Reference no: EM133201244

Discussion Post: Zippos Traits of Being a Customer Centric

I. Zappos' Culture of Customer Service

As this online shoe retailer's website proudly boasts, "If you are looking for the best service and the best selection of shoes, clothes, and handbags, shop at Zappos.com!" Thousands of customers would agree, and have subsequently pledged their loyalty to this popular e-tailer. Much of Zappos success has come from customer referrals that have been posted on blogs and picked up by authors of popular trade books such as A Complaint is Gift.

One such story involves a woman who purchased seven pairs of shoes from Zappos for her mother who was terminally ill. The mother had lost a lot of weight throughout her illness and the daughter was no longer sure of the correct shoe size. When placing the order, the daughter ordered different sizes of the same shoes so that the correct size would be included in the order. The mother died shortly after the shoes arrived, and the daughter (occupied by more important thoughts) missed out on Zappos' 15-day free return policy. A thoughtful customer service representative, remembering the daughter's order and that the shoe size was a guess, contacted the customer and asked her if she would like to return any of the shoes. After learning of the customer's mother's death, the representative made arrangements with UPS to go to the women's house and return the shoes free of charge. In addition, Zappos sent the customer a huge flower arrangement the following day. Overcome with the company's kindness, the daughter immediately posted a message online that read, "I burst into tears. I'm a sucker for kindness, and if that isn't one of the nicest things I've ever had happen to me, I don't know what is. So...IF YOU BY SHOES ONLINE, GET THEM FROM ZAPPOS. With hearts like theirs, you know they're good to do business with."

Online or offline, companies that have a heart are rewarded with consumer loyalty. The woman's comment has been linked with thousands of other websites, and discussed in hundreds of blogs by people referring to Zappos heart. It's a great story and exemplifies how online service providers can connect with their customers through simple acts of human kindness. This ABS News profile YouTube Video "Zappos Culture of Customer Service" of Zappos, as well as this commentary YouTube Video "Customer Service Secrets That Made Zappos Successful" from CEO Tony Hsieh on Zappos' approach to customer service provide additional insights.

Source: Jane Barlow and Claus Moller, A Complaint Is a Gift (San Francisco, CA: Berrett Koehler Publishers, Inc., 2008) pp. 33-34.

i. Based on the video, 75% of Zappos customers are repeat customers. What are the major traits that have led to Zappos' success?

ii. Conduct online research about how Amazon.com acquired Zappos. Discuss the benefits and downfalls of this acquisition.

II. Defection Management at AOL

The key to defection management is the creation of a zero defections culture within the firm. Everyone in the firm must understand that zero defection is a primary goal of the organization. To establish this goal, the firm's first step in the defection management process is communicating to its employees the importance of retaining current customers and the benefits obtained by reducing defections. The chapter discussion outlines the importance and benefits of customer retention that should be conveyed to all employees. Did this AOL employee in this YouTube Video: "Cancel AOL" go too far?

i. Based on the video, is AOL trying to increase customer retention or customer loyalty? Please explain.

ii. Do you believe the employee's behavior is the result of the employee's personality or company policy?

iii. What were the consequences of this employees actions for the employee, for current and prospective customers, and for the organization?

III. The Chick-fil-A Song

Although many business people may use the terms loyalty and retention interchangeably, for our purposes customer loyaltyreflects an emotional attachment as well as a business attachment to the service firm. As one Harvard service guru explains, "It's not enough to have [customer satisfaction]. You need the hearts and minds of the customer to close the loyalty gap." When a service firm has no competition, loyalty matters less since customers have nowhere else to go. However, as competition enters the marketplace, establishing and maintaining customer loyalty is essential to keeping customers from defecting to the competition.

Ultimately, customer loyalty is a deeper conviction to the firm than pure retention alone. It is intuitively appealing to believe that customer satisfaction leads to customer loyalty which leads to customer retention. The truth is that without loyalty, customer satisfaction may or may not lead to customer retention, and retained customers may not be loyal customers. The bottom line is that the service firm cannot simply assume that retained customers are loyal customers. Consequently, service firms wishing to build their business and nurture strong customer relationships need to understand the added strategic value of customer loyalty over customer retention. Songwriter and comedian Tim Hawkins performed this parody song YouTube Video: "Chick-fil-A" which extolls the virtues of Chic-fil-A, and notes the chains policy of closing on Sundays.

i. Does singer Tim Hawkins' song represent customer retention or customer loyalty, please explain?
ii. Do you believe the Chick-fil-A Company felt about this song?