Zappos hits the jackpot with employee engagement in Las Vegas

By Marc Wright

"Going to Las Vegas?  You should visit Zappos,” said one of my simply colleagues.  I laughed off the suggestion; why would I take time out from the pleasure capital of America to visit an online shoe store?

But when a multi-coloured SUV picked me up from the hotel I started to get an inkling of the buzz around this young internet company, that is setting new highs in customer service and employee engagement. My driver Julie used to work in advertising but is having much more fun now as one of the team that runs the regular tours of Zappos’s offices in Henderson, a 20 minute drive from the Las Vegas strip.

“I thought I would just walk into this job but they made me do 5 interviews before hiring me as a mere receptionist. By the 3rd interview I wanted to work for this company more than anything I wanted in my life.”

This passion for the job reminded me of Southwest Airlines, a company where complete strangers hug you in the corridor and the walls are covered in company memorabilia. The exterior of Zappos is bland and corporate, but go through the doors and it’s like Southwest but messier. As you will see from the video that accompanies this article, the place looks like the morning after the office party. The legal department was decked out like a snow-laden Christmas high street, while around the corner you come face to face with a cut-out pole dancer.  Everywhere I went staff would greet me with their own choice of claxon, audio clips of old comedy shows and – in one department – an array of cow bells.

If the shoe fits…

So far, so warm and fuzzy.  Yet the environment of fun and friendship has certainly paid off financially.  Zappos has become a huge success story, with Americans devouring their wares at a staggering $7m a day.  They deliver free both ways, have a 365 day return policy, and if you can’t find the shoe you want, they’ll even go online and find it at one of their competitors. The company promises 4-day shipping free with all orders but often delivers next-day anyway, to pleasantly surprise customers.  Most people buy their shoes online without ever talking to a human being, but the 6% who do are bowled over when they receive a hand-written note from the call centre staff packed in with their shoes, picking up on some personal detail from the call.

The overwhelming company culture is supported by the rigorous interview process (only 1 in 100 applicants get hired) that ensures that staff are like-minded in their passion for customer service.  After joining the company all recruits are offered $2,000 to leave if they can’t fit in with the company’s in-your-face values. Apparently it saves the company thousands in the long-term. Yet in a part of America that has been ravaged by the recession, Zappos has continued growing and hiring.

The steps to success

The Zappos name is based on the Spanish word Zapatos, which means shoe, but has a Web 2.0 resonance that has allowed it to trade on service as well as its warehouse of millions of Caterpillar boots.  Despite spending very little on advertising, its word-of-mouth reputation has allowed it to expand successfully into clothing and accessories. And late last year the company was sold to Amazon for $880 million which is about as good an endorsement as any online retailer can get.

Zappos was founded just 10 years ago by a young entrepreneur Alfred Lin, who knew nothing about shoes but had the advantage of recruiting Tony Hsieh – a multi-millionaire who had just sold web-advertising company, LinkExchange, to Microsoft for $265 million in 1998. Hsieh (pronounced Shay) saw the opportunity in a market where people were still buying shoes via catalogues. But it has been his obsession with service values that has given the company a cult-like status among its customers.

Other companies are so interested in this success story that Zappos now run 3 tours a day for visitors to spread the engagement gospel.  As a young company that started in San Francisco it’s not surprising that they are strong users of social media. Hsieh tweets on http://twitter.com/zappos and has over 1.6m followers at the time of writing. He actually writes well and is amusing; Amazon’s millions have not diminished his enthusiasm for the company.

Internal = External

On the internal communications front they have an in-house blogging team who regular publish the internal goings-on, parties and parades of the 1,500 staff in Vegas and Kentucky where the shoes are warehoused and shipped. Just go on the site and click on http://about.zappos.com/ to see the kind of stories they report on. When I questioned Rob Siefker and Jane Judd who are in charge of the Customer Loyalty Team, they seemed bemused by the concept of internal communication. At Zappos (their business cards say “Deliver Wow through Service” on the back) they don’t see any kind of distinction between internal and external communications, it’s all part of the same game.

Each year they publish a Culture Book that celebrates and defines the Zappos culture.  It is not written by the brand team, nor the CEO, nor even a group of consultants; instead it is entirely made up of quotes, photos and other contributions from staff. It’s the most genuine version of its kind I have ever come across.

The question is what the Zappos experience can teach other companies. The strict recruitment policy has definitiely turned it into a mono culture, where everyone thinks alike. It’s a potent recipe for engagement and financial success but it’s debatable whether this can be scaled up to work in larger, global organisations. Our tour guide, Jonathan, oozed enthusiasm and passion and in his day job works on Zappos Insight, a business consultancy service that helps other companies get the service bug. Only time will tell if Zappos can do to management consultancy what they have done to shoe retailing. 

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