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A few weeks ago I had the opportunity to read Tony Hseih’s book Delivering Happiness.  Tony is the CEO of Zappos, the phenomenally successful online shoe retailer that grew to $1B in sales within less than 10 years then was acquired by  Zappos has many non-traditional approaches to its business model.  One of its relatively unique philosophies surrounds its views on marketing.  Zappos believes that excellent customer service is the best form of marketing.  In fact, Zappos takes the money it would have spent on paid advertising and instead invest it into customer service and experience.

CEO Tony Hseih has the same philosophy about public relations.  In his book, Hseih states “If you just focus on making sure that your product or service continually WOWs people, eventually the press will find out about it.  You don’t need to put a lot of effort into reaching out to the press if your company naturally creates interesting stories as a by-product of delivering a great product or experience.”  Zappos believes in letting its’ customers do the marketing through word of mouth, which it cites along with repeat customers is the top driver for growth.  And they believe in letting all employees, not just those in marketing, to be the brand ambassadors.

Hseih states “We receive thousands and thousands of phone calls and e-mails every single day, and we really view each contact as an opportunity to build the Zappos brand…Seeing every interaction through a branding lens instead of an expense-minimization lens means we run our call center very different from most call centers.”  The Zappos approach is very different from traditional retailers, which bury their contact information five links deep on their web sites.  Zappos puts the toll free customer service at the top of every page.  Why?  Because Zappos actually wants to talk to its customers.  Hseih states that “Most call centers measure their employees’ performance based on what’s know in the industry as “average handle time…Most call centers also have scripts and force their reps to try to upsell customers to generate additional revenue.  At Zappos, we don’t measure call times…and we don’t upsell. We just care about whether the rep goes above and beyond for every customer.”

Quite ironically for a company which conducts nearly 100% of its sales via a web site, Zappos believes that the telephone is one of the best branding devices out there.  On a phone call you have customer’s undivided attention for 5-10 minutes.  Hseih states that “Too many companies think of call centers as expense to minimize.  We believe that it’s a huge untapped opportunity for most companies, not only because it can result in word-of-mouth marketing, but because of its potential to increase the lifetime value of the customer.”

A key part of Zappos brand promise is delivering the very best customer service possible.  How does the online retailer define excellent customer service?  Zappos offers free shipping both ways.  The goal is to make the sales transaction as easy as possible and risk-free for our customers.  With its return policy, “customers will order 5 different pair of shoes, try them on with 5 different outfits in comfort of their home, send back the ones that don’t fit or simply don’t like free of charge.”  Zappos offers a 365-return policy for people who have trouble committing or making decisions.  The additional shipping costs are viewed as a marketing expense.

Zappos Offers Free Returns on Shoes

The Zappos strategy for marketing is particularly interesting when considered in the context of social media efforts.  Companies are investing millions of dollars a year to socialize and engage with customers on microblogs and social networks, but they use every means possible to avoid actually having a live phone conversation for support issues.  Customer service functions are offshored or pushed to low cost geographies.  Self-service web portals and automated voice response systems are utilized to further reduce the need for human contact.  In today’s world, a maverick on Twitter who speaks negatively about a company receives far more attention than a loyal customer who phones into a contact center.

The challenge for marketing professionals is that while it is easy to agree that excellent service does drives word-of-mouth and positive publicity, it is challenging to control the customer experience.  Customer service organizations rarely report into marketing.  And support executives rarely take direction from marketing.  Even in organizations which assign a product manager to drive customer service initiatives, the marketing group is challenged to influence behaviors.  Consequently, I suspect most CMOs don’t even bother to consider investments in customer service as an alternative approach to achieving marketing objectives.

Steve Keifer

Steve Keifer has led marketing and product management teams at seven different SaaS and cloud providers ranging from venture-backed, early-stage startups to multi-billion, publicly traded companies - including several that experienced hypergrowth, filed IPOs, and reached unicorn status. In Bantrr, Steve shares many of the best practices and lessons learned from building and scaling marketing organizations. Topics include new category creation, brand development, and demand generation.

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