What Zappos Can Teach You About Competing and Winning

It’s an honor and a privilege to bring you some thoughts from bestselling author Dr. Joseph Michelli (author of The Zappos Experience and The Starbucks Experience) on how to reduce the risk of becoming a commodity. Enough of me… here’s Joseph.

Every business is at risk of becoming a commodity. So how is it that some travel agents still thrive after the advent of Priceline and Travelocity? Why do some companies maintain premium pricing while similar businesses have to resort to discounting to attract price sensitive consumers? And the most important question of all, how can YOU assure that YOUR business doesn’t fall into the commodization trap?

The recent recession has only reinforced the economic truth that brands that “wow” customers – thrive and survive! Conversely, brands that simply satisfy consumers are at the risk of extinction! While the lessons, I’m sharing here could’ve just as easily been drawn from my books about Starbucks, Ritz-Carlton, the Pike Place Fish Market, or the UCLA Health System, I’ll offer insights and tools courtesy of Zappos (The Zappos Experience: 5 Principles to Inspire, Engage and WOW).

Zappos is an online retailer who defied the odds and built an Internet empire, initially as a virtual shoe store and now expanding its inventory well beyond shoes alone. Zappos has always charged top dollar for its products and has succeeded primarily because they innovated an experience that consistently exceeds the expectations of customers, vendors, and people who simply encounter the brand.

To help you appreciate how Zappos might serve as a provocative benchmark for your customer experience, let me cover the 5 principles outlined in The Zappos Experience:

Serve a Perfect Fit

Let’s assume you have a job opening. Your final decision comes down to a choice between two equally qualified candidates. How do you decide which will be a better fit for your organization? The Zappos answer is “by determining which candidate best embodies the Zappos 10 Core Values.” These Zappos values serve as the filter for every decision made by the company’s leadership including the determination of the “perfect fit” job candidate.

The take away for most business leaders studying Zappos “serve a perfect fit” concept is that your company has to STAND FOR SOMETHING. This process of taking a stand begins with distinguishing your authentic values. It then requires discipline leadership to make all major decisions through the lens of those defined values while enlisting your people to defend and contribute to the growth of those values.

Make it Effortlessly Swift

Zappos places great emphasis on executing to “get it right” (delivering exactly what customers want the first time you serve them) and “make it easy” (reducing the overall effort required for customers to get their needs met). Zappos dedicates extensive resources in areas such as building a website with one of the fastest load times, answering customer calls swiftly and expediting product delivery (by not relying on manufacturers to drop ship product but instead purchasing inventory and shipping it from warehouses strategically placed near the worldwide air hub for UPS).

Zappos is a classic example of consumer loyalty built in part on the relentless pursuit perfect, quick, and effortless service.

Step into the Personal

The greatest insurance against commoditization is a personal relationship with your customers. Companies that seek an emotional connection without operational excellence might spark a short-term customer bond but that fascination quickly wanes and those companies wash out as fads. Conversely, companies that only “get it right” and “make it easy” often endure but are vulnerable to competitors who replicate the operational excellence while building the emotional engagement with those they serve.

Even in settings where nothing is for sale, Zappos staff members understand that they exist for happiness, wow, and long-term customer relationships. Zack Davis, who drives a shuttle bus for Zappos, notes, “Just like everyone else in the company, I have a very important job. I am in the relationship and kindness business. My relationships may only last from the time it takes for me to pick someone up at the airport to bring them to our headquarters for a tour but if I extend kindness and listen to people, their relationship with Zappos could last a lifetime.” When your shuttle drivers see themselves as more than transporters and are passionate about building brand loyalty through kindness, you are a service organization that is likely not to become commoditized.

S T R E T C H

Consistent with the Zappos core values “embrace and drive change” and “pursue growth and learning”, leadership at Zappos understands that in order to create innovative and relevant experiences for customers, Zapponians must constantly be given opportunities to develop their skills and push the company’s product offerings as well as service experiences. To that end, Zappos has developed the “Pipeline” team.

The Pipeline team more closely resembles a university than a traditional corporate training department. This curriculum of courses was developed at Zappos to address two overarching business questions: 1) what are the knowledge sets and behaviors needed to produce strong departments and leaders at Zappos? and 2) what should be offered to grow the culture and increase the happiness of Zapponians? The Zappos Pipeline serves to facilitate personal, team, leadership, and business growth.

Zappos leaders encourage employees to disruptively stretch the company’s current product lines and delivery mechanisms. As such, Zappos has grown from exclusively selling shoes to being a provider of bags, accessories, clothing, sporting goods and more. In fact, based on Zappos business success they have created, Zappos Insights (www.ZapposInsights.com) a business unit that offers training on the concepts discussed in this post and in The Zappos Experience.

Play to Win

Consistent with the core value “create fun and a little weirdness” much of the genius of Zappos leadership is the way they blend the fun into the work. Zappos understands that work made fun gets done. Moreover, work made fun creates energized, happy, and cohesive teams which in turn build energized, playful relationships with customers.

While Zappos pays at the median level for most positions, it uses additional resources to enhance the experience of Zapponians through small playful and regular events. These modest investments include such things as giving staff money and authority to playfully decorate conference rooms and incentivizing staff performance with fun activities including managers being willing to comply with fun requests from their teams (e.g. leaders rewarding team goal attainment by coming to work dressed as a garden gnome).

“Old school” managers are likely balking at the Zappos focus on short-term, daily fun. Increasingly, scientists, inspirational leaders, and staff members agree – in order for people to create and produce, they must be given space and opportunities tore-create, re-energize, and find enjoyment in the very setting where they spend the largest percentage of their waking hours.

How Zappified are you?

Now let’s bring this conversation back to you. What are your strengths relative to Zappos? What opportunities do you have to reduce your risk of commoditization through cultural enhancement, strengthening your platform of streamlined service delivery, making personal connections, stretching your brand, and/or playing to win?

I suspect that if you take one idea from this discussion, talk about it in your organization, generate ideas, and execute improvement, you will go a considerable distance away from commodity and sail in the direction of greater “beloved brand” status.

So what idea resonates most for you? The time for action is now, lest customers decide they don’t really need you or a Zappos-like competitor happens along.

About the author: Joseph A. Michelli, Ph.D., is an author, internationally sought-after speaker, and business consultant who has been described as “catching what is right in the world and playfully sparking people and businesses to grow toward the extraordinary.” In addition to writing best-selling books about enduring business principles, Dr. Michelli hosted an award-winning daily radio program in Colorado Springs, Colorado for over a decade.