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Customer service secrets from Zappos

By Sarah Lindner | Saturday, March 8, 2008, 01:59 PM

Zappos.com is known for outstanding customer service. Tony Hsieh, the CEO of the shoe (and now clothing, makeup and electronics) site shared some of the principles that have worked for the company at a session called “Top Ten Lessons Learne din E-Commerce.”

E-commerce businesses are built on repeat customers. Hsieh says Zappos focuses on building customer loyalty.
Word of mouth really works online. Hsieh says word of mouth is the No. 1 way Zappos gets new customers.
Don’t compete on price. Hsieh says Zappos tried things like offering coupons, but found out that the new customers they got through coupons did not become loyal, repeat customers.
Make sure that your Web site inventory is 100 percent accurate. Getting a “your item is not in stock” message drives off customers.
Centrally locate your distribution. Zappos picked Kentucky for its distribution center because it enabled the company to offer faster shipping to more customers, while at the same time costing Zappos less money.
Customer service is an investment, not an expense. Zappos doesn’t have scripts for its call center employees; nor does it try to minimize call time. Hsieh says measures like that save money in the short term but don’t create long-term customer relationships.
Start small, stay focused. For example, Zappos has started selling clothing but is not making a huge push in this direction. Instead, they’re building slowly, taking their time figuring out how clothing sales will work on the site.
Don’t be secretive and don’t worry about competitors.
You need to actively manage your company culture. Zappos has a book that spells out its company culture, and bases a big part of hiring and evaluating on culture fit.
Be wary of so-called experts. Hsieh says most of the consultants they worked with on various areas were a big waste of money and time. He emphasized that not all consultants are bad, but that no one knows your business as much as you do.