The "clients first" positioning wasn't even part of the company's original design, explains CEO Tony Hsieh, a former Zappos early investor recruited onto the team by founder Nick Swinmurn (who left in 2006 to launch a new startup). "It was initially, almost by accident," says Hsieh, who now heads up operations with COO/CFO/Chairman Alfred Lin and Nordstrom vet Fred Mossler, recently elevated to a "no-title" position from director of merchandising. "Our whole philosophy is, rather than spend a whole lot of money in marketing, let's just put it back into the customer experience and let our customers generate that word of mouth and do the marketing for us."
That ethos translates to a lot of careful screening when it comes to hiring. All prospective "Zapponians" go through a rigorous two-part interview to determine if their skills are up to par and to discern whether or not they're a "culture fit," according to the company's ten "core values" (listed on its website). Once potential hires clear those gates, no matter what their department, they go through a four-week training session, during which they work in the Vegas-based call center and even stock shoes at the Kentucky warehouse. Upon completion, each newcomer is then offered $2000 (up 100% from previous years) to leave the company—another test to determine the true loyalists. "We put as much energy in planning and training our employees as other companies do planning their media," says Brian Kalma, director of creative services/brand management. "That allows us to feel more comfortable having every single employee be a direct contact with the customer. Every person is an advertising vehicle; with thousands of phone calls a day, mutiplied by 365, those are a huge amount of touch points with our customers."
What's the payoff? Today, 60% of Zappos customers are repeat buyers. Compared to its first year of business in 1999, when Lin says gross merchandise sales were negligible, the shoe seller is on track to hit the $1 billion mark for 2008 alone—not a bad chunk of the $40 billion total shoe market. Meanwhile, the e-tailer is starting to breathe down the neck of the Amazons, adding categories like housewares, clothing and electronics.
This, with very little help from traditional marketing. Only in the last few months did Zappos start running TV spots, arguably just window dressing compared to its robust online presence. Aside from its e-commerce site, CEO Hsieh keeps things personal with his customers and employees on his Twitter feed, where he's given out free shoes and other goods to some of his followers. Zappos also has its own YouTube channel, on which employees have posted a variety of webfilms showing them at work, but mostly at play—shaving their heads at a bbq, talking like pirates or marching through the office during one of many theme parades.
It might be hard to see where all the silliness–and fun–fits into the business plan, but "we believe that brand and culture are basically two sides of the same coin," says Lin. "Because of the internet, everything is so transparent these days. If you're internally a different company, what you project externally is not going to work."
Read about Audi, another of our 2008 Creative Marketers.