Zappos CEO: Company culture is higher priority than customer service

Customer service is incredibly important to any business, especially online retailers. But Zappos.com's CEO argues that there's actually a higher priority that business should keep in mind.
Written by Rachel King, Contributor

SAN FRANCISCO -- Our top priority is not customer service but rather company culture, said Zappos CEO Tony Hsieh during the afternoon keynote at BoxWorks 2011 on Wednesday afternoon.

If we're serious about building our brand, Hsieh argued, then "customer service shouldn't be just a department. It should be the entire company." He posited that if they get the culture right, everything else will file into place.

So far, it would look like Zappos.com has the right idea. Although it was acquired in 2009 by Amazon, the online retailer retains relative autonomy and the right to run itself the same way as it did before. Hsieh admitted that the most interaction he has with Amazon is really just a two-hour meeting in Seattle every quarter.

Hsieh's belief in a strong company culture stems back to the days when he co-founded and ran online advertising business LinkExchange before it was sold to $265 million in 1998.

However, Hsieh said that the real reason that he sold the company was that it wasn't a fun place to work anymore. Starting off with a group of 10, the whole strategy of hiring friends worked really well for Hsieh and company until they had more than 20 people. 

"The problem basically was that we ran out of friends.," Hsieh said. "We didn't know any better to pay attention to the company culture."

Hsieh said by the time the company had about 100 employees, he dreaded getting out of bed to go to his own company, which made him question how his employees must feel. Thus, the company was sold, Hsieh moved on and so did many of the original employees.

In 1999, Hsieh formed investment fund VentureFrogs, which invested in Zappos.com, Inc. Hsieh got involved there and instilled the company culture ethic that Zappos holds dear now.

But going back to customer service, Hsieh insisted that it's not possible without a solid company full of employees who actually enjoy working there and believe in the brand wholeheartedly.

The job application process at Zappos is no joke either. Everyone hired has to go through two interviews, and there's really more stress put on being able to fit into the culture just as much as performance. In fact, if you treat the bus driver poorly on the shuttle ride from the airport, Zappos won't hire you.

"Everyone hired into our headquarters goes through the exact same training as our call center reps," Hsieh said.

Zappos' commitment to transparency is strong as well. For example, Zappos has quarterly all-hands meetings in which employees (and customers) can ask anything they like, whether it be about earnings or what brands that Zappos will be selling next. Even when reporters come to visit, they can speak to anyone they like even though employees have not had media or PR training.

"Every employee is automatically living the brand," Hsieh said.

Nevertheless, that doesn't mean customer service is not important. In fact, it's probably the second highest priority at the Las Vegas-based company. For example, Hsieh said that Zappos takes most of its money and plugs into customer service and improving the overall customer experience, which lets customers do the marketing for Zappos via word-of-mouth.

Hsieh said that the constant question that Zappos is always aiming to answer is "How do we 'wow' our customers?" Some of the perks include free shipping both ways, a 365-day return policy, and script-less customer service agents who actually listen to customers and don't just blabber corporate mumbo jumbo.

So far, it would seem that customers are pleased.

"Customers have asked if we can start an airline, run the IRS," Hsieh joked to much laughter from the audience, "We're not going to do any of those things this year."


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