Designing an Organisational Culture: Tony Hsieh Wrapping Zappos' Organisational Culture?

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Designing an Organisational Culture: Tony Hsieh Wrapping Zappos'; Organisational Culture?

 

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To build customer relations, unlike other retailers, Zappos' customer-service representatives are trained to direct customers to at least three rival websites, if a specific pair of shoes is unavailable at Zappos. Tony says, “For us, we're willing to lose that sale, that transaction in the short term. We're focused on building the lifelong loyalty and relationship with the customer.”27 The company also makes its toll free 1-800 numbers easily accessible on its website. By delivering excellent customer service, Zappos attracts four million customers of which 75%28 are repeat purchasers (Exhibit II). Tony said, “We hadn't planned all of those things from the beginning. However, we found that as we put more into the customer experience and customer service, it helped fuel our growth of repeat customers and word-of-mouth.29 He further said, “We believe if we get the culture right, great customer service will happen on its own…by delivering great customer service, our customers become repeat customers and tell their friends and family about us. So the basic business model is: Culture -> Customer Service -> Word-of-Mouth Marketing -> Revenue/Profits.”30

With a computer science degree from Harvard, Tony knew how to write code, and he decided to try a similarly algorithmic approach to creating culture. He devised a Ten-Commandments-type list (Exhibit III) that included such tenets as, “Be Humble”, “Create fun and a little weirdness” and “Build open and honest relationships with communication.” From that moment, those core values have driven all key decisions – from hiring to customer relationships to, most recently, downsizing. Tony explained, “The employees came up with the list of core values themselves. We hire and fire people based on the core values, and performance reviews also include core values in them.”³¹

The first core value, “Deliver WOW through service” is obvious from the highly satisfied customers and the BusinessWeek's customer service champs survey for 2009. Zappos never outsourced its call center because the function is too important to be sent either to India, Ireland, or Poland, etc. Job one for these front-liners is to delight callers. Unlike most inbound telemarketers, they don't work from a script. They have been trained to encourage callers to order more than one size or color, because shipping is free in both directions and to refer shoppers to competitors when a product is out of stock. It was reported that when one of the customers complained that her boots had begun leaking after almost a year of use, not only did the company send her a new pair – in spite of a policy that only unworn shoes are returnable – but also told the customer to keep the old ones and mailed her a hand-written thank you.

To ensure that every employee of Zappos believes in the core values, Tony focused on hiring the right people. Zappos seeks people who have a passion for providing exceptional customer service. They go through an extensive interview process that tests them on technical proficiency as well as cultural fit. Tony said, “we have questions for each core value and they get to know about our culture at the time of recruitment”.³² To test their cultural fit, unusual, wacky questions are asked. For instance, “how weird are you, what's your theme song, who two people would you most like to invite to dinner, etc”.³³ In fact, the job application starts with a crossword. While they are being tested for creativity and individuality, they are being filtered out for egomaniacs and wallflowers. All the new hires complete four weeks of training, including two weeks on the phones, beginning everyday at 7 a.m. They can't be late or call in sick. Any one too good to work the phones during a holiday rush isn't a zappos material. “We do our best to hire positive people and put them in an environment where the positive thinking is reinforced,” observed Tony³⁴.

The training period also initiates the new hires into the company's strategy, culture and obsession with customers. New recruits are even offered a $2000 bribe to leave the company during training, one final effort to filter out the half-hearted. According to Tony, this process helps them to weed out half committed employees even though some 2%–3% of the employees accept the offer. “We've actually passed on a lot of really talented people, who we know would have made an immediate impact on our top or bottom line, because they didn't fit the culture,” explains Tony³⁵

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27] Zmuda Natalie, “Customer Service First – and a Daily Obsession”, http://adage.com/moy2008/article?article_id=131759, October 17th 2008
28] “A lesson on Customer Service and Corporate Culture by Tony Hsieh, CEO of Zappos .com”, op.cit.
29] “Tony Hsieh from Zappos”, op.cit.
30] “Interview conducted with Tony Hsieh by Sravanthi Vemulavada and Priti Krishnan”, op.cit.
31] Ibid.
32] “Interview conducted with Tony Hsieh by Sravanthi Vemulavada and Priti Krishnan”, op.cit.
33] O'Brien Jeffrey M., “Zappos knows how to kick it”, http://money.cnn.com/2009/01/15/news/companies/ Zappos_best_companies_obrien.fortune/index2.htm, January 22nd 2009
34] Ibid.
35] “Customer Service First – and a Daily Obsession”, op.cit.