Running head: ZAPPOS CASE STUDY ANALYSIS 1

Zappos Case Study Analysis

Anna C Nail and Juan M Carracedo

Anderson University

Author Note

Masters of Business Administration program

Anna C Nail- anail147@andersonuniversity.edu

Juan M Carracedo
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Abstract

Customer service has become more and more important, as more people are employed in

the service industry as opposed to the manufacturing industry. Customer service is an aspect of

the supply chain that is more intangible, but is nonetheless, still very important (Prater and

Whitehead, 2013). Zappos, an online, direct-to-consumer company primarily known for selling

shoes (they have recently expanded in the last decade to include other articles of clothing), is

well known for their customer service and company culture (Frei and Ely, 2009). In this paper,

Zappos’s customer service practices will be examined by looking at SERVQUAL. Their

company culture and management decisions that have gotten them to where they are today will

also be examined.

Keywords: customer service, Zappos, SERVQUAL

Zappos Case Study Analysis

Zappos’s mission is simple: “to live and deliver wow (Zappos, 2020).” A company

known for their exceptional customer service, and unique company culture, Zappos is a source of

inspiration to many companies looking to improve customer loyalty and boost employee morale

(Frei and Ely, 2009). In this case study, Zappos’s exceptional customer service qualities and

unique company culture will be analyzed, along with the organizational choices that have gotten

Zappos the recognition they have received as one of the most customer-oriented companies in

the world.

Zappos & SERVQUAL

In the 1980s, there was a culture shift service companies became more prevalent than

manufacturing companies. Because of this, many researchers tried to define quality service,

which proved to be a hard task for many. However, in 1985, three researchers developed a

conceptual model of service quality, SERVQUAL. The researchers found that there are five

main dimensions customers consider when evaluating service quality. These dimensions are

tangibles, reliability, responsiveness, assurance, and empathy. At Zappos, they clearly address

three of these SERVQUAL dimensions in the way they serve their customers.

Zappos customer service representatives are reliable, which is the most important

dimension to customers (Arlen, 2008). “Reliability involves consistency of performance and

dependability.” This encompasses many different areas, mainly, billing accuracy, the keeping of

correct records, and timely service (Parasruman, Zeithaml, and Berry, 1985). At Zappos, the call

center is open 24/7, and the team always acknowledges mistakes and works to get things right

for their customers, including upgrading their shipping at no cost. Zappos customer service team

is also responsive, meaning they are always ready and willing to help their customers, and they
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quickly provide service. At Zappos, their 24/7 hours and talkative service team makes them a

great example of a responsive company. Customer service representatives have been known to

talk with customers on the phone regarding a variety of issues such as shipping,navigating the

website, returns, etc. For example, they allow customers to return items after 365 days, and they

also always upgrade customers’ shipping for free, if asked (Frei and Ely, 2009).

Megan Petrini, a customer service trainer/facilitator at Zappos Insights said “We want to

distinguish the service experience for every customer, on each and every phone call (Solomon,

2018). The quote above relates to the SERVQUAL dimension of empathy, meaning that at

Zappos, they are always tuning in to the customers’ needs by providing individualized service.

At Zappos, employees are encouraged to spend as much time as needed with a customer in order

to serve them well. For example, one of the call center representatives talked to a customer for

seven hours. The customer service team is also allowed two hours during their ten hour shift to

eat lunch, get water, or they can write letters to customers, which they are also known to do (Frei

and Ely, 2009).

Zappos’s Company Culture & Its Effects on Service Quality

The culture of a company is the soul of the firm. A “positive” culture could be what

decides if a firm could be successful or on the other hand, if it’s a negative culture, destroy it.

Company culture entails the firm environment, its mission, employees, goals (Doyle, 2020) and

many other things that might not be seen or thought as important.

The values and mission statement are the pillars of any firm. These are the “guidelines”

by which employees stand by. They are also the first step to create a healthy organization or a

positive culture. By having clear values statement the firm attracts employees that want to work
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under these values, therefore the company; making it seem like the company has a “personality”

for itself. The personality of the firm translates into the environment in which employees work

daily and the relationship within one and another. Employees that work in a healthy environment

tend to be happier, which translates “[…] to more productivity, and when a business is more

productive, that means it is working faster; and when it works faster, it can get a leg up on the

competition […]” (Patel, n.d.).

Company culture starts at the top with the leaders of the firm; they must lead by example,

so employees follow. Zappos established a healthy culture by making managers interact with

employees outside the firm, creating friendships. The firm also put their employees needs always

first, such as in the warehouse where a bigger fan was installed so workers could have better

working conditions; in the same warehouse food is provided free to workers making them feel

appreciated (Frei and Ely, 2009).

