It’s not about shoes — Rest In Peace Tony Hsieh
I was in Bangkok with my family in the last week of December 2019. I remember thinking about the next year to come — the year 2020. The year number looked great — 2020, and I told myself it would be a great year. Who would think I could be so wrong, very wrong. 2020 has been a rough year for many people, myself included. Covid-19 pandemic is one thing: the world also losses several great people. Most recently, I was shocked when I saw the news that Tony Hsieh passed away.
I heard Tony Hsieh’s name in 1999 or about 20 years ago. He made the news that he invested in an online shoe store. E-commerce space back then was not as prevalent as today. I never thought that anyone could buy shoes online because people like to trial and touch shoes before they pay. Tony somehow made it works. His only shoe store was very successful and became a part of Amazon in 2009 for US$1.2 billion. Tony made another big news.
Tony Hsieh’s business philosophy can be summed up in one, short quote below:
“Our number one priority is company culture. Our whole belief is that if you get the culture right, most of the other stuff like delivering great customer service or building a long-term enduring brand will just happen naturally on its own.”
His business principle sounds great, and 99% of business leaders would agree. Many tried to do the same. And, many failed. There are a lot of misconceptions about business culture and customer experience. I witnessed a few attempts in my career that I told myself “it’s not going to work”.
What can we learn from Tony Hsieh?
It’s all about the right culture
And culture must start from the top. There is no other way. You can invest millions and millions of dollars to have external consultants, training, coaches, courses to train your employees, but if the top — the CEO and the Executive team — do not live by the company’s values, it’s a waste of time and money.
Tony’s big idea was that online retail could be about much more than delivering price, quality, and selection, although Zappos offered all of that. Everything Zappos did (and does) was meant to amuse, amaze, surprise, and otherwise engage customers — “delivering happiness” in Tony’s words. And it became a mantra of the culture he injected to all of his endeavours.
Tony also understand that you cannot build something special in the marketplace unless you also built something powerful in the workplace. To create a passion brand for his customers, Tony had to sustain a passionate culture among his colleagues.
If the CEO is not committed to this principle, second-guessing people around him, and worst, surround himself only with his friends no matter how hopeless they are, don’t even try.
Marketing as a service
Tony once said:
“Zappos is a customer service company that just happens to sell shoes.”
can say with confidence that 99.99% of businesses want their revenue to come from words of mouth or customer referrals. I have witnessed many referral programs and numerous attempts to promote words of mouth. But, not many companies could genuinely achieve a true referral philosophy like Zappos. How did Tony do it? Below was what he said:
“Our whole philosophy became ‘let’s take most of the money we would’ve spent on paid advertising and paid marketing and instead of spending it on that invest it in the customer experience/customer service and then let our customers do the marketing for us through word of mouth’ and that became the whole business model.”
One of the main reason that many companies cannot achieve a referral-driven business model is because of their cost structure. In order to be a true customer service company (aka adopting a marketing as service concept), you have to start from a business model level. Many businesses especially direct response ones, have sales and marketing cost as a major cost, probably 50% to 60% of their cost structure. There is no way they could allocate enough resources and attention to offer great customer experience.
To achieve what Zappos did, companies have to invest early on in customer service/experience capabilities. It means they have to invest in people and tools that allow employees to deliver the best service on earth. It also means companies have to choose NOT to spend most of their budget on sales and marketing to maintain the profit margin. The most challenging part is this service approach takes longer time than the direct response approach. That’s why many companies choose not to pursue this business model. They simply cannot wait.
Tony’s secret about brand building
Building a brand is nothing more than offering solutions that make the world (of your customer) a better place. It’s all about emotions. Zappos is all about happiness — happy employees and happy customers. It sounds absurdly simple, but it is extremely difficult to do.
In Tony’s mind, these four attributes are key to build a long-lasting brand:
- Perceived Control — People don’t want to feel like they’ve lost control
- Perceived Progress — People need to feel like they’re making progress
- Connectedness — Having strong social ties
- Vision/Meaning — Being part of something bigger than yourself
He also rightly said that:
“If we’re serious about building our brand to be about the very best customer service and customer experience; then customer service shouldn’t just be a department — it should be the entire company.”
And as I mentioned earlier, it’s a trade-off between making quick revenue and building a business that lasts a lifetime. There is a quick test that your business can check if it’s possible. Would you allow your service people do whatever it takes to make customers happy? Tony didn’t measure his call centre using normal KPIs such as call handling time. He let his team spending hours and hours to solve customer issues. The longest call that was recorded was an 8-hour conversation between his consultant and a customer.
When you try to do everything right for your customers, everything else will fall into shape by itself. You don’t have to allocate a big budget on branding and sales and marketing. You also don’t have to have a big Legal and HR department because you treat customers and employees with respect. I giggled when I saw what Tony said about the Legal and the HR department:
“Don’t let HR and Legal make the decisions. Tell them they’re great for some things, but, ultimately, it’s the manager’s decision. Limit their power in an organization. They can make things more bureaucratic if they aren’t contained”.
Have anything to add about Zappos or Hsieh? Have you ordered from them? What was the service like?
I’d like to hear your feedback in the comments!
