Tuesday, 26 June 2012

5 things we can learn about WOW from Zappos

Meeting customer expectations is not enough. You need to work out how to WOW your customers, ensure you exceed their expectations and anticipate their needs before they even know they have them!

And you need to find ways to do this consistently over time.

One of the most exciting examples of WOW customer experience is Zappos (the biggest online shoe retailer – now diversified into clothing and handbags - with turnover in excess of $1bn). This is what we can learn...
1. Create purpose
At the heart of Zappos’ purpose is creating happiness (for both employees and customers). But this is not just printed on mousemats and coffee mugs, gathering dust on people’s desks. It is at the heart of everything that the company does, from the people it recruits to the way the service is delivered.

Chief Exec Tony Hsieh views Zappos as a service company that just happened to sell shoes. Happiness at Zappos is exemplified by free delivery, 365 day free returns policy, employees who are empowered to do whatever it takes to keep their customers happy, a culture that embraces fun and quirkiness and a happiness movement with website, books and blogs.

Delighting customers even extends to directing them to competitors if they don’t have the size, colour or style of shoe they are looking for. Why do they do all this? Because they understand that delighting people, even if you don’t make the sale today, will make people come back to you again and again in the long run. And when people are happy they tell their friends and family.

2. Really live your values

As soon as employees join the company they are involved in projects to make the core values at Zappos live. Leaders demonstrate, talk about, and structure activities that enliven values like “be humble”, “create fun and a little weirdness,” and “do more with less.”

Below are the 10 core values:
  1. Deliver WOW Through Service
  2. Embrace and Drive Change
  3. Create Fun and A Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships With Communication
  7. Build a Positive Team and Family Spirit
  8. Do More With Less
  9. Be Passionate and Determined
  10. Be Humble
Every year Zappos publishes its “Culture Book” in which all employees are encouraged to write about what the culture means to them. Tony Hsieh says of culture “I can’t force the culture to happen; so part of people's job description is to display and inspire the culture.”

3. Pay people to leave!

Zappos understand that at the heart of great customer experience are employees who are motivated and committed to wowing their customers – whatever it takes. So along with the expected interview processes for skills profiling and culture fit, Zappos have another wonderfully quirky strategy.

They encourage their employees to leave. During the induction and training period (which is 4 weeks long) employees are told "If you quit today, we will pay you for the amount of time you've worked, plus we will offer you a $1,000 bonus." Their thinking is that they want people who really, really want to work for Zappos because committed employees will deliver better customer experience.
Some people take up the offer. The rest stay and become Zappos fanatics.

4. Get the metrics right
Go to any online customer service department and you will hear talk of minimizing call times and 1st time resolution.

At Zappos call centre time and resolution is not measured. There are no scripts. Call center members do not up-sell. Zappos boasts the longest customer service call of 8hrs 23 mins! Whether this demonstrates that something is broken or that this was a particularly difficult customer is not clear. But it does demonstrate the ethos of whatever it takes to solve the customer problem.

The call metrics focus on whether customer interactions have the potential to generate more revenue for Zappos instead of how much it’s costing them. The ratings are intangible (unlike call time) so it forces employees to focus purely on customer happiness. They measure:
  • How likely would you be to recommend Zappos to a friend or family member?
  • How likely would you be to request the person you spoke with again?
  • How likely would you be to recommend this person to a friend or coworker?
  • If you owned your own business, how likely would you be to try to hire the person you spoke with?
What Zappos measures is customer happiness, and their success is demonstrated by repeat purchases (which make up 75% of daily orders) and repeat customer spend (2.5x more than 1st time buyers).

The point is not that every customer service company should have these metrics. It is more that every company should have the right metrics which measure what’s important. And what’s important has to be related to the purpose that the company is trying to fulfill for its customers.  

5. Deliver what you say you will
Zappos delivery is underpinned by a business model and associated processes which enable it to delight customers.

For instance, free shipping listed as two-to-three days is frequently upgraded to overnight. This service has to be backed by clearly defined, extremely efficient processes. To do this, Zappos trains employees in working capital principles so that they understand the impact on overall profitability. The company also seeks to eliminate paper and manual processing by working closely with suppliers to automate across the source-to-payment process. Underpinning this is a principle never to outsource their competitive advantage and to treat vendors well so that they can form long term partnerships.

Warning: If your delivery processes are broken, if communication between employees and departments is broken don't try to wow your customers. (Some companies do this a bit back to front throwing in a coupon or freebie initiative to make up for a broken service). The fundamental priority should always be to deliver what you say you will, when you say you will. So make sure you have the processes, foundations and systems to deliver before you try to wow anyone.

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