Zappos — Building A Passion Brand
By: Sylvia L. Inthoughtful
Tags: Case Study, Leadership, Branding, Startup, Organizational Culture

Zappos — Building A Passion Brand

Photo on Zappos.com

Hearing about the death of retired Zappos CEO, Tony Hsieh, brought back memories of reading about a case study on Zappos while learning about organizational behaviour at business school.

In particular, I remembered a quote by Tony Hsieh in the case study:

If we were serious about building our brand around being the best in customer service, customer service had to be the whole company, not just a single department.

To do that, Tony relocated Zappos’ headquarters from San Francisco to Las Vegas so that he could find the right people to set up a call centre for Zappos. Due to bad experiences with outsourcing in the past, it was important to Zappos not to outsource what Tony knew to be its core competency — providing world-class customer service.

Zappos, named after “zapatos” which means shoes in Spanish, became the largest online shoe store in the U.S. before expanding to apparel and accessories. To create a passion brand for customers, Tony had to sustain a passionate culture so intense, so outsized and so performative.

So, how did Tony led Zappos to become a passion brand?

First, Tony understood what it would take to build a brand. Being an internet company, only 5% of its sales were by telephone. So, why the focus on setting up a call centre? Back in 2004, Zappos’ biggest problem was customer service. Tony realized that there was an opportunity in building an emotional impact of the brand through the telephone. Every time a customer calls, “you have the customer’s undivided attention for five or ten minutes, and if you get the interaction right, the customer remembers the experience for a very long time and tells his or her friends about it.” His decision to set up a call centre was a strategic one based on branding instead of cost.

Second, Tony and his team did their research. No, it was not because of tax reasons and Las Vegas was not the cheapest option. The team did extensive research into real estate, wages, and cost of living in various cities to determine the best place where Zappos could find a large supply of workers who would be keen on building a career in customer service, manage the cost of relocating current employees, and support the culture at Zappos. Back in San Francisco, one of the challenges that Zappos faced was finding the right people to staff its call centre. Customer service was not a preferred career in Silicon Valley and the high cost of living in the Bay Area rendered a call centre representative’s salary unattractive. The team also believed that Las Vegas, with its hospitality-centric and all-night city culture, would help them find dedicated and high-calibre customer service representatives.

Third, Tony was committed to his vision and empowered his staff to realize his vision. He made customer service a priority in Zappos. By focusing on delivering happiness to customers, the team at Zappos implemented customer-orientated initiatives and performance measures. The company worked towards providing a risk-free shopping experience for customers e.g., generous returns policy, free shipping both ways, and easy access to its customer service representatives. Zappos also encouraged its staff to handle customer issues on their own, preferring that they build a personal emotional connection with customers, without following a script or measuring the number of calls a customer representative staff should take in a day.

The case study lets us observe how Tony led the team with conviction and thorough understanding of what was needed for Zappos. And what most people fail to realize is the importance of having a good team. Tony knew where to find them and what they would need to help him build the brand. He had the “whole company” behind him.

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