From Delivering Happiness: A Path to Passion, Profits and Purpose by Tony Hsieh.
Over the years, the number one driver of our growth at Zappos has been repeat customers and word of mouth. Our philosophy has been to take most of the money we would have spent on paid advertising and invest it into customer service and the customer experience instead, letting our customers do the marketing for us through word of mouth.
So what is great customer service?
It starts with what customers first see when they visit our Web site. In the United States, we offer free shipping both ways to make the transaction as easy as possible and risk-free for our customers. A lot of customers will order five different pairs of shoes, try them on with five different outfits in the comfort of their living rooms, and then send back the ones that don't fit or they simply don't like -- free of charge.
The additional shipping costs are expensive for us, but we really view those costs as a marketing expense. We also offer a 365-day return policy for people who have trouble committing or making up their minds.
At most Web sites, the contact information is usually buried at least five links deep and even when you find it, it's a form or e-mail address that you can only contact once. We take the exact opposite approach. We put our phone number (1-800-927-7671) at the top of every single page of our Web site, because we actually want to talk to our customers. And we staff our call center 24/7.
I personally think it's kind of funny when I attend marketing or branding conferences and hear companies talk about consumers being bombarded with thousands and thousands of advertising messages every day, because there's usually a lot of discussion among companies and ad agencies talking about how to get their message to stand out.
There's a lot of buzz these days about "social media" and "integration marketing." As unsexy and low-tech as it may sound, our belief is that the telephone is one of the best branding devices out there. You have the customer's undivided attention for five to ten 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. Too many companies think of their call centers as an expense to minimize. We believe that it's a huge untapped opportunity for most companies, not only because it can result in word-of-mouth marketing, but because of its potential to increase the lifetime value of the customer.
Usually marketing departments assume that the lifetime value of a customer is fixed when doing their ROI (return on investment) calculations. We view the lifetime value of a customer to be a moving target that can increase if we can create more and more positive emotional associations with our brand through every interaction that a person has with us.
Another common trap that many marketers fall into is focusing too much on trying to figure out how to generate a lot of buzz, when really they should be focused on building engagement and trust.
I can tell you that my mom has zero buzz, but when she says something, I listen. To that end, most of our efforts on the customer service and customer experience side actually happen after we've already made the sale and taken a customer's credit card number. For example, for most of our loyal repeat customers, we do surprise upgrades to overnight shipping, even though we only promise them standard ground shipping when they choose the free shipping option.
In conjunction with that, we run our warehouse 24/7, which actually isn't the most efficient way to run a warehouse. The most efficient way to run a warehouse is to let the orders pile up, so that when a warehouse worker needs to walk around the warehouse to pick the orders, the picking density is higher, so the picker has less of a distance to walk. But we're not trying to maximize for picking efficiency.
We're trying to maximize the customer experience, which in the e-commerce business is defined in part by getting orders out to our customers as quickly as possible.
The combination of a 24/7 warehouse, surprise upgrades to overnight shipping, and having our warehouse located just fifteen minutes away from the UPS Worldport hub means that a lot of customers order as late as midnight EST, and are surprised when their orders show up on their doorstep eight hours later. This creates a WOW experience, which our customers remember for a very long time, and tell their friends and family about. We receive thousands and thousands of phone calls and e-mails every single day, and we really view each contact as an opportunity to build the Zappos brand into being about the very best customer service and customer experience. Looking every interaction through a branding lens instead of an expense minimization lens means we run our call center very differently from most call centers.
Most call centers measure their employees' performance based on what's known in the industry as "average handle time," which focuses on how many phone calls each rep can take in a day. This translates into reps worrying about how quickly they can get a customer off the phone, which in our eyes is not delivering great customer service. Most call centers also have scripts and force their reps to try to upsell customers to generate additional revenue.
At Zappos, we don't measure call times (our longest phone call was over 8 hours long), and we don't upsell. We just care about whether the rep goes above and beyond for every customer. We don't have scripts because we trust our employees to use their best judgment when dealing with each and every customer. We want our reps to let their true personalities shine during each phone call so that they can develop a personal emotional connection (internally referred to as PEC) with the customer.
Another example of us using the telephone as a branding device is what happens when a customer calls looking for a specific style of shoes in a specific size that we're out of stock on. In those instances, every rep is trained to research at least three competitors' Web sites, and if the shoe is found in stock to direct the customer to the competitor. Obviously, in those situations, we lose the sale. But 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.
A lot of people may think it's strange that an Internet company is so focused on the telephone, when only about 5 percent of our sales happen through the telephone. In fact, most of our phone calls don't even result in sales. But what we've found is that on average, every customer contacts us at least once sometime during his or her lifetime, and we just need to make sure that that we use that opportunity to create a lasting memory.
The majority of phone calls don't result in an immediate order. Sometimes a customer may be calling because it's her first time going through the returns process, and she just wants a little help stepping through the process. Other times, a customer may call because there's a wedding coming up this weekend and he just wants a little fashion advice. And sometimes, we get customers who call simply because they're a little lonely and want someone to talk to.
I'm reminded of a time when I was in Santa Monica, California, a few years ago at a Skechers sales conference. After a long night of bar-hopping, a small group of us headed up to someone's hotel room to order some food. My friend from Skechers tried to order a pepperoni pizza from the room-service menu, but was disappointed to learn that the hotel we were staying at did not deliver hot food after 11:00pm. We had missed the deadline by several hours.
In our inebriated state, a few of us cajoled her into calling Zappos to try to order a pizza. She took us up on our dare, turned on the speakerphone, and explained to the (very) patient Zappos rep that she was staying in a Santa Monica hotel and really craving a pepperoni pizza, that room service was no longer delivering hot food, and that she wanted to know if there was anything Zappos could do to help.
The Zappos rep was initially a bit confused by the request, but she quickly recovered and put us on hold. She returned two minutes later, listing the five closest places in the Santa Monica area that were still open and delivering pizzas at that time.
Now, truth be told, I was a little hesitant to include this story because I don't actually want everyone who reads this book to start calling Zappos and ordering pizza. But I just think it's a fun story to illustrate the power of not having scripts in your call center and empowering your employees to do what's right for your brand, no matter how unusual or bizarre the situation.
As for my friend from Skechers? After that phone call, she's now a customer for life.