zappos - james malinchak event - 7-26-09
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Delivering Happiness
Tony Hsieh – [email protected]
Follow me on Twitter: twitter.com/zappos
James Malinchak EventJuly 26, 2009
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Slide 2
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Slide 3
A Little About Me (Tony)My Background
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Slide 4
Zappos at a GlanceCorporate Background
• Founded in 1999
• 1300 employees (half in Las Vegas headquarters, half in Kentucky) #23 in FORTUNE MAGAZINE’s “100 Best Companies To Work For” Highest debut for a newcomer in 2009
• Zappos is “Powered by Service” Providing the best online shopping experience possible. Fast, Free Shipping. Free return shipping. 365-day return policy. Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service.
• Best selection Over 1,000 brands, over 200,000 styles, over 900,000 unique UPCs. 4 million items in warehouse 100% of products inventoried (no drop ship).
• Zappos is a service company that happens to sell clothing, shoes, handbags, eyewear, watches (and eventually a bunch of other stuff).
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Slide 5
Recent Recognition:Nice, but we pay more attention to our customers
• TV Stories• Oprah (2008/2009)• ABC Nightline (2008)• 60 Minutes (2007)
• Fortune “100 Best Companies to Work For”• #23 (2009) – Highest ranking newcomer to list
• Fast Company “50 Most Innovative Companies”• #20 (2009)
• BusinessWeek Top 25 “Customer Service Champs”• #7 (2009)
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Slide 6
Customer service value proposition in action…Zappos is committed to WOWing every customer.
• Customers come… Over 11 million total purchasing customers Over 4 million have purchased in the last 12 months
• Customers come back… On any given day, about 75% of purchases from returning customers Repeat customers order >2.5x in the next 12 months
• Customers come back, order more and order more often… Repeat customers have higher average order size $123.86 – first time customers in Q407 $156.27 – returning customer in Q407
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Slide 7
Power of repeat customers and word of mouth...
2000 2001 2002 2003 2004 2005 2006 2007 2008
Gross Sales 1.6 8.6 32 70 184 370 597 841 1014
$0
$200
$400
$600
$800
$1,000
Gro
ss S
ales
$M
's
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Slide 8
Customer Service:What customers first see
• 24/7 1-800 number on every page
• Free shipping
• Free return shipping
• 365-day return policy
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Slide 9
Customer Service:What customers experience
• Fast, accurate fulfillment
• Most customers are “surprise”-upgraded to overnight shipping Create WOW
• Friendly, helpful “above and beyond” customer service
• Occasionally direct customers to competitors’ web sites
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Slide 10
Customer Service:What we do internally
• No call times, no sales-based performance goals for reps.• The telephone is one of the best branding devices available.
• Run warehouse 24/7. Inventory all product (no drop-shipping).
• 5 weeks of culture, core values, customer service, and warehouse training for everyone in Las Vegas office.
• We’ll pay you $2000 to quit.
• Culture Book
• Interviews & performance reviews are 50% based on core values & culture fit.
• Twitter helps build company culture.
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Slide 11
Owning the 3 C’s
Clothing
Customer Service
Culture
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Slide 12
Clothing
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Slide 13
Customer Service
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Slide 14
Culture
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Slide 15
Owning the 3 C’s:Clothing, Customer Service, Culture
Customer Service
Clothing
Culture
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Slide 16
ZapposDelivering Happiness
(customers and employees)
“People may not remember exactly what you did or what you said, but they will always
remember how you made them feel.”
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Slide 17
CULTURE“Committable Core Values”
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Slide 18
Zappos Core Values
1. Deliver WOW Through Service2. Embrace and Drive Change3. Create Fun and a Little Weirdness4. Be Adventurous, Creative, and Open-Minded5. Pursue Growth and Learning6. Build Open and Honest Relationships With Communication7. Build a Positive Team and Family Spirit8. Do More with Less9. Be Passionate and Determined10. Be Humble
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Slide 19
“That’s great for Zappos but it would never work at my
company…”
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Slide 20
It doesn’t matter what your core values are…as long as
you commit to them.
ALIGNMENT
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7 Steps For BuildingA Brand that Matters
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Slide 22
Step #1
DECIDEif you’re trying to build a long term sustainable brand
Requires more patience with revenues & profitsin order to lay the foundation
Decide sooner rather than later
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Slide 23
Good businesses figure out how to continuously add value.
Great businesses figure out how to continuously multiply value.
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Slide 24
Step #2
FIGURE OUTVALUES & CULTURE
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Slide 25
VALUES & CULTURE
Figure out values & culture sooner rather than later
• What are your PERSONAL core values?• What are the COMPANY’s core values?• Start EARLY.• It is surprisingly HARDER than you think.• It doesn’t MATTER what the values are.• The most important thing is ALIGNMENT.• …LIVE the BRAND.
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Slide 26
Step #3
COMMIT TO TRANSPARENCY
“Be real and you have nothing to fear”
Your culture is your brand
Don’t try to be someone you are not
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Slide 27
Commitment to Transparency:Examples
• twitter.zappos.com
• “Ask Anything” newsletter
• Extranet for vendors
• Tours & reporter visits
• ZapposInsights.com
• Zappos Insights Live events – www.zapposinsights.com/live
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Slide 28
Step #4
VISION“Whatever you’re thinking, think bigger.”
Does the vision have meaning?
Chase the vision, not the money…
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Slide 29
VISION
“Don’t chase the paper, chase the dream.”
Sean Combs aka “Puff Daddy” to rapperBiggie Smalls aka “Notorious B.I.G.”
in Notorious
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Slide 30
ENTREPRENEURS:
“What would you be passionate about doing for 10 years even if you never made a dime?”
