The Zappos Experience FAQ s

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2 The Zappos Experience FAQ s "How empowered are Zappos employees to make customers happy - in other words, does the customer loyalty team get to 'make the call' with difficult customers?" Yes, the team has full authority to do what is necessary to wow a customer (one of the core values) but they must all do so by doing more with less (another core value). CLT members escalate calls as they need and review great calls and challenging calls with their supervisors to continue to develop their skills at handling all types of callers. "Any tips for standing out in offering above the average support to customers?" Yes, nail it operationally. Get it right and make it right quickly and graciously when you get it wrong. Consistency of service execution and swift service recovery is the low hanging fruit for most businesses today. "How much money does Zappos spend on things like sending flowers, inserting a Red Bull, etc.? I think a lot of companies would like to be cool and random like that, but it costs a lot. I wonder what the intangible value is of doing that?" Zappos arranges most of these opportunities as trade outs with partners. Here is a link to an example of how Zappos arranged a flip/flop insert partnership through the learning channel: Think of the gain if you can leverage partnerships to surprise and delight customers

3 "In your opinion, how did Zappos handle their customer experience with the recent hacking incident?" They were swift to disclose to customers openly what they knew about the breach. I think they struggled to handle the volume of questions which in turn shut- down their call center and made all communication go through /twitter. I think that was less than optimal and not the way leadership would have liked it to occur. What were the experience outcomes? Ease, Engagement and Advocacy (for all stakeholders) How do you build a sense of pride and happiness in your customer service workers when your job is dealing with unhappy people all day long? In truth, their job is to help people who are in pain. That is an amazingly noble pursuit. Mastering the ability to resolve others problems is the foundation for lifelong life success. I also think it is important to not let those people be abused by customers. Diffusing conflict and shifting to problem solving is a huge interpersonal competency and should be celebrated as such. I sense you have a compassionate heart that gets this. It is a constant battle to make your people's job a source of pride. For me, I frequently distinguish service professionalism from servitude. Zappos is a business-to-customer brand, which feels a lot different from business-to-business brands like the one I'm part of (we sell a web app). How does this translate in your opinion to business-to-business companies? You know these distinctions better than most. Business- to- business customers are multi- level customers who tend to have slower purchases cycles and greater loyalty. They are less affected by impulse emotions and more driven my thought leadership and demonstrated ROI. All that said, they still want to be "heard and seen." They want to matter. Caring for their needs is important but so is caring about their short and long- term success. Emotional value has a strong role in business- to- business but more on the "trust" dimension than on the WOW dimension.

4 "We have a very small company, but we already have a great customer driven culture, and everything we do revolves around what our users say. What is the best way to market that against our competitors who have no culture or customer service whatsoever, but have lower cost?" I love using testimonials from your customers. Also using video of your employees, evidence of the positive social contribution you make all the intangibles that make you the kind of business that I would want to be associated with. People want companies that are competent, earn trust, make them proud, and even better are passionate. Congratulations for being one of the good guys and my continued best to you. Concerning the pipeline theory, don't you experience that a lot of people want to do other things than customer service? So that if you want to give everybody a change to reach what they want, you end up lacking people in customer service? Zappos has made levels with in the customer side of the business so people can progress through that pipeline. Additionally, call center staff (customer loyalty team members) are rock stars at Zappos. The fact that every employee has experience with that job category (during onboarding) also validates the importance of that function. They have ample numbers of career customer loyalty professionals. How has the culture shifted post-amazon acquisition? Amazon has left the Zappos culture alone. They have made changes in efficiencies at the Zappos warehouse, which turned out to be more disruptive than initially anticipated but they have not touched the Zappos high service culture. While different than Amazon culture, Amazon understands Zappos is not a discounter and as such has to deliver a different service value proposition. How do you make a profit on products with the service velocity? e.g. 365 returns policy, free shipping both ways? Zappos is not a discounter. You can get product cheaper elsewhere but you don't get the perks like two way shipping. By charging full retail they have margins to support their success. Also if they don't have to pay for marketing and advertising because of service and customer advocacy they offset the benefits they provide. What would be the differentiator between what has made Zappos so successful compared to Starbucks? In a nutshell, Starbucks has an advantage. People can have daily contact with human beings and environment that is tangible. Zappos has to create much of the experience online. At the same time people are more likely to let down a solid product, so one might argue Starbucks has a larger service challenge.

