Teaching Methods and Higher Education Minder Chen Associate Professor of MIS Chair of the Business and Economics Program Martin V. Smith School of Business and Economics CSU Channel Islands minderchen@gmail.com or minder.chen@csuci.edu Web site: http://faculty.csuci.edu/minder.chen/ Course materials: http://faculty.csuci.edu/minder.chen/event/

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Zappos Founded in 1999. “A service company that just happens to sell shoes.” - Tony Hsieh, CEO of Zappos Zappos can cultivate a reputation for outstanding customer service to the point where it, too, can become a springboard into several markets. It rang up a record $1 billion in sales in 2008. Employees are referred to as “Zapponians”.

Customer Service Is Everything At Zappos.com, Customer Service Is Everything. In Fact, It's The Entire Company. We've been asked by a lot of people how we've grown so quickly, and the answer is actually really simple... We've aligned the entire organization around one mission: to provide the best customer service possible. Internally, we call this our WOW philosophy.

Case Study Questions Why selling shoes online is not considered a good e-commerce idea? What policies Zappos have to make it easier for you to buy shoes online? Why changed Tony’s mind to invest in Zappos (shoesite.com)? Why were the challenges in the early stages of Zappos company history? Why Amazon acquired Zappos? Why Zappos moved its headquarter to Las Vegas? Why Zappos logistic center at Explain the meaning of Zappos’s culture and how it foster its culture What are the major differences between Amazon and Zappos? What are the unique approaches that Zappos have taken that are against traditional wisdom? “Carry less and sale more” (drop-ship) vs. “Carry all” Outsource call center vs. in-house call center How is the performance measured for call center employees?

Assignment Questions 1. What are Zappos’ core competencies and sources of competitive advantage? How sustainable are they? What role does corporate culture play in these questions? 2. How important is next-day air shipment to the customer experience? Is it worth the cost? How might you change it in the cost-conscious environment facing the company in late 2008? 3. How would you expand the business? Would you add more products, more geographies, or by selling private labels? As you expand the business, how can the company become more profitable, particularly in light of the costs associated with the focus on service? 4. How would you expect the environment of a more cost-conscious consumer to affect Zappos’ business? What can Zappos do in such an environment to maintain sales growth? Source: Stanford Graduate School of Business, Case GS-65, Teaching Notes

Zappos Core Values Deliver WOW Through Service Embrace and Drive Change Create Fun and A Little Weirdness Be Adventurous, Creative, and Open-Minded Pursue Growth and Learning Build Open and Honest Relationships with Communication Build a Positive Team and Family Spirit Do More with Less Be Passionate and Determined Be Humble