“The workplace should not be something that people dread every day. Employees should

look forward to going to their jobs” (Patel, n.d.). This is what Zappos has created by making

their employees feel appreciated and developing relationships within employees and managers.

The workers do know the company puts them first therefore they are happy to go “the extra

mile” for the firm.

Zappos emphasized on providing “wow service” to customers and this is only possible

due to the culture of the firm. This service (wow service) starts by making the workers feel like

they are at home so when they speak to customers, they do it happily.

Zappos culture was described as energetic and fun (Frei and Ely, 2009). This is an

employee focused culture. It has been proved efficient for the firm to focus on employees first,
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the customers enjoy the service provided by the workers when they call with any issues. This

creates customers to come back and recommend the service to others.

Decisions Designed for Superior Customer Service

The employee focused culture made it possible for each worker to go into work happy

every morning at Zappos. But this was not always the case, in 2009 the firm started focusing

more on customer service and culture. This decision and many others were made by the CEO

and resulted in superior services, due to the happiness of the workers.

“[…] We only hire happy people and we try to keep them happy […] (Frei, 2009). That is

the starting point for any successful company. Later the Hsieh decided that the core values from

the firm needed to be done with employee support, which are the ones that are held accountable

under these; from the feedback of each employee and after a year-long process Hsieh created 10

core values. This decision to involve the employees is what makes the company superior over

competitors. “Our websites, policies- all can be copied, but not our special culture” (Frei, 2009).

Another decision that helped Zappos become successful was the adaptation of the hiring

process, to fit employees into the firm’s culture. This adaptation to the hiring process included

asking applicants “for their personal theme song, to rate themselves on a “weirdness” scale and

to assess how lucky they considered themselves to be” (Frei, 2009).

Orientation and training are provided to all new hires, it lasts four weeks and it’s focused

on customer care no matter what position the employee will work. Management implemented a
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system to “filter” uncommitted new hires by offering them $2000 to leave the company (Frei,

2009).

In 2008 a process was created to help employees go from entry-level jobs to the highest

level in management. This gave workers the chance to grow within the company and fulfill their

aspirations without having to leave the firm. This idea helps keep the employees from leaving

and once an employee has reached a high-level position, they have been through all the “ranks”.

The process consisted of 225 hours of “core level” training including 160 hours of loyalty

training and courses in effective communication, coaching, and overcoming conflict (Frei, 2009).

The decision on how to measure calls provided to customers by a worker is another

reason why the company has succeeded. Zappos does not evaluate CLT members by using

industry metrics such as call handle time, or cost per contact. The firm evaluates performance

based on customer feedback, after all, if the service was indeed “wow” the customer will go

provide feedback. By doing so the workers don’t have the pressure of being measured by metrics

that at times are not fear, allowing the workers to work relaxed.

These decisions made by management have increased the quality of life within the

company, which ultimately increases the quality of the service provided. At the end of the day

every dollar that is invested in the employees, comes back.

References

Arlen, C. (2018, July 2). The 5 Service Dimensions All Customers Care About. Retrieved
February 5, 2020, from http://www.serviceperformance.com/the-5-service-dimensions-
all-customers-care-about/

About Us. (2019, June 7). Retrieved February 6, 2020, from

https://www.zappos.com/about/

Doyle, A. (2020, January 19). The Definition of Company Culture. Retrieved from The

balance Careers: https://www.thebalancecareers.com/what-is-company-culture-2062000

Frei, F., & Ely, R. (2009). Zappos.com 2009: Clothing, Customer Service, and Company
Culture. Harvard Business Review.

Parasuraman, A Parsu & Zeithaml, Valarie & Berry, Leonard. (1985). A Conceptual Model of

Service Quality and its Implication for Future Research (SERVQUAL). The Journal of

Marketing. 49. 41-50.

Patel, N. (n.d.). The 4 elements that make great company culture. Retrieved from Neil

Patel: https://neilpatel.com/blog/great-company-culture/

Prater, E., & Whitehead, K. (2013). An Introduction to Supply Chain Management: A

Global Supply Chain Support Perspective. New York: Business Expert Press.

Solomon, M. (2018, Sept. 5). How Zappos Delivers Wow Customer Service on Each and Every

Call. Retrieved February 6, 2020 from

https://www.forbes.com/sites/micahsolomon/2018/09/15/the-secret-of-wow-customer-

service-is-breathing-space-just-ask-zappos/#6c8eea191b2c