dana goba bus 550 - the contemporary firm may 21, 2012
TRANSCRIPT
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Dana GobaBUS 550 - The Contemporary FirmMay 21, 2012
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Nick Swinmurn• Graduated from UCSB in 1996• Unable to find brown Airwalks in his size• Thought the internet could solve the issue• No experience in retail or shoe industry• Founded Zappos in 1999• Hired Fred Mossler from Nordstrom• Left Zappos in 2006• Formed Dethrone Royalty in 2009
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Tony Hsieh & Alfred Lin• Harvard classmates• Sold LinkExchange to Microsoft for $265 million• Founded venture capital fund, Venture Frogs• Invested in Zappos• Hsieh became Zappos advisor, then co-CEO• Lin joined as COO/CFO
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Let’s Go Shopping!• www.zappos.com• Photos• Videos• Tags• Reviews• Recommendations
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Company Information• Sell shoes, clothing, beauty products, accessories, and
housewares• Free shipping both ways• 365 days to return• 24/7 customer service• “Customer services is what we do.”
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Company Information con’t• Headquarters in Las Vegas• Warehouse in
Shepherdsville, Kentucky• 1,500 employees• 1,200 brands• 200,000 styles• 900,000 unique UPCs• 4 million items in warehouse• Fortune’s 100 Best
Companies to Work For from 2009 to today
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Warehouse & Shipping• In the beginning, manufacturers would deliver to customers• Then tried outsourcing warehouse• Realized had to open own warehouse
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Warehouse Upgrade• Moved to larger
facility• Located near UPS hub in
Louisville, KY
• 800,000 square feet
• Custom built automation• Able to ship twice as
many packages• Decreased cycle time• No one lost their job
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Warehouse Conveyor• 9,200 feet of conveyor!
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Live Shopping• Photo studio and full-service photo lab in fulfillment center• Take photos as new products arrive• HQ writes description• On website in 48 hours
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Annual Revenue
19992000
20012002
20032004
20052006
20072008
20092010
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Mill
ions
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Path to the Culture• Swinmurn – desire to build internet powerhouse• Hsieh – focus on culture and employee happiness• Very best customer service
• Burst of internet bubble• Moved headquarters to Las Vegas
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Employee Culture Input• Culture book• Began in 2004• Compiled and published annually• Employees building the culture
• Core values• Live them, don’t just stare at them on a wall
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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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Finding the Right Employees
• Qualities• Weirdness• Humor• Humility• Luck
• Training• 4 weeks of Customer Loyalty Team training• 1 week at warehouse• $3,000 offered for people to quit after training
• You’re hired• Employees are encouraged to spend time together outside of
work• Managers are required to spend 10-20% of their time hanging
out with team members
Hire slowly,
Fire quickly
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Call Center• Most call centers have 300% turnover• Zappos saw call center as an opportunity• Customer Loyalty Team (CLT)• No script• Conversations help build the brand• Personal Emotional Connection (PEC)• Not compensated based on the number of calls• Track longest customer call• Hseih is adverse to typical retailing techniques
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Customer Loyalty Team• Need to hire the right staff• Was difficult to have customer service career in San Francisco• Looked into outsourcing
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Customer Demographics
38
62
Gender
MaleFemale
12
11
21
24
18
104
Age<18 18-2425-34 35-4445-54 55-6465+
5347
Childen in Household
No kidsHas kids
12
23
30
35
Household Income<$50k$50-100k$100-150k$150k+
39
44
18
Education
No collegeCollegeGrad school
72
11
510 1
EthnicityCaucasionAfrican AmericanAsianHispanicOther
Courtesy of Quantcast
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Repeat Customers• 75% of orders• Higher average orders• $156.27 versus $123.86
• Rely on word of mouth instead of traditional advertising
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CRM Software• Created custom Customer Relationship Management software• Not many CRM in 1999• Want control over process and systems• CRM needed to be driven by customer service
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Social Media• Building open and honest
relationships• The good, bad, and ugly are
posted• The true brand is what your
customers say you are
• Telephone• Twitter• Blogging• Facebook• Video
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Social Media: Telephone• Considered the best social media• 5,000 to 6,000 calls per day• If interaction is done right, people remember and tell others
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Zappos Insights• Other companies seeking insight regarding management
practices• Began business to business consulting• Offer seminars• 1 day Gold Package• 2 day Boot Camp• 5 day Innovation Series
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Amazon Acquisition• Announced in July 2009• Stock deal worth $1.2 billion• Honest and open communication with employees• Email from Hsieh to all employees
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Hacked• On January 16, 2012• Personal information of 24
million people had been hacked• Names, email, billing/shipping
address, phone, last 4 digits of credit card• Full credit card information stored
separately
• Required customers to change passwords
• Shut down call center due to high volume
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Questions?