10 rules for creating a customer-centric culture Make customer service a priority for the whole company. Make "wow" a part of your company' vocabulary. Don't measure call times, and don't force agents to upsell. Empower your customer service team. Don't hide your toll-free number. Have the entire company celebrate great service. Create a culture book. Find people who are passionate about customer service. Give great service to everyone: customers, employees, and vendors. Make customer service part of everyone's performance reviews. Source: http://decker.typepad.com/welcome/2006/12/zappos_10_rules.html http://crmweblog.crmmastery.com/2006/12/10-rules-to-creating-a-customer-centric-culture/ The Zappos.com mission statement is a simple one: “We are a service company that happens to sell _____.” What the online retailer sells is purposely left blank, according to Jane Judd, senior manager of customer loyalty. Best known for selling shoes, Zappos.com doesn’t want to be restricted by filling in that blank; during its seven years in business the $600 million company has added apparel, handbags, and accessories to its offerings. More important, using that mission puts the emphasis on service, right where Zappos.com management wants it to be. In a presentation at the North American Conference on Customer Management (NACCM), Judd shared her 10 rules for creating a customer-centric culture. 1. Make customer service a priority for the whole company. Every new hire — including the controller and merchandisers — takes the company’s two-week customer loyalty training program. Along with the basics of how to use the service systems, the training focuses on helping new staff embrace the culture by explaining how customer centricity is practiced at Zappos.com. 2. Make “wow” a part of your company’ vocabulary. “We have a ‘wow’ cycle,” Judd explained. That cycle includes offering new and existing customers great products at great prices, then delivering them with outstanding service. “It’s the ‘wow’ that generates referrals,” she said. 3. Don’t measure call times, and don’t force agents to upsell. Although management does track such metrics as average handle time, these numbers are not emphasized to agents. Zappos.com management wants its staff to focus on the customer by taking the time necessary to provide a great experience, Judd said. 4. Empower your customer service team. “We focus on delivering the best service possible, that’s why we call our service [team] the customer loyalty department,” Judd said. “We understand that creating long-term customer relationships is key.” The Zappos.com management team also believes that customer loyalty is an investment, not an expense, and communicates that attitude throughout the organization. 5. Don’t hide your toll-free number. Zappos.com’s toll-free customer service number is displayed at the top, left-hand corner of every page on its Web site. 6. Have the entire company celebrate great service. Zappos.com has 10 core values that “helped us celebrate great service every day,” Judd said. Those values include: deliver “wow” through great service, embrace and drive change, pursue growth and learning, and build open and honest relationships through communication. 7. Create a culture book. Each year Zappos.com founder Nick Swinmurn asks employees what it means to them to work at Zappos.com and why they want to be there. The answers are printed together in book form and distributed to the entire staff, as well as being made available to customers. 8. Find people who are passionate about customer service. “We look for people who fit our 10 core values,” Judd said. During bimonthly job fairs the company hosts, each candidate interviews with six Zappos.com executives. Anyone who gets a “yes” vote from at least four of the six is brought in for a second interview that includes questions and testing around the core values. 9. Give great service to everyone: customers, employees, and vendors. At Zappos.com this means being open and sharing information, Judd said. It also means that the primary focus is on the customer, not on competitors. 10. Make customer service part of everyone’s performance reviews. At Zappos.com employees are evaluated annually against the 10 core values. “This helps show who’s committed to deliver a great service experience,” Judd said.

Sold to Amazon It was announced on July 22, 2009 that Amazon.com would buy Zappos for $940 million in a stock and cash deal. Owners of shares of Zappos were set to receive approximately 10 million Amazon.com shares, and employees would receive a separate $40 million in cash and restricted stock units. The deal was eventually closed in November 2009 for a reported $1.2 billion. Softline vs. hardline goods Definition: A store department or product line primarily consisting of merchandise such as clothing, footwear, jewelery, linens and towels. Also Known As: Soft Goods Examples: The "Softer Side of Sears" campaign was aimed at bringing Sears' loyal hardlines shoppers into its softlines department, which accounted for 36 percent of full-line store revenue.

謝家華（左）與林君叡的辦公室根本連門都不設，頂上裝飾成熱帶雨林，還有猴子。 記者馮鳴台／攝影 Read more: 世界新聞網

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Business Week Customer Service Champ Consider No. 7, Zappos.com, the online shoe retailer whose devoted fans rave about its free shipping on both orders and returns. The retailer had typically upgraded both first-time and repeat customers to overnight shipping even though it wasn't advertising that perk. But starting in 2009, Zappos will no longer offer overnight upgrades to first-time visitors. Instead, CEO Tony Hsieh is moving those dollars into a new VIP service for Zappos' most loyal shoppers. Launched in December, the site, which for now can only be accessed by loyal customers who receive an invitation, promises overnight shipping and plans to offer earlier access to sales and new merchandise than the plain-vanilla site. (Repeat customers who aren't yet asked to join the VIP service will continue getting the overnight upgrade for now.) “ We decided we wanted to invest more in repeat customers," says Hsieh. "We're shifting some of the costs that would have gone into new customers." http://www.businessweek.com/print/magazine/content/09_09/b4121026559235.htm

The service is the product/brand. Shoes are commodities. Any the same shoes you buy at Zappos can be bought at ten other online shoe stores. The reason Zappos succeeds is that they are adding value to otherwise indiscernible products. The service is the product.

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