5 Does the employee have to be focused on a sale, or on a relationship? Michael the call center is viewed as an opportunity to put a human face on a mostly online brand. As such, sales are deemphasized and customer loyalty and wow is prioritized. After being purchased from Amazon, were there any changes or improvements made to the operations? So far, Amazon has retrofitted the warehouse to match Amazon's inventory management system. It resulted in some unexpected problems and delays during the cutover period but seems to be running smoothly now. Future changes seem to be directed toward allowing Zappos to gaining access to other Amazon products on the Zappos website. Amazon has left Zappos service culture alone since high value service is needed for a company like Zappos, which is not an online discounter (full- retail). As Zappos started as fully online shoe store, I'd appreciate if you at one point could comment a bit on the "additional" challenges that manufacturers are not "born" digital face? In your experience what are the additional critical barriers they need to overcome to create a truly successful retail service culture online? Interesting question, I have worked with many brands that have moved from brick and mortar to online. The ones that had a great service culture in the "face- to- face" world convert better than their counterparts particularly when they remember the importance of ease, speed, and self- service to the online community. Also they benefit from dedicating staff to answer Twitter and Facebook customer inquiries as well as provide options for live chat to those who want questions answered 24/7. So the training they encourage their employees to engage in - what the speaker called "Zappos University" - how does Zappos measure the ROI on that? Carol, this answer will not satisfy many CFO's but it is the Zappos way. Training is assumed to be effective and need not be protected as a line item (since failing to train is assumed to create a dinosaur company). Remember a core value is to pursue growth and learning. That said, they have metrics around the degree of effectiveness. Information retained, supervisor perceptions of functional skill acquisition, trainee perception of effectiveness, knowledge gap evaluations, promotion readiness etc

6 Zappos clearly have clear company vision and it is clear what they wait from each department/employees. Quite often companies do not have so clear targets/vision so what is the order company should start improve these issues? There is a great Simin Sinek TED talk video on the power of why and the golden circle. I strongly recommend it. It should be an inspiration for leadership to set a compelling why. Once this has been viewed it is a matter of getting a team together to begin assessing your "why" and assuring the input of all existing employees is solicited. Here is a link to that video. Coming from a company who only has a few customer service agents, how do we get them to relate to our clients? Lauren, I am a fan of regular conversations about the "back story" of clients. What do customers value, who are they typically? Often call center staff see the worst of demanding clients and don't get a well- rounded picture that humanizes or allows them to empathize with the need states of customers. That is not to say customers should be allowed to mistreat staff, simply that much of the demanding nature of customers can be put in context by understanding the need state of consumers. So client persona work, sharing all compliments and forms of appreciation from customers etc. Does Zappos use traditional support metrics like ticket value? While Zappos will measure ticket value it is not a performance metric for call center staff (customer loyalty team members). They are measured on speed to call, rapport, delivery of wow, accuracy, and the subjective ratings of customers who complete surveys. A lot of tech companies nowadays are very heavily engineering-focused, rather than customer focused. How do you infuse those companies with customer-centricity and teach them to glorify the customer, rather than the engineer? The great management guru Peter Drucker noted we are in business to.. Create a customer. Tech has a critical role to play to serve customers but not to serve tech. Great businesses leverage technology to strengthen the bond with the customer not to complicate it or building technology for technology sake. I talk a lot bout RTC (return to customer) on tech investments.

7 I am curious as to how Zappos uses Twitter effectively. I would love more information on that. Carolyn, Zappos dedicates staff 24/7 to answer the Zappos handle Zappos_service. They also troll other Zappos handles. That staff is responding to twitter and doing live chat. They identify service problems get back to the person immediately and use DM to route the problem to better resolution channels ( or phone). Just track Zappos_service for a while and you will see it in action. With out limits on the call times, would you say that their service might suffer because of hold times? While call times are not measured, call wait time is (as is speed to next call). Realize everyone at Zappos has been trained to answer phones (as part of onboarding) and as such they can tap cross- departmental staff to address calls when call volumes increase. Through this lateral service approach they avert problems with wait times and as such demonstrate service velocity to answer calls and a patience/accuracy focus while on the call. What about employees that are already hired? I am assuming you are asking about the refreshing of culture values for those already in the employee pool. Staff has monthly discussions with leaders (Zappos did away with formal annual performance reviews) where they talk about how they are living their values and what they are doing to advance the Zappos culture through those values. Departments have a designated Zappos value for which they are chief defenders and the Zappos values are inescapably present constantly through the company s buildings.