Leadership

To keep your customers in the present day, you can’t be content just to please them. If you want your business to thrive, you have to produce enthusiastic aficionados—customers who’re so keyed up about how you treat them that they want to tell stories about you. These customers and their cult-like loyalty become a key element of your sales force.

American entrepreneur Tony Hsieh built the online retail store Zappos on the fundamental idea that great service is not a happenstance. It starts when leaders decide what kind of experience they want their customers to have—and articulate that approach in a clear mission and vision. As in the case of luxury hotel chain Ritz-Carlton, leaders keep the mission alive by empowering their employees to go the extra mile for the customer. Above all, when it comes from the heart, great customer service keeps customers coming back over and over.

In Delivering Happiness: A Path to Profits, Passion, and Purpose (2010,) Hsieh discusses the importance of cultivating happiness as a launch pad to better results for your business.

How Zappos Profits from The Happiness Business

Hsieh did not create Zappos. He was one of the startup’s initial investors but got sucked in to help the original founder after six years. Zappos operated in survival mode for a while. As it began to outlive its financial struggles, Hsieh and his leadership team went about building an intentional corporate culture dedicated to employee empowerment and the promise of delivering happiness through a valued workforce and devoted customers.

Over the years, the number one driver of our growth at Zappos has been repeat customers and word of mouth. Our philosophy has been to take most of the money we would have spent on paid advertising and invest it into customer service and the customer experience instead, letting our customers do the marketing for us through word of mouth.

Hsieh tells his entrepreneurial life experiences, often presenting biographical stories to make his line of reasoning. Many great entrepreneurs got started early, and Hsieh is no exception. He started with worm-farming (age 7,) button-making (elementary school,) magic tricks involving dental dams (high school,) burger joint (college,) and web-consulting (post-college) before having considerable financial success with the internet advertising firm LinkExchange (sold in 1998 to Microsoft for $265 million.)

In 2009, Hsieh sold Zappos to Amazon for $847 million under pressure from Sequoia Capital, a major financier of Zappos. As a point of reference, Hsieh later recalled,

Some board members had always viewed our company culture as a pet project—“Tony’s social experiments,” they called it. I disagreed. I believe that getting the culture right is the most important thing a company can do. But the board took the conventional view–namely, that a business should focus on profitability first and then use the profits to do nice things for its employees. The board’s attitude was that my “social experiments” might make for good PR but that they didn’t move the overall business forward. The board wanted me, or whoever was CEO, to spend less time on worrying about employee happiness and more time selling shoes.

How Zappos Fostered a Culture and a Business Model Based on the Notion of Happiness

Zappos’s corporate culture is guided by ten core values, which aspire to empower employees, create a sense of community in the workplace (employees are encouraged to “create fun and a little weirdness” in the office and build personal connections with colleagues,) and serve a higher purpose beyond bottom-line metrics.

• Zappos’s core values include: deliver WOW through service (#1,) be humble (#10,) do more with less (#8,) be passionate and determined (#9,) and create fun and a little weirdness (#3.)
• Zappos wants only those employees who really want to work for the company. All new employees attend a four-week training program that immerses them in the company’s strategy, culture, and customer-obsession. Zappos offers $2,000 to walk out at the end of the first week, and the offer stands until the end of the fourth week. Only a small number of new employees take the offer.
• Zappos challenges all employees to make at least one improvement every week. Allowing employees to improve the tasks they’re doing and enhancing the processes that they’re responsible for executing allows them to make their jobs more meaningful.
• Instead of measuring call center efficiency by the time each call center operator spends on the phone with a customer, Zappos developed its own scorecards. Zappos quantifies such things as the personal and emotional connections operators make with customers using measures such as measuring the number of thank you cards.

Zappos is Obsessed with Impressing Customers

By focusing on company culture, everything else—such as building a brand with sustained revenue growth, fast turnaround times at warehouses, and passionate employees—fell into place.

Happiness is really just about four things: perceived control, perceived progress, connectedness (number and depth of your relationships,) and vision/meaning (being part of something bigger than yourself.)

Recommendation: Read Tony Hsieh’s Delivering Happiness. This insightful tome is brimming with practicable ideas on customer service, building a positive company culture, best hiring practices, how to motivate and train your team, and setting business goals and values. The core elements of Zappos’s DNA—purpose, happiness, culture, and profits—are an effective framework for making happiness a business model.