Zappos went from a struggling start-up in 2000 to getting acquired by Amazon in a deal valued at $1.2 billion in 2009. The face of the company, chief executive Tony Hsieh, a successful entrepreneur even before leading the shoe company, shares the secrets to his success in his new book, Delivering Happiness: A Path to Profits, Passion, and Purpose. He has long held that customer service is paramount, especially at a time when many companies are scaling back and outsourcing. Even Twitter, he says, serves as a way to “[improve] our relationship and connection with our customers.”
Some of the company’s idiosyncrasies are well-known, including a focus on customer service, free two-way shipping, and a tight workplace environment (some have even called it a cult), but others will surprise you. Here are 5 rules from the book that you may need to use for your own company:
1. Every Startup Should Know the Importance of Customer Service
Aside from the shoes and clothes, Zappos is best known for having a relentless focus on customer service. In fact, Tony Hsieh consistently cites this customer service as being the reason for the company’s immense success. Hsieh considers the humble telephone as a key differentiator that sets them apart at a time when instant messenger and email are often the only options elsewhere.
According to Hsieh, startups and entrepreneurs should utilize the telephone as part of their customer service efforts. Although just 5% of their sales come from phone calls, the Zappos CEO says that every call is a chance for businesses to improve both their service and relations with customers. He believes that this effort will eventually have a return in the form of a loyal customer who was more than pleased with being provided so much care and attention.
How It’s Done – While most startups and entrepreneurs are focused on the service or product, Hsieh advises that the customer should still be a priority. In fact, Tony claims to be more passionate about providing excellent customer service than he is about the shoes that Zappos sell!
Takeaway – The rewards of customer service are not always tangible but they always matter.
2. Nurturing Company Culture
Zappos has such an unusual approach to company culture but these unorthodox ways have created a very strong sense of togetherness and identity in the company. Company employees are consistently urged to interact with each other and the company asks some very peculiar yet telling questions during interviews.
For example, in many interviews, potential Zappos employees are asked if they broke company rules in order to get a job done. Also, as part of “security measures”, existing employees are required to answer familiarity questions about their work colleagues and the results are recorded. In other words, Zappos encourages employees to get to know each other or find themselves locked out of their computers!
Either way, Tony Hsieh is adamant that this sense of company culture is another foundation of success for any startup. Even as the company grows, you can still retain the company culture.
How It’s Done – Hsieh believes that bonuses and direct rewards, in general, are counter-intuitive to production. Instead, he thinks that startups should focus on motivating workers by the actual work instead of unrelated perks. An example of this at Zappos can be found when new hires are offered $4,000 to quit as a means of weeding out the people who might not be committed!
Takeaway – Create an environment in which people will want to work regardless of whether they get paid or not!
3. Don’t Just Lead, Initiate
As a leader, you have certain obligations to interfere from time to time but Tony Hsieh is crystal clear that micromanagement is the worst possible approach for entrepreneurs or startups. Aside from the fact that this is more work for management, it also tends to result in an unhappy and unproductive workforce.
Hsieh recounts how he left his first job at Oracle as the environment was not conducive to personal growth. In other words, why work for a company that does not care about the growth or happiness of their employees?
How It’s Done – Hsieh believes that it’s important for startups in particular to create a relationship in which employees are encouraged to learn, adapt and progress. The leader becomes an enabler and initiates the type of workplace that employees will be proud to join.
Takeaway – Avoid stifling company culture by encouraging as much freedom of expression as possible.
4. Treat Every Interaction as an Opportunity
Tony is always eager to share his failures in life and accounts for these times as learning periods. However, he has also learned that every relationship big and small is a potential opportunity.
For example, Hsieh recounts a fantastic story about when a business partner invited the rep of a very small brand to dinner. Fred Mossler knew that this brand contributed next to nothing to their bottom line but genuinely valued the relationship with this rep. Later down the road, this rep would become the president of a company that Zappos was trying to purchase. Thanks to Mossler’s simple gesture, Zappos was now indirectly aligned with the company.
How It’s Done – Tony Hsieh thinks that startups should have the belief that every customer interaction, both good and bad, is an opportunity to at least learn something new.
Takeaway – Startups and entrepreneurs can benefit from the motto “Win or Learn”
5. Understanding What Makes You Happy
Prior to investing in Zappos, Tony Hsieh had his own venture capital business. However, during his time at the helm of this big operation, he realized that he was much happier running small businesses and injecting his passion into smaller projects. He realized how strong the correlation is between productivity and happiness.
In fact, you can see a very employee-focused culture in Zappos and a focus from management to keep these employees happy. Zappos provides yoga mats and life coaching sessions to employees while free lunches are also a regular thing in the workplace. According to Hsieh, keeping employees happy is the key to having an ultra-productive workplace. Although it seems cliché, it always works.
How It’s Done – Tony says that most companies simply do not talk to their employees. This is the only way to know if employees are happy. It sounds simple but employees should be asked if they are happy and if the answer is no, they should be asked what can be done to make them happy.
Takeaway – There is such thing as a free lunch and it might be the difference between a happy workplace and an unproductive workforce.
For many people, advice to focus on customer service can seem a little basic or lacking insight but when it comes from a man who sold Zappos to Amazon for $1.2 billion – it’s advice worth heeding.
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