Opening Case HIGH MOTIVATION RESULTS IN EXCEPTIONAL CUSTOMER SERVICE AT ZAPPOS How can organizations create a motivating work setting? Online retailer Zappos is about as uncorwentional as 3 company can get The CEO works from 2 small messy cubide, accountants can be seen running Finewcod Derby car races, a conference room decorated by 2 team resembles a log cabin, vistors touring the company are arested by the sound of cowbels and homs, and managers are encouraged to socialize with their subordinates. “These ate just a few of the ways in which Zappos is distinct. Founded in 1999 as a struggling ‘online shoe store, Z3pp0s survived the dot-com bust to have sales of $1 bilion in 2008 and be ranked on Fortune magazines list of the “ne Hundred Best Companies to Work For" in 2003 and 2010; in 2010, Zappos was ranked 15H on the list and in 2009, 23? ‘Amazon.com bought Zappos in 2009 for shares worth $1.2 billon.* New a wholly-owned subsidiary of Amazon, Zappes continues to be lead by CEO Tony Hsich who was the intial primary investor who kept Zappos going in the early days as has served as CEO since 2000.* What sets Zappos apart from other online retailers is @ focus on creating a motivating work setting in which motivated and happy employees provide outstanding service to customers Hsieh's own early experiences as an entrepreneur gave him insight into the importance of being highly motivated and happy at work. After craduating with a computer science degree from Harvard, Hsieh founded a company called LinkExchange which sold advertising and helped small Web publishers swap advertising on each others’ sites. When, Hsich was 24 years old, Microsoft bought LinkExchange for $265 milion. In spite of this outstanding and early sucess, Hsieh became somewhat troubled because he was na longer that excited about going to werk and the people he dealt with seemed more concerned with making a lot of money than in building something meaningful ® This experience helped Hoein realize he wanted to build something that was meaningful and long-lasting and create 2 work environment in which motivated and happy employees would be eager to come to work. Zappos was actualy one of over 25 start-ups that Hsieh and his former classmate and partner AMfed Lin invested in via Venture Frogs, their own venture capital fund. During the dot.com bust, many of these star-ups failed while some succeeded such as Ask.com and OpenTable. Zappos ise was struggling and Hseih stepped up to the plate with more funds and an active involvement in managing the start-up 7 In addition to selling shoes, Zappos now sels an extensive range of merchandise ranging from watches, jewelry, clothing, and handbags to housewares ® The mefchandise itself not a distinctive asthe outstanding service provided to customers ° Zappos has 2 365-day retum policy and customers receive free shipping for both purchases and returns. The Zappos Tony Hsieh, president, founder and chief executive (of Zappes.com inc. focuses on creating a motivating ‘environment for employes.website clearly features a toll-free telephone number that customers can call 24 hours a day, 7 days a week, to talk with a Customer Loyalty Team (C.L.T.) member.'? C.LT. members have high levels of autonomy to satisfy customers, keep them happy, and provide exceptional service. They are not given scripts to read from and their call times are not monitored. They have the autonomy to make decisions on their own ranging from providing customers who had problems with their purchases refunds without getting prior authorization from a manager to having flowers sent to a customer who had a family member die. They strive to make personal connections with customers and they view each customer they talk with as an important human being that they want to keep happy. Thus, team members use a variety of skills to be truly helpful to customers. Team members send personal notes to their customers and some calls can last for hours.'' The positive responses team members receive from customers confirms that they are, in fact, providing excellent customer service and treating customers as they should be treated. Given that the provision of outstanding customer service that leads to repeat business and excellent word cf mouth advertising is at the heart of Zappos’ approach to business, team members know how significant and important their jobs really are."? Importantly, Hsieh and other managers at Zappos strive to create a motivating work setting for employees in which they will be happy, highly motivated, have fun, and be eager to come to work each day.'? Thus, they continually strive to uphold Zappos’ Core Velues and distinctive culture. The Core Values of Zappos are "1. Deliver WOW Through Service: 2. Embrace and Drive Change; 3. Create Fun and A Little Weirdness; 4. Be Adventurous, Creative, and Open-Minded; 4. Pursue Growth and Learning; 6. Build Open and Honest Relationships With Communication; 7. Build a Positive Tear and Family Spirit; 8. Do More With Less; 9. Be Passionate and Determined; 10. Be Humble.” '4 en that C.LT. members and all employees utilize a variety of skills on their jobs, employees at Zappos receive extensive training. New C.LT. employees who will be answering calls have 4 weeks of training: 2 weeks in a classroom setting followed by 4 weeks training actually answering calls.’® In fact, all employees are encouraged to continue to learn and develop at work. Employees who have worked at Zappos for 2 years or less receive over 200 hours of classroom training and development during work hours and read nine business books. Employees with more experience have training and development opportunities on a variety of topics ranging from effective pubic speaking to financial planning. A company library supplied with multiple copies of books on business and seff development provides employees with the opportunity to take and read books to further expand their knowledge and develop their skills.'° And employees are given the opportunity to use new skills on the job. All in all, Hsich and other managers at Zappos have succeeded in creating a motivating work setting in which employees really do provide exceptional service to customers and are happy to come to work.'7