Happiness in a Box

What business are you in? Phrased another way, what do your customers buy – really?

One of my vacation reads was Tony Hsieh’s Delivering Happiness. The book is a widely ranging narrative of how a young programmer and frequent quaffer of Red Bull made an early bonanza, became an angel investor and gradually developed a notion of management. He distilled all of these through the school of hard knocks to transform his company, Zappos, into a leading direct apparel merchant and a brand which delivers more than the shoes and clothing it sells.

Hsieh and his team did not do this by running a lean, mean profit maximizing machine. They experimented continuously, paid well, staffed fully, rejected outsourcing, invested in a large domestic call center and abandoned a cost efficient out sourced drop-shipping model to take on the risk and expense of carrying a vast inventory.

Rather than use brute force marketing such as offering large discounts or spending heavily on advertising, SEO and promotion, Hsieh transformed Zappos into a customer service powerhouse. He marketed better by marketing less. The result in many cases is to deliver an experience, which not only satisfies but “Wows” the customer. Thus Zappos can claim to deliver “happiness” while also delivering profits. How does he do it?

Zappos has an excellent ecommerce website, but its core channel is, surprisingly for this day and age, the telephone. Zappos achieves customer intimacy through highly trained and carefully selected phone representatives and embedding them in a culture which honors their role. No minimum wage remote call centers in a low wage country here.

The phone experience is paramount for Zappos, such that every employee regardless of job goes through call center training. Unlike so many firms, the call center is not treated as just an expense to be minimized. Reps do not have a quota and can spend as much time as they wish on a call. They are empowered to deal with customer issues as they think appropriate and may dispense additional benefits such as upgrades to free overnight shipping. They can learn a great deal about customers and use this knowledge in growing their business. Their customers feel as if they’re being wooed. That’s delivering happiness.

The concepts which built Zappos are simple, so why don’t more organizations apply them to deliver happiness to their customers and profits to their stockholders? In essence, Zappos has a different business model: Dote on the customer, engage her in conversation and capture what you learn from these conversations. She will pay full price and tell her friends about it.

This approach requires the courage and commitment of making continuous long term risky investments and deferring short term profitability. It also requires dedicated leadership to build and maintain a culture of customer focus and continuous innovation.

Many firms, including some I’ve worked for and consulted to, have flirted with Zappos’ approach with clichĂ©s about how they value customers and staff. They abandon it with the first dip in quarterly earnings or the next article they read in a business magazine. It’s too hard and too disciplined for most companies.

If it can’t be like Zappos, what does your organization do to foster customer intimacy?