With the recent loss of former Zappos CEO, Tony Hsieh, we’ve been reminded of his story and what he did to take a brand from its drop-ship days to an online mega-retailer worth a billion dollars. The company motto sums it up pretty well, “We’re a good customer service company that happens to sell shoes.”
At the time he was introduced to the idea of Zappos, Tony was working with a business incubator and the idea of Zappos was presented to him. He had been investing in entrepreneurs but felt like he wasn’t active enough in the process and wanted to be more involved. So he did.
The first major question about the feasibility of an online shoe company was “Would people buy shoes online?” It was all happening during the dot com bust of the early 2000s. Investors were hard to find, so there were struggles. The founders knew that the mail order catalog industry was in a growth cycle, so they decided to press forward, even with their own money as investments. By adding that investment to a unique business strategy, the company grew.
Tony and his team began building the brand as “the very best customer service and customer experience” with offers like free shipping for delivery and returns. They tried to set the company apart by doing things other companies might not have been willing to do to satisfy the customer.
Another big question was how to handle customer service. Would agents be in-house or outsourced? Since Zappos prioritized its’ customers, they knew would need quality agents to assist with orders. At one point, Zappos spoke with outsourcers in the Philippines and India but decided that they would keep everything in-house. One of the reasons given was that outsourcers overseas wouldn’t have the same cultural knowledge to assist customers.
That is a genuine concern for companies in the United States. There are only two countries nearby that can boast a cultural similarity, Mexico and Canada. Many people travel or relocate from Mexico to the U.S. and back regularly, so you do see the experienced shared culture and deep understanding of U.S. customer needs. At the time Zappos was looking for an outsourcing partner, Mexico wasn’t as well known for customer service outsourcing as it is today.
Ultimately, the customer service team was to be staffed with Zappos employees. This decision fueled a unique company culture that has become the subject of case studies and presentations as companies look to replicate Zappos’ successes. So what made Zappos into a highly successful brand and a coveted employer?
As an introverted CEO, Tony assumed the role of caretaker of the employees at Zappos, instead of being the star lead. He often would step outside his normal and “do something that makes you uncomfortable.”
Zappos built its company culture into a workplace that consciously kept things fun around the office. Everything from the job descriptions and hiring process through to a termination bonus offer. Yes, a cash offer was extended to employees that didn’t quite fit the culture, which starts with a few core values. According to TheBalanceCareers.com, the Zappos 10 Core Values are:
- Deliver WOW Through Service
- Embrace and Drive Change
- Create Fun and A Little Weirdness
- Be Adventurous, Creative, and Open-Minded
- Pursue Growth and Learning
- Build Open and Honest Relationships With Communication
- Build a Positive Team and Family Spirit
- Do More With Less
- Be Passionate and Determined
- Be Humble
Employees find job satisfaction from sticking to the core values. They were allowed to be a little weird while feeling like they were doing meaningful work. They provide on-the-job training, performance incentives, skills tests for raises, team building activities, and ice-breaker activities disguised as scavenger hunts.
Even the management system of Zappos is different than most companies. Since raises are skills-based, instead of performance reviews, Zappos managers give cultural fit assessments. Management teams help employees with career path planning within the company. So many other corporations get this part wrong, keeping employees in one role can lead to burnout or feeling stuck if they don’t enjoy something about the role they are in. The Zappos way allows employees to feel more in control of their contributions to the company.
It should be said that not everyone fits into this style of company culture. It’s called a holacracy. It’s basically making decisions as a self-organizing team instead of the standard tree-like management structure most companies choose. This flexible hierarchy can be confusing and some people just don’t prefer it.
When Zappos was acquired by Amazon in 2009. Tony was hesitant about the deal ($1.2 Billion in Amazon stock) because he feared that they would lose the company culture that he and others had worked so hard to build. By the end of the deal, Amazon agreed to let the company stay its own brand and not be absorbed entirely into the Amazon structure. Tony stayed on as CEO after the purchase.
A visit to the current “About” page on Zappos.com reveals a few more customer-facing facts about what makes Zappos stand apart from competitors. There, you’ll find a story titled “10 Things to Know About Zappos Customer Service.” Aside from how casual it reads (yet a completely relatable tone), you’ll find real examples of their company culture.
Here is what they say helps them to “Wow our customers in new and wonderful ways.”
- Easy-to-find contact info
- Unlimited call times
- Friendly, solution-oriented representatives
- No phone tree
- No scripts
- 24/7 call center
- Empowered to help
- 365-day return policy
- Free shipping and returns
- No upselling
In January of 2017, Tony sat down for an interview with NPR’s Guy Raz, host of the podcast series, “How I Built This”, based on a book by the same name. In this fascinating interview, Tony revealed that he owned less than 4 pairs of shoes. In fact, he wasn’t all that into shoes. But, instead, he was a fanatic of customer service. When asked what he considered as a success, Tony replied, “Getting to the point of being truly ok with losing everything.” This, interestingly enough, from a man who at the time lived in an Airstream trailer in an artist community he built in Las Vegas. He had already downsized his need for physical things, which in hindsight, bears a similarity to his definition of success.
In August of 2020, Tony stepped down as CEO of Zappos but remained on the Board of Directors until his death in late November 2020.
Zappos continues to inspire others through Zappos Insights, which shares strategies for other companies to strengthen their core values and culture. Although, since the Covid-19 pandemic, these efforts have been scaled back as they decide how to best proceed.
One takeaway from the successes of Zappos and the unconventional leadership of Tony Hsieh is that sometimes it’s worth trying something different. He sold an earlier company because it didn’t fit his values and it wasn’t fun. Take a chance, be creative, and weird, and do what works for you and your team. Creativity in business should be in more than just a marketing department. And of course, realize the importance of providing outstanding service to your customers. You can’t make it very far in business without your customers.
Centris deeply understands the connection between customer service and company success, as well as fostering a company culture that rewards employees for outstanding service. For over 30 years we’ve provided advanced contact center solutions and strategic business intelligence. Through our talented and skilled team of agents in Mexico, we help our partners increase customer retention, sales, and increase market share. We’re known for our accent-neutral bilingual support and our agents have a deep understanding of American culture.
While we support numerous industries, we have specialized experience in the insurance, healthcare, retail, and security space and are proudly PCI and HIPAA compliant.
Reach out to learn more about how Centris can help you reach your business goals.
