How Your Company Survives

If the reports about retail business are correct, you've been shopping more than before online, especially this holiday season. I hope that your customer experience and interactions with customer service brought you joy.

If that's the case, you can thank Zappos for completely redefining what customer service used to mean in e-commerce. In fact, Zappos probably redefined it for almost all industries.

The story of Zappos is a widely successful one. But in the company's early years, way before Amazon stepped into Zappos's shoes in 2009 for a deal worth $1.2 billion, the company struggled.

At the time, the economy wasn't doing well. As a result, the company was bleeding money. Tony Hsieh (then CEO of Zappos) was funding the company by selling apartments he had acquired after exiting from previous ventures.

Here is Hsieh explaining the dilemma he was facing:

"Every week, we had to make the choice between “do we make payroll, or do we pay half of our vendors, or do we sell another apartment? But you can’t sell an apartment overnight either”.

Eventually, Zappos had to start laying off people to survive, and it almost went out of business.

How did Tony Hsieh and his team turn around the Zappos?

”For us, a big turning point was really to decide we wanted our brand to be about customer service and customer experience."

Although this is vastly what Zappos is now known for, this wasn't part of Zappos's initial business model.

But after Tony Hsieh decided to change the company's narrative and focus on delivering the best service in the world, things completely changed.

Here is Hsieh telling the fascinating story of how he built a new strategic narrative for Zappos in an NPR interview with Guy Raz:

“In the beginning, we always wanted to offer good service. But it wasn’t until we decided that we wanted our brand to be all about customer service as the most important thing that it led us to do a lot of things that wouldn’t have made any sense if customer service had not been our North Star.

An example would be offering free shipping both ways. This was obviously very expensive to do. If we were still around trying to maximize our profit margin, then we would have never gone down that path. We would have made more money in the short term, but we wouldn’t have built our reputation and so on."

And Hsieh to add a critical insight:

"When you actually want your brand to stand for something or have some sort of purpose (in our case, customer service), you do things that are kind of nonsensical in some ways, that your competition would never do.

 

Customer service is what sets our company apart.

 

There is actually a phrase that one of our employees in our call center came up with. He started describing us as “we are a service company that happens to sell shoes."

One of the core beliefs in the perspective of Zappos is that actively listening to a customer for a long time is actually how you build an authentic connection that lasts forever. As a result, customers become true believers in your company.

Therefore, Zappos customer service operators will never disconnect first. When they make excellent connections, they will have very lengthy phone calls.

As of 2020, the company's longest customer service call is… ready for this?

10 hours and 51 minutes

No, you don't need glasses. Ten hours. Fifty-one minutes.

Today, Zappos thrives because it has a system to build the strategic narrative about customer service continuously. For instance, the extended customer service calls become stories that employees can share with friends, colleagues, or even social media.

That's what Zappos did to survive: committing to redefining the words "customer service" and building a new strategic narrative as a result.