When a company believes in its brand, customers will believe in it, too.
Posted Apr 18, 2008
NEW YORK -- With all the disparate marketing messages fighting for the spotlight, the Association of National Advertisers' (ANA) Brand Innovation Conference arose precisely because the idea of the "brand" was actually getting lost in the mayhem. This week, going on its second year, the event gathered nearly 200 registrants in a unique setting -- the Hard Rock Café here in Times Square. Technology has changed, and continues to change, the landscape of marketing, said Bob Liodice, chief executive officer of the ANA, forcing marketers to constantly reinvent their strategies. The key, however, is to innovate without losing sight of the brand message.
Speakers from companies representing industries across the board -- American Express, Procter & Gamble, Lee Jeans, Ford Motor Company, among others -- shared their experiences creating meaningful and long lasting brand recognition. Tony Hsieh, chief executive officer of online retailer Zappos.com, shared his belief -- and the success he's obtained -- by building a brand that is focused on the concept of unrelenting customer service.
In terms of direct offerings, Hsieh told attendees, Zappos.com gives customers:
At Zappos, contact center agents don't follow scripts. As if ripped from a scene out of Miracle on 34th Street, where Macy's sent customers to its rival for a better deal, when a Zappos.com item is out of stock, agents will help customers find it on a competitor's site. "Even though it's a lost sale, customers will remember that [service]," Hsieh said, adding that Zappos is always trying to raise the bar. With returns, for example, it started as 30 days, then 60, then 90 -- and then finally, 365.
- 24/7 customer service;
- a 1-800 contact number on the top-left corner of every Web page;
- free shipping;
- free return shipping; and
- a 365-day return policy (for unworn merchandise, of course).
"For some reason, it's psychologically sexier to chase acquisitions," Hsieh said. But, he said, 75 percent of the company's revenue is from existing customers. As it continues to uphold its belief in customer service, Zappos has been able to rely primarily on word-of-mouth marketing, spending only on advertising that pays for itself within the first buy (80 percent to 85 percent of advertising spend goes into online keywords, he said; the balance targets offline advertising, such as magazines and stickers inside bins at airport-security checkpoints).
It's often said that marketers are so focused on hitting their numbers that they don't have time to focus on the long term. It took approximately eight years before Zappos.com grossed a substantial profit -- and by last year profits reached a not-so-modest $800 million. (The company says it's on track to hit $1 billion by the end of 2008.) For years, the company has been focused on reinvesting their earnings into customer service, Hsieh said. All the money that would have been spent on marketing goes into services like over night shipping and better call center training -- areas that, Hsieh said, will always be the last to be cut even during an economic downturn. "Chase a vision," Hsieh told the audience. "Not money." If you're doing something you're passionate about, the money will be sure to follow.
Quality customer service undoubtedly begins within the company. Hsieh emphasized the importance of transparency -- "Be real, and you will have nothing to fear." Sales data is openly shared with employees and vendors. While Hsieh is sure his competitors will have access to this information, he believes that having 1500 vendor partners helping him monitor the activity of his business is worth a few competitors peeking in. The company also has an "Ask Anything" newsletter where employees ask questions that are answered with complete honesty.
Finally, and perhaps most importantly, Zappos.com is built upon a solid company culture. The 10 "Commitable Core Values," Hsieh said, are essentially grounds for hiring and firing. This culture extends from high-level executives, to the call center, to the warehouse workers earning minimum wage. He recalls an instance where a woman returned a wallet, and inside, she had left $150. A few days later, the company received a letter of gratitude from the woman. The warehouse had mailed her back the money.
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