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Slide 31
EMPLOYEES:
What’s the larger vision and greater purpose in
their work beyond money or profits?
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Slide 32
VISION
MOTIVATIONvs.
INSPIRATION
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Slide 33
Step #5
BUILD RELATIONSHIPS
(not networking)
Be INTERESTED rather than trying to be INTERESTING
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Slide 34
Step #6
BUILD YOUR TEAM“If you want to go quickly, go alone. If you want to go far, go together.” (Al Gore quoting African proverb)
Hire slowlyFire quickly
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Slide 35
Step #7
THINK LONG TERMRepeat customersCustomer service
There is no “get rich quick” formula
“Overnight” successes are years in the making(both personally and in business)
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Slide 36
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TAKE A STEP BACKWhat is your goal in life?
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Slide 38
WHAT IS YOUR GOAL IN LIFE?
Grow Company
Get a Great Job
Boyfriend / Girlfriend Be Healthy
Retire Early Make Money Find Soul Mate Run Faster
Spend Time w/ Family Buy A Home Get Married Run A
Marathon
why? why? why? why?
why? why? why? why?
HAPPINESSwhy? why? why? why?
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Slide 39
RESEARCH HAS SHOWN:
HAPPINESSPeople are very bad at predicting what
will bring them sustained happiness.
“When I get ___, I will be happy.”
“When I achieve ___, I will be happy.”
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Slide 40
HAPPINESS:
• There is a SCIENCE behind many aspects of business including:• conversion• psychology of buying• direct marketing• customer acquisition metrics• repeat customer behavior, etc.
• What if you spent just 10% of your time studying and learning the SCIENCE of HAPPINESS?
• How much HAPPIER could you be?
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Slide 41
WHAT IS YOUR GOAL IN LIFE?
Grow Company
Get a Great Job
Boyfriend / Girlfriend Be Healthy
Retire Early Make Money Find Soul Mate Run Faster
Spend Time w/ Family Buy A Home Get Married Run A
Marathon
why? why? why? why?
why? why? why? why?
HAPPINESSwhy? why? why? why?
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A Few Different Frameworks of
HAPPINESS
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Slide 43
Perceived Control
Perceived Progress
Connectedness
Vision / Meaning(Being part of something bigger than yourself)
A FEW DIFFERENT FRAMEWORKS ON HAPPINESS:
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Slide 44
Maslow’s Hierarchy:
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Slide 45
Rock Star(Pleasure – chasing the next high)
Flow(Engagement – time flies)
Meaning /Higher Purpose(Being part of something bigger than yourself)
3 TYPES OF HAPPINESS
time
time
time
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Slide 46
RECOMMENDED BOOKS:
PEAKChip Conley
TRIBAL LEADERSHIPDave Logan, John King & Halee Fischer-Wright
FOUR HOUR WORK WEEKTim Ferriss
HAPPINESS HYPOTHESISJonathan Haidt
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Slide 47
Put a little Zappos in your day……some links to check out…
• Follow me on Twitter: @zappos - http://twitter.com/zappos
• http://twitter.zappos.com (public mentions, employees)
• http://bit.ly/twitterbetter - “How Twitter Can Make You a Better (And Happier) Person”
• http://blogs.zappos.com (photos & videos of culture)
• http://about.zappos.com (more information about us & core values)
• http://www.zapposinsights.com (video Q&A, book recommendations)
• http://jobs.zappos.com (job opportunities)
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Slide 48
Put a little Zappos in your day……to contact me or get a tour…
• Email [email protected] for:
A copy of this presentation
Copies of our culture book (need physical mailing address)
• Email [email protected] for:
Tour of our offices when you’re next in Las Vegas (takes about an hour)
We’ll pick you up from the airport or your hotel in a Zappos Shuttle!
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Slide 49
What % of your time do you want to spend learning about the SCIENCE of HAPPINESS?
How can the SCIENCE of HAPPINESS help your business, your brand, and yourself?
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Slide 50
If the research shows that vision / meaning / higher purpose
leads to happiness…
What is your company’s higher purpose?
What is your higher purpose?
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Delivering HAPPINESS
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Slide 53
Legal and Financial Disclaimer
P.S. You might be wondering why we need to have a legal and financial disclaimer in this presentation, but you are still reading, so our lawyers, auditors and accountants would really like to make sure we make the following clarifications.
Although an audit was underway and almost done, the financial information presented in this slide show was unaudited. We made every effort to present the best information we had at the time.
Gross merchandise sales is a non-GAAP metric. We use it to express the total demand across all of our web sites and stores. This number measures the dollar value of the orders placed in the year before accruing for certain items such as returns, and it ignores certain timing cut-offs that are required by GAAP for revenue recognition purposes. If we were a public company, we would have to reconcile gross merchandise sales to the nearest GAAP metric (net sales), but we are currently a private company so the gross merchandise sales number should be viewed just as an interesting number that we want to share with our friends.
This presentation contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by the forward-looking statements and assumptions. These risks and uncertainties include, but are not limited to, the risk of economic slowdown, the risk of over or underbuying, the risk of consumers not shopping online or at our web site at the rate we expected, the risk of supplier shortages, the risk of new or growing competition, the risk of a natural or some other type of disaster affecting our fulfillment operations or web servers, and the risk of the world generally coming to an end. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. Zappos.com assumes no obligation and does not intend to update these forward-looking statements.
Congratulations on making it through all the fine print. If you enjoy fine print, look for openings on our legal and finance team at jobs.zappos.com.
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