Selling Service and Shoes: Interview with Tony Hsieh of Zappos.com

As a new feature on The Art of Nonc-Conformity site, I’ll be posting profiles of individuals, companies, and non-profit organizations that have chosen alternative paths in pursuit of their goals. We’ll have at least one of these interview features a month, and the first profile is with Tony Hsieh, CEO of online retailer Zappos.com.

I first heard Tony speak at a conference a few weeks ago in Los Angeles. Tony talked about building a $1 billion company entirely around a phenomenal customer service experience. Lots of companies talk about service, Tony told us during his keynote address, but they don’t really mean it.

At Zappos, the company has become profitable selling shoes online, something that many people never thought would be possible. They have done this despite providing a 365-day return policy and free shipping both ways for customers.

Zappos also provides five weeks of training for every employee in both Las Vegas (the headquarters) and Kentucky (the main warehouse), even employees who perform manual labor or answer the phone. The key objective in all of this is to build a common culture with a genuine focus on customer service above everything else.

Pizza Delivery from the Shoe Store

One time, Tony said at the conference, he and some friends were out of town somewhere at 3:00 a.m. and they wanted pizza. Room service at their hotel had closed, so one of his friends suggested they call up Zappos to see how they could help. Okay, said Tony as the group dialed up the company’s 24/7 customer support line and put a rep on speakerphone. Without saying who was in the room, one of the guys told the rep that they were hungry and didn’t know what to do.

The rep put them on hold for two minutes, and when she came back, she had a list of nearby pizza places that were still open. “We’re happy to help any way we can,” she said.

I thought that was a pretty amazing story. When I travel in the U.S. these days, by comparison, I’m just happy if the airlines allow me to fly on the ticket I’ve already paid for, and if I can get a seat with decent leg room, I’m thrilled. I worry that the TSA will make a new rule preventing laptops from going on planes (you never know) and that wherever I’m staying hasn’t lost my reservation.

In other words, I live in fear of the same companies and people I pay money to, including the TSA since they are funded by taxpayers. Tony did mention that some of his loyal customer base requested that Zappos start an airline one day to sort out some of those travel problems. He says he’s thinking about it.

(By the way, Tony also asked us to please not call Zappos to order pizza, because that’s really not what they’d like to work on most days.)

***

I tracked down Tony last week and asked him a few more questions about the service-is-everything model. Here’s what he had to say:

Why not just sell stuff? Isn’t customer service overrated these days?

“Zappos.com isn’t trying to be all things to everyone. Zappos is for customers that value great customer service, including 24/7 customer service, fast shipping, free shipping both ways, and 365-day return policy. Zappos is not the place for price-sensitive customers. However, we do have another site that is separately branded called 6pm.com, which is catered towards the price-sensitive customer.

For me personally, in general I value customer service over lower prices, so the bet was there are other people that do as well. For Zappos.com, we believe that there is a large enough market for people that value great customer service.”

Selling shoes sounds pretty boring compared to what a lot of other dot-coms do. What attracted you and other early arrivals to the company?

“In 1999, the overall footwear market in the US was $40 billion, and 5% of that was being done by mail order catalogs ($2 billion). We believed that online sales would eventually surpass that.”

Aside from checking on pizza delivery options for jet-lagged customers, can you provide a short example of what you would define as exemplary service?

“All of our reps are trained so that when a customer is looking for a specific pair of shoes, if we’re out of stock (for example, we don’t have their size or are sold out of the entire style), they will look on at least three competitor web sites and refer the customer to that competitor if they find the shoe the customer is looking for.”

***

I appreciated hearing from Tony, both at the conference and in this interview. I tend to be fairly skeptical when large companies claim that customer service is one of their primary objectives. Whether they admit it or not, I think that most large companies view customer service as something that needs to be managed by employees so that the executives can focus on “more important things.”

But Zappos may be a good example of an exception to the rule of service as an afterthought, perhaps because they have taken steps to ensure the culture of a small company as they scaled up to the $1 billion point.

Or maybe it’s something else. What do you think?

###