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Lesson #5: “I’d rather spend money on things that improve the customer experience than on marketing”

Article Overview: Browse through some of the customer reviews on the Zappos.com site and you are likely to notice one thing: people might not be happy with the product they bought – the shoes were too tight, the bag was too big – but they were thrilled with the speed and efficiency with which their orders were processed and shipped by Zappos.

Lesson #5: “I’d rather spend money on things that improve the customer experience than on marketing”

Browse through some of the customer reviews on the Zappos.com site and you are likely to notice one thing: people might not be happy with the product they bought - the shoes were too tight, the bag was too big - but they were thrilled with the speed and efficiency with which their orders were processed and shipped by Zappos. That high level of customer satisfaction has come at a price. Indeed, Hsieh places customer service at the top of his priority level, spending more money on generating a positive customer experience than even on marketing or advertising.

"I'd rather spend money on things that improve the customer experience than on marketing," he says. "We run the warehouse 24-7; it's not very cheap or efficient, but it allows us to get the shoes out more quickly. We have a 365-day return policy with free shipping both ways."

A 365-day return policy? Free shipping both ways? Can that be sustainable for any business?

"Obviously if you are returning every single shoe you order, then we're losing money on that specific transaction," says Hsieh. "But our hope is that it'll still be such a great experience for you, that you'll tell your friends and family about Zappos. So rather than feel bad about it, instead just think spread the word about Zappos and think of that as your way of paying us back for the extra expenses."

Providing top quality customer service does not have to be so expensive all the time, says Hsieh.

"The telephone, as low tech as it may sound, is also a great way of really connecting personally with customers. So that's actually why we're very different from most web sites that try to hide contact information.

"We actually have our 1-800 number on every single page of our web site because we actually want to talk to our customers and when customers talk to us for five to ten minutes we have their undivided attention and that's really the best opportunity to brand ourselves as a company that unlike most companies, actually wants to take care of our customers."

But what happens if you actually call that 1-800 number? Will you be greeted by the same cold customer service associates that dominate the industry? Not according to Hsieh.

"We have to untrain employees' bad habits from previous call centers, where they're trying to be more efficient by minimizing the time they talk to the customer," he says. "If someone is looking for a specific shoe and we happen to be out of stock, we have employees direct those people to competitors' sites."

If and when several customers continue to have poor experiences with a particular product they have received from Zappos.com, Hsieh is on it immediately.

"It doesn't happen very often, but if there is a quality issue with a brand or a specific style, we usually hear about it pretty quickly from our customers and then we'll manually check all the product we still have in our warehouse for either that brand or that style," he says. "It's always a tough balancing act, but basically we take our financial goals and work backwards from there. We try to deliver the best customer service and customer experience we can while still meeting those financial goals."

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Article Tags: customer experience, efficiency, marketing, money, shoes



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