Zappos is a good company to model for the real estate industry. Sure it sells shoes, while we deal in homes. Sure its sales cycle spans from days to weeks, while ours spans years. And yes purchasing shoes over the Internet is easy to do with a credit card, whereas purchasing a home–typically–requires a mortgage and is not typically purchased over the Internet. So why should we model Zappos? Because in the words of their founder and CEO:

“Building a brand today is very different from building a brand 50 years ago. It used to be that a few people got together in a room, decided what the brand positioning was going to be, and then spent a lot of money buying advertising telling people what their brand was. And if you were able to spend enough money, then you were able to build your brand.

It’s a very different world today. With the Internet connecting everyone together, companies are becoming more and more transparent whether they like it or not. An unhappy customer or a disgruntled employee can blog about bad experience with a company, and the story can spread like wildfire by email or with tools like Twitter.

The good news is that the reverse is true as well. A great experience with a company can be read by millions of people almost instantaneously as well.

The fundamental problem is that you can’t possibly anticipate every possible touchpoint that could influence the perception of your company’s brand.

At Zappos.com, we decided a long time ago that we didn’t want our brand to be just about shoes, or clothing, or even online retailing. We decided that we wanted to build our brand to be about the very best customer service and the very best customer experience. We believe that customer service shouldn’t be just a department, it should be the entire company.”

Here’s a short history of their revenue trajectory, taken from their CEO blog, where they hit their 2010 goal in 2008:

  • 1999: Almost nothing
  • 2000: $ 1.6 mm
  • 2001: $ 8.6 mm
  • 2002: $ 32 mm
  • 2003: $ 70 mm
  • 2004: $184 mm
  • 2005: $370 mm
  • 2006: $597 mm
  • 2007: $840 mm
  • 2008: Over $1 billion (goal)

Why this trajectory while they faced such stiff competition from Amazon, Costco, etc? Because they mapped the customer experience and figured out the key points in the customer service lifecycle that required the ”human touch.” Additionally, they’re creative marketers. For example, when they launched their overnight shipping they knew that they could not do this for everyone; so in 2006 they got creative:

“Tony Hsieh, the CEO of Zappos.com, e-mailed me to clarify the upgraded shipping policy. In Tony’s words: “I just wanted to clarify that we don’t actually do the surprise upgrade to next day air for all customers. Instead, we semi-randomly upgrade orders for most of our repeat customers. There are a few that get next day air, and many get 2nd day air. Our long term goal is to get to next day air for everyone, but we’re not quite there yet.”

While this qualifies as a marketing point of brilliance, it’s mere icing on the cake. And at Zappos they bake their cake by focusing on customer service. It all starts with their hiring process:

“At the end of the first week of training, we make an offer to the entire class. We offer everyone $2000 to quit (in addition to paying them for the time they’ve already worked), and it’s a standing offer until the end of the fourth week of training. We want to make sure that employees are here for more than just a paycheck. We want employees that believe in our long term vision and want to be a part of our culture. As it turns out, on average, less than 1% of people end up taking the offer.”

To get a sense of the ingredients they use to bake their cake, watch this slideshow their CEO recently delivered at the 2009 SXSW conference and one he delivered last year at the same conference.

Here’s an annotated bulleted list of take-aways from these presentations with particular salience for the real estate industry:

  • Your eCommerce business is built on repeat customers
  • Don’t compete on price
  • Customer service is an investment not an expense
  • Figure out your values and company culture and then actively manage this culture
  • Give your employees a vision and higher purpose beyond money and profits
  • Commit to transparency
  • Be interested rather than trying to interesting
  • Research shows that vision, meaning, higher purpose (i.e., being part of something bigger than yourself) leads to happiness

Looking at these aphorisms at a high-level, it seems to me that real estate firms that have a 365 degree model of their customer service life cycle aligned with a core understanding and belief in the value of their brand with respect to their employees and clients, and reinforce this value in terms of how they motivate, train, and compensate their employees in a manner that aligns with promoting superior client engagement, will continue to thrive. What’s particularly telling about what Zappos has done is that at the inception of its brand they focused on setting a goal of providing the very best customer experience, and their revenue numbers show that likely most aspects of their operational infrastructure work towards ensuring that this goal is met. Next week at LeadingRE’s event of the year, I’ll delve a bit deeper into these issues. Hope to see you there.



Posted By: Eric Bryn