-day goals.
It doesn't matter if the goal is business or personal, what matters is that employees have opportunities to grow as people. To Zappos, a career should be a transformational journey that helps people realize their higher purpose while integrating their personal life with their work life.
At the end of the 30 days, if employees achieve their goals, peers publicly celebrate their achievements which includes awarding them with a Certificate of Achievement for taking life to the next level.
What started out as a couple of books shared amongst Zapponians, quickly turned into a growing library of over 500 titles that have influenced the philosophy and leadership style at Zappos. Employees, and even visitors, can grab any book from the library at any time for free and can also recommend inspiring books to be included in the library. Classes and bookclubs are also offered to discuss and develop ways to take the lessons from the books and turn them into actions.
Check out the Zappos top 10 recommended books.
If you ask yourself, 'What is your goal in life?,' what would you say? Now, with that answer in mind, ask yourself 'Why?'
Zappos Co-founder Tony Hsieh believed that if you ask yourself 'Why?' just enough times, everyone will arrive at the same answer: To be happy.
If life is than about finding happiness, Zappos wants to find ways to deliver happiness to each customer. Their mission is to make every moment with Zappos a WOW moment and every interaction an opportunity to build lifelong relationships. As Tony has said: "If you really just think about how to make customers happy and how to make employees happy, that actually, in today’s world, ends up being good for business."
For Zappos, their white box is the most tangible touchpoint they have with their customers. That is why it's so important to them, not only to make it recognizable from at least 25 feet away but to have it create a positive emotional connection. To do this, the Zappos team asked themselves: How can we turn our box into a creative and meaningful experience? Enter the #ImNotABox campaign that added:
Zappos tried professional models but user experience tests showed customers didn't respond well to them. So instead, Zapponians started filming short videos of themselves showcasing and modeling the products, while adding in their own insights and musings. As Jason Lee Menard, video production manager, describes: "In a minute or less, we want to show the product, make a connection with our staff's personality, and share our culture."
To make the cut, videos need to be well produced but not overly polished, engaging, relevant, and consistent with the overall brand.
Zappos sets a goal of answering 80% of incoming calls within 20 seconds. And although they are quick to answer, the rest of the call is set to the customer's pace with some calls lasting hours.
To keep up a quick response time, all employees are expected to take customer calls during peak times of the year, including the CEO. Luckily for Zapponians, they all have already been trained on how to do this during their onboarding process.
Even though customers may have loved their Zappos Customer Loyalty Team representative when they called last week, Zappos has set guidelines to avoid transferring calls to representatives asked for by name. This not only increases efficiency but with all prior transactions stored in their Customer Relationship Management system, Zappos is confident that any employee can make a personal connection with a caller.
Scripts don't let the personality of your team shine through. Upselling just annoys customers. And limited call times just don't give you an opportunity to make personal emotional connections with customers.
That is why the Zappos Customer Loyalty Team members are told never to do any of those things. They are expected, however, to spend at least 80% of their time with customers, whether this equates to 100 calls a day or just 1—doesn't matter. Even when a Zappos team member told his manager that he just had a 10 hour and 43 minute call with a customer, the manager only asked 'Was the customer WOWed?'
If a customer calls for a specific shoe and it is not available at Zappos, then it is the rep's job to help the customer find it. Team members are trained to research at least three competitor websites to help the customer. If the shoe is found in stock on another site, they send the customer there. Yes, Zappos might lose the sale but to Co-founder Tony Hsieh: "We're not trying to maximize each and every transaction. Instead, we're trying to build a lifelong relationship with each customer, one phone call at a time."
Even though the Zappos website might say they offer free ground shipping with a four to five day delivery time, over 70% of deliveries actually are upgraded for free to next-day air. Zappos considers the cost as a marketing expense, believing that the best marketing comes from word of mouth. Zappos has even used a $100,000 credit from UPS to upgrade their upcoming deliveries to next-day delivery.
Mail can be so much more than bills and junk. At Zappos, call center staff send handwritten notes to customers based on personal connections they made over the phone.
Whether they bonded over a graduation, wedding, or connected over a funny moment, Zapponians can choose from a selection of employee designed greeting cards they have at their desk, write a note, and mail it out. In total, Zappos sends out about 13,000 of these PEC (personal emotional connection) cards per year.
When it comes down to it, every online clothing purchase is a gamble. So in order replace feelings of stress with feelings of WOW, Zappos provides their customers with:
Zappos is constantly looking to hear feedback from customers regarding their shopping experience. The Zappos online survey located in the footer of their website asks visitors to offer suggestions or ideas on how to improve the site. Answers are scaled on either a 1 to 7 or 0 to 10 scale and the questions include:
If you're all about service, make it easy for your customers to contact you. Zappos customer service is not only available 24/7 but also prominently places their phone number on every webpage.
As Zappos co-founder Tony Hsieh puts it: "The telephone is one of the best branding devices out there. You have the customer's undivided attention for 5 to 10 minutes, and if you get the interaction right, what we've found is that the customer remembers the experience for a very long time and tells his or her friends about it."
We all know how creepy/annoying it can be when you shop for one product and then every platform you visit thereafter has ads for that exact or similar product.
Although Zappos does use these behaviorally targeted ads, they include a link in them that says "Why are you being shown this banner?" This directs customers to a page that educates and reassures them that their personal information is not being shared with any other sites. Additionally, on that same page, Zappos offers customers the option opt-out of these targeted ads from appearing ever again.
'Be real and use your best judgment.'
Those seven words make up the entire Zappos corporate communication policy. That's it.
Sound scary? Maybe for some, but with a strong culture in place, Zappos believes that "people step up and communicate both honestly and respectfully." And yes, the policy applies to every communication opportunity.
Originally named ShoeSite, founder Nick Swinmurn wisely changed the company name to Zapos—a derivative of zapatos, the spanish word for shoes. Co-founder Tony Hsieh recommended adding the extra 'p' to avoid accidentally mispronouncing it ZAY-pos.