Quadrupling Growth By Cultivating a Culture of WOW
For retail innovator Zappos, the Why of their brand can be summed up in a single word – happiness.
The concept of delivering happiness is the foundation of the company’s culture and values, and informs everything they do, from the way they hire, to their famously responsive customer service and free shipping.
Founder Tony Hsieh arrived at this concept in a circuitous fashion. Unhappy at LinkExchange, the company he founded and sold for a nine-figure sum back in 1998, he knew he needed a change.
After trying his hand at investing in and incubating startups, Hsieh realized his happiness lied in building something from the ground up again. Luckily, he soon found himself at the helm of one his investments – a scrappy online footwear business, whose name was inspired by the spanish word for “shoes.” That company was Zappos.
Fast forward to early in 2000, and Zappos was struggling to stay afloat. Low on funding and without a proper marketing budget, the company strategically focused on over-delivering on customer experience as a way to foster word of mouth.
This strategy (combined with a shift in consumer sentiment towards online retail) proved to be exactly what the business needed, and Zappos saw explosive growth. Sales hit $32 million in 2002, a 400% increase from the year before. This turn was a watershed for Hsieh.
While the product was important, he realized that Zappos wasn’t in the shoe business. They were in the happiness business.
The company focused on delivering “wow” to their customers, and made extremely attentive customer service and free shipping and returns hallmarks of the brand.
And happiness, he found, didn’t have to be mutually exclusive. Customer happiness could coexist with employee happiness, investor happiness, and even his own happiness.
With this as his premise, Hsieh then set about breaking the mission into ten core values. which include “deliver WOW through service,” “do more with less,” and “be humble.”
While the organization has grown and evolved over time, happiness remains the foundation of the culture, in part because of Zappos’ unique hiring and onboarding process.
All potential Zappos employees undergo two separate interviews one for job skills, and another for cultural fit, the latter of which is viewed as more importance than the former.
Zappos candidates are also encouraged to socialize with their prospective teams before they are hired to see if they got along outside the office, and often with the CEO himself.
“We ask all potential hires how they feel about socializing with co-workers,” Zappos’ Insight Manager Erica Javellana explains. If candidates express a desire to keep their business and personal lives separate, that’s a red flag. Ideally, Zappos employees can be the same person in and out of the office. “
There’s no concept of work-life balance here,” she elaborates. “It’s all just life.”
To really drive home the concept of delivering happiness and how important it is to the business, all newly hired employees (no matter what the job title) go through the same four week training process as the call center reps, two weeks of which is actually spent fielding customer service calls.
The point is to understand the business at its most important touchpoint – at the customer level.
At the end of the training, Zappos new hires are then presented with the option to quit on the spot. Employees who opt to quit are paid for their time and offered a spot bonus (around $2,000).
This cash incentive to leave helps weed out any potential mistakes in the hiring process.
One of the reasons cultural fit is so important is that at Zappos, culture – not policy – drives decision making. Core values, Javellana says, are a framework that inform every interaction, both inside and outside the company.
Zappos’ focus on delivering wow has paid off, and helped revolutionize the way business leaders think about purpose and its relationship to engagement.
Revenue has seen hockey-stick growth since Hsieh’s eureka moment back in the early 2000s, and the company now earns revenues in excess of $2 billion annually.
The Zappos’ story highlights how a purpose-driven company can galvanize employees around a common cause, create an emotional bond between employees and their company, and drive massive profits all at the same time.