Tony Hsieh Service Excellence

One of the two biggest wastes of a new business salesperson’s time is post-signature firefighting. Similarly Account Managers hate having to be the frontman for delivery problem apologies.

Zappos are an American-only billion dollar shoe etailer. Founded in 99 they are, according to the Bloomberg Venture show I saw where Cris Valerio interviewed chief exec Tony Hsieh, renowned for legendary customer service. So much so that they’ve branched out into corporate culture consultancy.

Before the solution sales punch, a few entertaining asides. Hsieh helped start what he thought was a pioneering banner ad firm in 96. They simply emailed a handful of sites asking if they’d be interested in having their ads managed, and several replied saying ‘yes’. This happened within a week and prompted the team to give it a go as a proper business. Link Exchange was sold two years later for $265m. Hsieh was 24. One problem he noted was that in the run-up to selling, he used to fear getting out of bed in the morning. He felt he’d lost cultural control. A big mistake firms make, he believes, are that growing companies are desperate to put any body into a seat, most hire too quickly and fire too slowly.

Having joined Zappos a couple of months after launch, buying-in during 2002, success was built on free shipping both ways, free returns, and delivery that day. They deliberately morphed their mission from wanting to be the best shoe store on the web, to being the best service experience online.


One fascinating mistake was spending $75k on a marketing billboard at the San Francisco Giant’s baseball stadium. They tracked its impact during the season and analysis showed that they only won three new customers from it. Yes, $25k a new customer.

In terms of solution selling, the interviewer lifted the lid on their gross sales being $860m yet after accounting for returns, they were only $520m. Far from being a negative, this was incredibly positive according to the response. The 50% margins and relatively small shipping costs meant they still made a profit. Then the killer point.

Customers that do not return are not as profitable as those that do.
The more that customers returned, the more profitable they become.
They get more experimental, order more styles and brands etc, and overall buy more

The implications for this are far-reaching. It brings to mind research I was once presented by a direct marketing expert that found the more outrageous the offered no-quibble guarantee, increased sales result. Can you identify a similar ethos for your products and get buy-in to this from above in your sales operation?

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