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“Chase the vision – not the money”

- Zappos.com CEO Tony Hsieh

Zappos CEO Tony Hsieh recently spoke at the SXSW festival in Austin and I just wanted to highlight a few things that really resonated with me.

Most people think of shoes when they think of Zappos.com but the company also sells clothing, cosmetics, electronics an even housewares. Even with the myriad of product offerings, however, their focus isn’t on promoting all these products – it’s on customer service, since they noticed that 75% of their business comes from repeat customers. Their philosophy is:

“Take most of the money that we would have spent on marketing – on paid marketing, and instead, put that into the customer experience and then the repeat customers and word-of-mouth become our true form of marketing.”

What is customer service?

It begins with policies. Most companies make it very difficult to find contact information. Zappos.com goes the opposite route – they promote their phone number because they WANT to talk to their customers. They believe the phone is their best branding method.

Call centers at Zappos are treated unconventionally. If a Zappos item is out of stock, a Zappos employee will actually look up that item on a minimum of 3 competitors’ websites to help the customer find the item that they’re looking for – this really blew me away.

Why does Zappos do this? Because they’re not trying to maximize profit on every potential transaction – they’re trying to build a relationship with customers for a lifetime.

Zappos also does surprise upgrades to repeat customers and provides overnight shipping at no extra cost. This is a perfect example of “under promise, over deliver.”

At a certain point, Zappos discussed their brand ethos, and what they wanted to be about. It wasn’t shoes (the product), it was about customer service (broader purpose – highest calling they can aspire towards).

Zappos’ number 1 priority is company culture. Hsieh says that if you build a great company culture, then everything else (like customer service and building an enduring brand) will happen naturally.

How do they create a strong culture?

1) Hiring: The company doesn’t hire people that aren’t a good cultural fit even if they have relevant technical skills and work experience.

2) Training: Everyone goes through the exact same customer focused call center training regardless of their position. Zappos also offers all employees full compensation for their training plus $2,000 if they choose to LEAVE the company at any point until the end of the training. By doing this, they feel that they only keep employees who are a true cultural fit and believe in the company’s long-term vision.

3) Zappos Culture Book: This is an UNEDITED Zappos book the company puts out that asks employees to write their thoughts about the company culture, which is then given to potential employees to let them decide if the culture is the right fit for them. The high level of transparency I find here is really refreshing.

4) Twitter: Zappos has actually encouraged employees to participate on Twitter and even holds Twitter classes during new hire orientation, with over 400 current users. As Hsieh says,

“It’s been a great way for Zappos employees to meet up outside the office (and that builds company culture) and then when they’re inside the office there’s just a higher level of trust and communication. They see each other as people, not just as coworkers.”

Zappos believes that culture and brand are really the same thing. Hsieh says Zappos used to be about shoes, but they made a conscious decision to be about something more meaningful – customer service. I think that’s the key word – “meaningful.” By doing something you are passionate about, that has nothing to do with making money, you can then indirectly achieve all your business objectives. What Zappos found was that when they gave their employees a higher purpose to work for, they became more engaged and committed.

This was the first time I’ve heard Hsieh speak and I think it’s great that he’s having such success pursuing a vision that I think most other CEOs would say is idealistic and ineffective. I couldn’t help thinking of the book “Raving Fans” as I was writing this post – it’s a fast read and I highly recommend it if you’re interested in learning more about remarkable customer service.

I’ll leave you with this last Hsieh quote:

“I think there’s a big difference between motivation and inspiration. You can accomplish stuff by motivating employees, but I think you could accomplish a lot more by inspiring them to a bigger vision that has meaning to them and that you’re passionate about.” Yes, indeed.

Here’s the videos of Hsieh speaking:

SXSW 2009 – Opening Remarks: Tony Hsieh Part 1

SXSW 2009 – Opening Remarks: Tony Hsieh Part 2

Further info:

Follow Tony Hsieh on Twitter

Inc.com “How I Did It- Tony Hsieh, CEO, Zappos.com“