If you’re gonna fail, fail fast

By: Magda Walczak

zappos_hsiehEveryone has heard about Zappos phenomenal company culture, which helps Zappos live up to its reputation for having excellent customer service. Yesterday I had the opportunity to attend a briefing with the head of Marketing at Zappos, which inspired the following golden nuggets of wisdom and give a bit of insight as to what makes Zappos click.

Focus

Zappos didn’t enter the market thinking “let’s be the best online shoe store” because that’s too limiting as a business. They started with “let’s be best at customer service.” Now that Zappos is expanding, it’s easy for them to retain their core competency of customer service excellence while adding other product lines like clothes. What does your company focus on? If you succeed at the thing you want to be good at, what comes next? Can you take it to the next level or is it limiting your potential for future growth? Are you focusing on the right thing?

If you’re gonna fail, fail fast

Zappos performed several failed experiments such as selling consumer electronics (margins were too low to allow them to retain their high level of customer service) or international shipping (costs were unsustainable). Each time, they learned their lesson quickly so that they can move on and from their mistake and focus on things that are working well, thus getting rid of distractions and limiting costs. Does your company let things go at the right time or do people’s egos let bad initiatives linger on?

Loyalty – take care of your customers

While new customers and growth are important, don’t forget who made you successful in the first place. Retain your existing customers and keep them happy and they’ll tell their friends. How much does your company care about retention versus new business acquisition?

Start with culture and values

Culture starts at the top with company leadership. Usually the CEO’s personal values are in alignment with the overall company values. The CEO will probably hire upper management whose values also match. As companies grow, companies sometimes forego cultural fit in favour of recruiting more people, faster. This could have irreversible repercussions. The sooner you recognise the importance of company culture in recruitment, the better off the company will be. Does your company cultivate the common thread of culture and values and use it to its advantage?

Transparency and trust

At Zappos all employees have access to company data like sales figures, financial information, etc. Most companies would see that as a risk for leaking sensitive information out to the public. But Zappos employees self select. By the time they apply to work at Zappos they know what kind of company it is and they identify with it. Half the screening process during recruitment is for cultural fit. Employees are offered $2000 to leave Zappos upon completion of their probation period. By the time someone is an employee, Zappos is confident they’ve got the right person on board, someone they can trust. Does doing something like this at your company send shivers down your spine? How many of your employees would you trust with sensitive data? Do you have the right people (people you trust) working for you?

No sales or discounts

Zappos doesn’t do discounts or sales. The theory goes that if you discount something once, people won’t pay full price for it ever again. This doesn’t apply to everyone, but if you can get away with never discounting your product, why not?

Don’t overpromise and underdeliver

An example used by Zappos was their experiment with overnight shipping. Due to their volumes and arrangements with shipping companies, they are able to offer overnight shipping on all orders. Since they don’t have control over the whole value chain of the shipping process, they don’t offer overnight shipping. If there’s a snowstorm and the shipping company’s planes can’t take off, then Zappos won’t be able to keep their promise to their customer. Instead, they promise standard delivery times, but they surprise a lot of customers with overnight shipping. They’re under-promising and over-delivering instead of the other way around. It’s not about doing everything for the customer. It’s about setting expectations and meeting them. Does your company have a lot of disappointed customers? How many of them are upset because their expectations were not set correctly?

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Always hungry. Nuts for dogs. Love to travel. I write about marketing, food, web, travel and whatever else strikes my fancy.

2 thoughts on “If you’re gonna fail, fail fast

  1. Magda, Great post! I can imagine that some of the things we do may seem a bit intimidating, but you mailed it right on the head. It is all about getting the right people and focusing on the company values.

    You can get a closer look at our culture and how it affects our business everyday by checking out the videos on http://www.zapposinsights.com. There is a subscription service for folks who want a really deep look!

    Our blogs (http://blogs.zappos.com) also reflect our values and show the everyday goings-on!

    thanks for the post!

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