Extending the Customer Experience

by: @krianbalma

Zappos at a GlanceBackground

• Founded in 1999

• 1400 employees (half in Las Vegas headquarters, half in Kentucky)

• 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.

• Selection!!!• Over 1200 brands, over 200,000 styles, over 1,000,000 unique UPCs.• 4 million items in warehouse• Photography in multiple angles.• 100% of products inventoried (no drop ship).

• Zappos is a service company that happens to sell shoes, clothing, handbags, eyewear, watches (and eventually a bunch of other stuff).

Customer service value proposition in action…Zappos is committed to WOWing each and every customer.

• Customers come…• 12.0M total purchasing customers (3.5% of US population)• 4.0M 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• $111.98 – first time customers• $143.22 – returning customer

Power of Repeat Customers & Word of Mouth

2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008F

Gross Sales 1.6 8.6 32 70 184 370 597 840 1,000

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Gro

ss S

ales

($

in M

s)

3 foundational things we’ve learned are necessary for good

service online:

1 - Customer Service: What Customers First See

• 24/7 1-800 number on every page

• Free shipping

• Free return shipping

• 365-day return policy

2 - 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

3 - Customer Service: What We Do Internally

• No call times

• No sales-based performance goals for customer service reps

• Run warehouse 24/7

• Inventory all product (no drop-ship)

• 5 weeks of culture, core values, customer service, and warehouse training for everyone in Las Vegas

• Culture book

• Interviews and performance reviews are 50% based on core values and culture fit

2 Bonus things we’ve learned….

1 – Give your customers a voice on your site

• Customer Reviews• Provide useful information• Help lower return rates• Wonderful SEO Value!• Credibility!

• Feedback Mechanism (VoC)• Better user experience• Build empathy• SEO Value• Builds community/repeat visits

2 – Enable Product Sharing

• “free” link backs

• High converting trigger

• Community engagement is high!

• Creates referrals that lead to customer acquisition

Though, Times are Changing!

Customer experience extends beyond just your site!

Time to figure out how to extend the experience!

Why?

Because not all customers pick up the phone!

Create more touch points with your customers…

… and you enable more frequent and meaningful engagement with them (Brand longevity!)

Why?

Because people want to be heard!

Why?

To gather information?!

Why?

To make better educated purchases?!

Why?

To feel like they are part of it?

Why?

To talk about their experiences!

Why? Probably all of the above, and more!

That’s LOTS of people willing to help look out for your business, provide feedback and ideas, etc!

That is, if you are listening.

Most people don’t pick up the phone and call us!

Evolving Customer ConnectionsPhone

Live Chat

Social Sites, Networks, etc…1,100,000+ opportunities to interact per day

6,000+ calls a day

400+ live chats per day

That’s right, 1,100,000 per day in the social space

And growing!!!

Or you can annualize it:401,500,000+ invitations to

interact per year

How does a company engage in an organized predictive way?

Which leads me to…

Is People Planning the new media planning?

Don’t plan great media, plan great people!

Have the RIGHT people, have the RIGHT voice

People Planning

Train EVERYONE to be a customer service agent

Good Customer Service =

People PlanningRally the company behind the IDEA of pro-actively talking to customers

People Planning

Employees will want to engage customers, as often as possible.

Zappos Goal: Have as many employees be a voice!

Why?

We believe in People Planning being at the heart of our success.

How does one do that?

Have the right culture and nurture it

Have committable core values and aspire to live them

INVEST in hiring and firing and pay people to leave ($$$)

Stay focused and make people focused investmentsEducation!

Strategy: Maintain Transparency

Make it easy for people to see that we are, just a company of people just like you!

We have nothing to hide, we’ll show you what people are saying about us and what WE are saying

We like to make people smile and laugh

Transparency Tools – twitter.zappos.com

Get your partners involved!

Transparency Tools – Zappos.TV

Transparency Tools – Facebook Page

What does a Snuggie have to do with Zappos?

Absolutely nothing, but it has everything to do with an engagement opportunity!

The reshaping of customer expectations

Reshaping customer expectations

Reshaping customer expectations

Thank you for allowing me to be here!

Email me – bkalma@zappos.com for:

A copy of this presentation

Answers to any additional questions not answered today

A copy of our culture book

Tour of our offices when you’re in Vegas

Job opportunities

Follow Me on Twitter! http://twitter.com/krianbalma

Legal and Financial DisclaimerP.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.