On October 12th, I visited with Aaron Magness at Zappos, a billion dollar Henderson, Nevada based company, now part of Amazon, which has proven shoes and clothes can be sold online. When you think of shoes, you think of needing to try them on. No problem. Zappos removes any risk their shoes might not fit by offering a money back guarantee and paying for return shipping should customers need to return their order for any reason.

In a world filled with poor customer service where far too many businesses large and small reflect the attitude that the customer is always wrong, Zappos has proven that outstanding customer service is a foundation you can build success on. One easy measurement of that success is their growth from $1.6 million in 2000 to over a billion dollars in gross merchandise sales in 2008 with a sale to Amazon in 2009.

Here’s one great Zappos customer service example. One of their reps received a call from a customer who told her that her husband had recently passed and that she needed to return his shoes. Not only did the customer rep let her know that would be no problem, she also sent flowers to the woman. This act of compassion was not listed in a company manual. Rather, all reps are empowered to make the customer experience exceptional, to connect with each customer or potential customer and listen to each conversation with the question, “how can I insure that this customer has a memorable experience and is a bit happier because of this call with me?.

My experience at Zappos was that every “Zapponian” either smiled, said hello, were helpful, caring and empathetic and/or exhibited a sense of relaxed joy. I’m guessing the average age of associates was probably twenty-five. My sense was that here are people loving what they do. And each call center operator was encouraged to make their cubicle their own so decorations were as varied as the individuals occupying them.

To celebrate Zappos culture, an annual culture book is filled with information about the company’s achievements and culture with quotes from associates reflecting their feelings about what the Zappos culture means to them, and their experience of working for or rather playing with Zappos.

The 09 Edition lists Zappos core values:

1. Deliver wow through service.
2. Embrace and drive change
3. Create fun and a little weirdness
4. Be adventurous, creative and open minded
5. Pursue growth and learning (Zappos offers scholarships)
6. Build open and honest relationships with communication
7. Build a positive team and family spirit
8. Do more with less
9. Be passionate and determined
10. Be humble

These ten traits were the result of a process of receiving hundreds of ideas from team members and selecting the most powerful drivers of culture at Zappos and from my visit, I could see and hear many of them being lived and have no doubt they are all put into practice each day by each and every associate.

Here are a few associate quotes from the 09 edition:

“People may not remember exactly what you said or did but they will remember how you made them feel. Our team vision is to deliver happiness to the world”.
From the founder

“Zappos is the greatest thing that ever happened to me. In short, this company is amazing”.

“My first week, I thought can people really be this happy everyday? Maybe it’s something in the water. No one ever seems to have a bad day. It’s like the Twilight Zone but in a good way”.

“Being your self is embraced, not ignored for the sake of the bottom line”.

“Never in my wildest dreams did I ever imagine such a wonderful place to work”.

“After five years, I still look forward to every day in the week”.

“A breath of fresh air. Awesome, Fantastic, Wow!”

For these reasons and many more, Zappos was selected by Fortune Magazine as #23 of their 100 best companies to work for in 2009 making them the highest ranking newcomer.

I have visited many companies during my career on Wall Street and as a consultant and I can honestly say that Zappos culture is the happiest I’ve encountered.

The following day, I took a tour of Zappos headquarters where their associates work and play. Here’s what I learned and experienced:

700 mostly young people work at Zappos headquarters and 800 associates work at their 24 hour a day Kentucky distribution center located near the UPS hub that enables packages to be sent next day up to 1AM in the morning.

It takes 2 hours from order to pick to pack. At this point, one of every 60 packages at the UPS hub are Zappos. The distribution center uses 70 Kiva robots to pick from over 5 million items and features the world’s longest conveyor system. The average distance an associate walks per day is ten miles over a total warehouse space of 1 million feet. There is also an area where all Zappo’s photo shoots take place and are uploaded to their website.

Zappos send many packages overnight even though they promise 3-5 day delivery to insure the WOW factor. Call center operators are empowered to ask themselves, “How can I wow each customer?” They have no script to follow or maximum time to spend with customers and answer all calls within 20 seconds. If they feel they want to go the extra mile and send flowers or cards to a customer for any reason, they do so without asking managers.

If Zappos doesn’t have a particular item in stock, they provide customers with the names or websites of 5 other vendors. And for this quality service, customers pay full retail and don’t mind in the least with a 75% repeat business sales ratio. In 2009, Zappos had their first $6 million dollar sales day. Every sale is displayed in real time on monitors around the offices.

Customers can return any item they purchase for up to a year and, at the discretion of each call center associate, their order may include a thank you note. Vendors not just Zappos can monitor inventory and restock with a mouse click. “Powered by Zappos” provides vendors with the option to have Zappos design and manage their site and provide all its services in a turnkey process. They currently do this for client companies including Clarks, Bearpaw and Bostonian. About 8% of sales are for 200 brands of children’s shoes and although they began with shoes, Zappos estimates they will do over $100 million in apparel in 2010.

Zappos deep discount value site is www.6pm.com. Where Zappos offers free shipping, 6pm charges $6.95 for any number of items. In one case, ZAppos shipped over 100 items for $6.95.  85% of their inventory is Zappo’s closeouts and 15% exclusives. 6pm stands for 6 perfect matches and was acquired in 2007 when their name was Shoedini and now accounts for about 10% of Zappo sales.

To serve the needs of its associates, Zappos offers a full time life coach, Dr. Vic, nap rooms, dry cleaning, car washes, a tailor, and massages as well free daily soup, salad and sandwiches and all items in Zappo’s vending machines cost $.25 with the proceeds donated to local charities.

In keeping with the playful mood of its headquarters, Zappos legal team operates out of an office that has a facade that reads “Hall of Justice”

So now you know some of the successful secrets of empowering your team. Use the ones that might apply to your business and invite your team to suggest others.

And, if you are ever in Henderson, which is next door to Las Vegas, be sure to call and arrange a tour. It’s a once in a lifetime experience and great example of a company that truly cares for its people, customers, vendors and the community in which it operates.