I just discovered the eBay Speaker Series with allows eBay employees to meet with experts and leaders of the industry. I checked that I am allowed to blog about all these great conferences and since the answer is yes, I am really glad to be able to share them with you. Today, this conference was a paradise for my brain: everything seemed to fall into place, to make perfect sense. We had the chance of receiving Tony Hsieh, CEO of Zappos.com. For those who don’t know Zappos (and if it is the case, you’re probably European), it is the first online shoe retailer is the US, but before all, it is one of those companies completely shifting the paradigm in their approach of customer service. I pass quickly on Tony H.’s history which is anyway pretty impressive (cofounder of LinkExchange sold to MSFT for $265m, cofounder of an incubator which led him to Zappos) and on Zappos history (founded in 1999, now 1600 employees), but instead focus on Tony’s vision.

First, I was surprised by their mission: I thought that they would naturally choose “becoming the largest shoe retailer in the world” or “becoming the largest accessories retailer”. No, instead they chose something way more inspiring for customers and actionable by employees: “providing the best online experience possible”. Tony H. chose not to compete on prices, but on products and service instead, to drive repeat customers (very successfully strategy since 75% of purchases are from returning customers which on average have higher order size that first time ones). And how does it translate currently into their business? By a number of policies: free shipping and free return shipping, 365 day return policy, 24/7 1-800 number. Well, it seems interesting, but some e-tailers are doing the same, right? It seems that the differentiating factor is how these policies are implemented. For example, the number to reach the customer service is on every single page of the web site: Zappos wants their customers to call them, whereas other e-tailers try by all means to make you find your product or answer by your own. Tony H. mentioned that he sees the customer service as an immense branding opportunity, a unique way to speak directly to your customers. Customer satisfaction is the only focus: customer reps sometimes refer customers to competitors’ websites if Zappos is out of stock on a particular model. By the way, on this particular example, Zappos is only reproducing what local retailers, especially in small cities, have always done, but is doing it at a larger scale.

But what are the processes to achieve this customer satisfaction? I’ll pass quickly on a number of operational measures (reps don’t have a maximum call time to follow and are not incentivized on sales, warehouse run 24/7, inventory all products…) but instead focus on the culture. I am always skeptical when I hear a company saying that they rely on their culture to make things right: a nice sign with 10 really basic principles at the entrance of a corporate building has never helped me determine the strategy of a company. Even the really consensual Google’s “don’t be evil” is now questioned! But at Zappos, the difference is that the core values are really committable and that decisions, especially the crucial ones like hiring, firing and evaluating performance, are made in accordance with the culture. Notably, all employees spend 5 weeks in training to learn the culture, and customer reps are given $1000 to leave the company during the training if they feel that they don’t fit with the culture of customer satisfaction. And which impact does it make on the business? It seems that once you get the culture right, the decisions are much easier to make. Tony H. gave a lot of really good examples and I just picked one: a widow wanted to return shoes from her deceased husband, and the rep who managed the case took the initiative on her own to send flowers to the widow on behalf of Zappos. The widow was so moved by the gesture that she mentioned it during the funeral. Of course there is no guideline for this kind of situation, but having the right culture gives you confidence that your employees will do the right thing in terms of human behavior but also for the company (the widow and some members of the family are now repeat customers!).

But finally, what about the costs involved? Tony H. sees customer service as an investment and not an expense: Zappos has been profitable since last year but could have been profitable 4 years ago; instead, it invested in free overnight shipping and other aspects of customer satisfaction. But he is also extremely rigorous about ROI: whereas offering free shipping the same day would totally fit into the culture, it doesn’t make any sense from a business standpoint and therefore hasn’t been implemented.

I didn’t have time to ask the question about whether or not they plan to go global, because it would be a totally different challenge to maintain the same level of CS on a global scale. So if I’m lucky and Tony sees this article, I hope he’ll reply here

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