Zappos assignment for Business Ethics in customer satisfaction

1. Zappos
Delivering Customer Satisfaction
Alexis McDonald
February 15, 2015
Managerial Ethics

2. History in Happiness
 Founded in 1999 by Nick Swinmurn, it started as a shoe website
dedicated to best selection and service
 In 2000, Tony Hsieh took the helm as the CEO
 By 2004, Zappos moved to Las Vegas where it held its own inventory as
well as housed its own call center and became known for its unique
work environment and approach to customer service
 In 2007, company reached $840 million in annual sales
 In 2010, Amazon bought the company for $1.2 billion but allowed the
company to operate independently and kept Hsieh as CEO
 Company reorganized into 10 companies as the Zappos Family

3. 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 a positive team and family spirit.
• Do more with less.
• Be passionate and determined.
• Be humble.

4. Customer-Focused Business Model
 Make the shopping
experience addicting and
enjoyable by streamlining
and customizing product
view
 Free shipping to customers
 Free shipping
 100% Satisfaction Guarantee
 Free 365 day return policy
 Believes great customer
service is an opportunity to
make the customer happy
 Encourages customer
interaction (person-to-
person)
 Reps make decisions rather
than depend on scripts
 Customer relationships to
build loyalty
 Relies on word-of-mouth
marketing

5. Transparency
 Open and honest relationships with
employees and stakeholders
 Social media posts about company
actions
 Employees receive performance
information to share with others

6. Insights
 Successful business model is showcased in
two day visit consisting of tours and
workshops
 Insights subscription featuring business
practices in videos and blogs

7. Corporate Culture
 One-of-a-kind culture which attracts
talented employees who believe in brand
power development, great customer
service and hard work ethic

8. Work Environment
 Fun work environment
 Cultural and technical interviews
 Five weeks of training (two weeks on the phone, one week in
order fulfillment)
 Continuing studies
 100% paid medical plan for employees, 85% for dependents
 Flex spending, pre-paid legal, 40% employee discount, free
snacks and lunches, paid volunteer time, life coaching and car
pool program
 Compensation pay model for Customer Loyalty Team
 Employee-to-employee reward cards
 Team bonding and building exercises
 Culture book

9. Social Reponsibility
 Donates to charities like Shade Tree and
Nevada Childhood Cancer Foundation
 Environmental focus through Zappos LEAF
and Recycle Days as well as links to eco-
friendly products
 Recognized as Best Company To Work
For, Top 50 Innovative, Top Customer
Service Champs, and World’s Most Ethical
Companies

10. Past Ethical Issues
 2008 Sequoia Caprial forced Hsieh to layoff of 8% of corporate
employees
 2009 Amazon acquired to help Hsieh more control of the
company
 2011 More Than Shoes Campaign’s racy ad
 October 2011upgrade error to processing system led to $49.95
pricing for 6 hours leading to $1.6 million loss
 January 2012 customer information theft and disconnected
call center blemished its customer service record

11. Focus and Approach
Zappos maintains a focus on keeping their stakeholders happy.
From their “fun” environment and employee incentives to their
desire to keep their customers loyal, happy and addicted to their
shopping experience. In addition, Hsieh keeps the transparency
of their internal movies by posting to social media outlets. The
company relationships have developed with their stakeholders
and aligned along with the organization’s standards for an ethical
corporate culture.

12. Competitive Advantage
Zappos has created a niche market for themselves in the e-
commerce sector. By offering several customer-focused options,
it has created long-term customer relationships where price does
not always matter. A vast product selection, free shipping to the
customer as well as free shipping and full returns shipping and
refunds for 365 days coupled with outstanding customer service is
what sets the company a part from the rest.
This lends itself to the first core value of “Deliver WOW through
service.”

13. Ethical Risk Management
Ethical issues have been successfully managed. Hsieh
implemented and maintained full disclosures of company
changes with explanations of additions, changes, and
improvements through social media outlets. The company offers
tours and workshops to other companies on how they stay
innovative which shows they do not see others as competition but
as business partners. By hiring the right employees for their wacky
environment, their core values and corporate culture is shared by
all which prevents unethical practices.
Future potential risks lie in the search for zany employees as the
company continues to expand, the quest to stay innovative and
their computer security.

14. Conclusion
According to Ferrell, Fraderich and Ferrell (2013), Zappos
remains loyal to serving its customers and employees. It
continues to see great leadership by Hsieh as a key
success factor. Hsieh will continue to inform his
stakeholders of all proceedings with the company which
strengthen the ethical culture of the company and trickles
down to his employees. He offers a clear communication
of the values and goals for his organization. Hsieh
represents integrity, fairness and honesty that all company
leaders should possess.

15. References
Ferrell, O.C., Fraedrich, J., Ferrell, L., (2013) Business Ethics, Ethical Decision Making and
Cases, Stamford, CT: Cengage Learning, 10th edition.