Zappos: Customer service excellence is hired not trained

3rd Nov 2010

Zappos believes you can't teach great customer service - you need to hire people apt to providing it. So given its reputation, how is it so successful at this?

When you talk about brands that have made customer service a competitive differentiator, a few names commonly crop up in conversation. Southwest Airlines, for instance. Or perhaps Virgin. Established big brands that have honed their service skills over many years.
But one company that has made an astonishing name for itself in customer service in only a few short years is Zappos. Generating 75% of its business through repeat purchases, in the 11 years since it was founded, the online shoes and clothes retailer has established itself as one of the most customer-centric businesses in the world. And Amazon CEO Jeff Bezos liked its "customer obsession" so much, that he bought the company. So how has this online retailer managed to carve out such an amazing reputation in such a short time?
"What we try to do is form personal connections," says Aaron Magness, director of brand marketing and business development at Zappos, who explains that this is why the firm drives customers to the phone – a strategy that contrasts with other online retailers such as Amazon. "Obviously face-to-face is the best way to form that personal connection, but it is not practical to meet every one of our customers, so the next step down is the telephone. After that we look at other ways to form personal connections – Facebook could be one, Twitter could be one, and YouTube."
Magness continues: "What we find is that over time every customer calls our call centre at least once in their customer lifetime. We want to make sure that whenever that call does happen, they experience the best customer service ever. That is why when you call you don't have to go through 14 different phone trees. That is why when you call you are not talking to someone who doesn't work for Zappos – because at that point, it really doesn't matter if you outsource to Iowa or India, if they are not employees, there is potential to have a bit of a disconnect from the high level of service that we want Zappos to be known for."
Born not raised
The company extends an open invitation for a tour of its Las Vegas HQ, and anybody who has experienced such a tour has borne witness to the Zappos culture. Ensuring that the agent delivers a WOW experience to the customer, creating a personal connection, is something that Zappos has dedicated itself to. But the business believes that its customer service stars are born, not raised.
"Customer service is important, regardless of the industry you're in, or whether you're online or offline," continues Magness. "We want it to be about more than just the product we sell. We want it to be more than just about price point. We really want to focus on customer service. And in order to do that you need to have the right people in place and the right culture has to be set up to foster that customer service environment.
"So while great customer service is the output, the input is providing the right environment and giving the right people a place to foster a culture that can lead to great customer service – because you can't teach someone to provide great customer service, but you can hire someone who is apt to provide great customer service."
Reflecting this, the company has a rigorous approach to staff selection, identifying individuals that have both a good fit with the Zappos' culture and its 10 core values, which include: creating fun and weirdness; pursuing growth and learning; embracing and driving change; being passionate and determined; building open and honest relationships with communication; and being humble.
"Our hiring process, onboarding and progression are all 50% focused on culture," says Magness. "Even before you get in the door, are you a culture fit? Would you fit in with this type of environment? And once you are in the door, it's not are you a culture fit anymore, but how are you enhancing the culture, what are you doing to drive the culture and keep it strong? Because as a business scales and you go from 10 employees to 100, to 1,000 to 2,000, if you're built on customer service, culture is going to continue to be the most important thing, and as you scale you need to ensure that that is always at the forefront of what your best efforts are. And that's why it continues to always be 50% of how you're measured at Zappos."
COO Alfred Lin has described the interview process as "50% about whether they can technically do the job and 50% about whether they are passionate about what we're trying to do and have the same values." Magness expands on this. "A lot of it is based on interaction – we have 10 core values so how do they measure up to each of them? All the different core values are touched upon during the process. We actually have two sets of interviews, although the candidate may not necessarily know that, but we have the hiring manager who does the 'can you do the job you're being interviewed for', and also with some cultural fit questions there, and then our recruiting team actually do a great job of ensuring that people are culture fits."
The $2,000 test
And the company has a final method to ensure that no-one lacking the necessary attributes and commitment slips through the net – after completion of the training, employees are offered $2,000 to quit.
"Think about it this way," says Lin. "If you are really good at interviewing and your interviewing process is really great at screening people you don't want at your company what is your success rate? If you're right 60% of the time that means 40% of the time you're letting someone into the company that doesn't want to really be there. And we just want a very easy way for people to leave the company gracefully. And there are all these studies about how much a bad employee costs the company – and it is way more than $2,000."
Magness adds: "If you're here just for the pay cheque you are not going to be engaged enough to drive the business to greatness. Once the culture starts to turn around then service starts to fall off and the repeat customers start to fall off and the next thing you know you are no longer relevant as a business. So as employees we want to make sure that we're constantly pushing the organisation to be more than just about profits, as a business.
"Tony [Hsieh, Zappos CEO] says that if you were an entrepreneur, what would you want to do for 10 years if you never made a dime. What would I do if I never made any money and as an employee how can I make sure I am aligned with an organisation that is about more than just the bottom dollar. You couple those together and that is where the real power comes in."
While the company uses standard metrics such as average call time and speed to answer to monitor its call centre team – or 'customer loyalty team' as it calls them – it is not measured on cross sells, up sells or call times to gauge success, instead using the Net Promoter Score. "As a company we are big believers in NPS and that is the primary metric for our customer loyalty team," says Magness.
Zappos' methods are not only proving popular with the customers – the company also has a spot in the top 20 in Fortune's 100 best companies to work for. And Magness also believes that while Zappos looks like a difficult model to replicate, other businesses shouldn't dismiss the approach as something that cannot work outside of Zappos.
"People know Zappos for being this loud, crazy environment. But the point there is that it is not about the 'Zappos way'. It is about figuring out what you want to be, creating the values from the beginning, aligning your team and hiring the right people on board. Those are the things that are important.
"We often get asked whether it is a top-down or bottom-up approach. But it is cyclical – everybody believes it is everyone's responsibility. That is where the power comes in, as opposed to Tony telling us to do something, you think that you want to do it because it is the kind of person you are. It allows us to be ourselves and realise we're all part of this greater organisation."
Magness concludes: "Any business can care about the employees, make sure they're happy at work and make sure they are really engaged. This will reduce the turnover, which will probably increase word of mouth referrals and turn to higher profits because you're not going through customer churn as much. So you can translate the core aspect of what Zappos does, not necessarily the environment."

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By tcarrigan
04th Nov 2010 16:12

Great article and it definitely supports the "Get the right people on the bus..." direction that Jim Collins gave us all in Good to Great.  It's an approach we have followed with hiring our own consultants and have seen in place at the most successful of our clients in terms of customer service and employee engagement.

A key statement by Mr. Magness though was "It is about figuring out what you want to be..." as the first part in their approach.  That couldn't be more accurate and points to the reality that not all companies are expected to be (by their customers) or want to mirror the Zappos! culture.  Rather they should follow the approach he described which starts with figuring out what you want to be and then aligning your culture and hiring the right people to fit.

Tim Carrigan

Customer Experience Strategy Consultant

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By Tibor Kazimir
09th Nov 2010 09:41

Looks like a book I'll need to pick up!!!!!!!! Thanks for the reference!!!!!!!

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By 123Contracting
29th Nov 2010 15:02

I'll be ordering that book right away as well - thank you for the reference and great article.


Accountants for Contractors

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