1. Building a Customer Focused Culture & Inspire Employee Happiness and Engagement to Wow your Customers Scott Klein Customer Loyalty Team Manager Shannon Roy Customer Loyalty Team Supervisor Zappos CLT, Inc. Kathy Koziatek Zappos Merchandising, Inc. 1

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3. 3 A little about us…

4. Zappos at Glance Corporate Background 4 Founded in 1999 1700 employees (half in NV, half in KY) #23 in FORTUNE MAGAZINE’s “100 Best Companies To Work For” 2009 Highest debut for a newcomer in 2009 #15 in FORTUNE MAGAZINE’s “100 Best Companies To Work For” 2010 Zappos is “Powered by Service” Providing the best online shopping experience possible. Fast, Free Shipping. Free return shipping. 365-day return policy. Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service. Best selection Over 1,000 brands, over 200,000 styles, over 900,000 unique UPCs. 5 million items in warehouse 100% of products inventoried (no drop ship). Zappos is a service company that happens to sell clothing, handbags, shoes, accessories, housewares,….

5. Customer service value proposition in action … Being committed to WOWing every customer 5 Customers come… Over 10 million total purchasing customers Over 4 million have purchased in the last 12 months Customers come back… On any given day, about 75% of purchases from returning customers Repeat customers order >2.5x in the next 12 months Customers come back, order more and order more often… Repeat customers have higher average order size $123.86 – first time customers in Q407 $156.27 – returning customer in Q407

6. Power of repeat customers and word of mouth... 6

7. 3 fundamental things we’ve learned are necessary for WOW service online: 7 What Customers See First What Customers Experience What We Do Internally

8. Customer Service: What customers see first 24/7 1-800 number on every page Free shipping Free return shipping 365-day return policy 8

9. Customer Service: It’s all about the experience! Fast, accurate fulfillment Surprise your customers Create WOW, PEC Friendly, helpful “above and beyond” customer service Don’t have it? Assist them with finding it elsewhere 9

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11. Customer Service: Inside message needs to match the outside message No call times The telephone is one of the best branding devices available No sales-based performance goals for reps Run warehouse 24/7 Inventory all product (no drop-shipping) 5 weeks of culture, core values, customer service, and warehouse training for everyone in Las Vegas office We’ll pay you $2000 to quit Culture Book Interviews & performance reviews are 50% based on core values & culture fit Twitter/Facebook/YouTube/Blogs help build company culture 11

12. Times are changing! 12

13. Customer experience extends beyond just your site! 13

14. Time to figure out how to extend the experience! 14

15. Social Media 15 No social media strategy We have a COMMUNICATION strategy

16. Create more opportunities to communicate with your customers… 16

17. 17 Why?

18. Because people want to be heard! 18

19. To gather information! 19

20. To feel like they are part of it! 20

21. To talk about their experiences! 21

22. Why ask why? Probably all of the above, and more! 22 That’s LOTS of people willing to help look out for your business, provide feedback and ideas, etc!

23. That is, if you are listening… 23

24. Most people don’t pick up the phone and call us! 24

25. Evolving Customer Connections Phone 6,000+ Calls a day Live Chat 800+ live chats per day Social Sites, Networks, etc… 1,100,000+ opportunities to interact per day 25

26. That’s right, 1,100,000 per day in the social space… And Growing! 26

27. We engage customers by using our best resource. 27

28. Our people! 28

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31. People Planning 31 Customer Service Marketing IT Finance Facilities Fulfillment Center Legal HR etc

32. 32 “Quite simply the best customer service experience I have ever had, period. I was totally satisfied with the tone of the conversation, happy with the outcome, and impressed by Elsie’s knowledge and ability to explain and clarify the Zappos’ returns process. This kind of experience makes for lifelong loyalty among customers. Thank you so much for your help.” Sincerely, Bob

33. People Planning 33

34. Zappos Goal: Have as many employees as possible be a voice! We believe People Planning is at the heart of our success 34

35. How does one do that? Have the right culture and nurture it Have committable core values and aspire to live them INVEST in hiring and firing and pay people to leave ($$$) Stay focused and make people focused investments Education! 35

36. Zappos Family 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 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 36

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38. Hiring for Culture The Application (Beyond the Basics) – If you entered a room and a theme song played, what would your song be and why? – How lucky in life do you consider yourself to be on a scale from 1-10? The Tour The Hiring Process – Managers interview for technical fit and department culture fit. – Human Resources interviews for culture fit. – Must pass both in order to be hired. Hire slowly, Fire quickly 38

39. Customer Connections: Personal Emotional Connection in Action “She went above and beyond…” “What a gem of an employee…” “I feel like a made a friend…” “Kind hearted, genuine, and sincere…” “The epitome of what customer service is…” “Treated me like royalty…” “Engaging, wonderfully pleasant…” “Funny, a person that I have never met and probably never will, touched my life in a lasting way.” 39

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41. Doing what the customer asks: Friendly, helpful, FUN… You are now chatting with Jonathan Jonathan: Hello Timmy. How can I help you? Timmy: do you know how wide the G-Shock Atomic Solar - AWG101 SKU #7403774 is? Timmy: i mean, how big a wrist it would fit? Timmy: Timmy has a big fat wrist Timmy: Timmy need watch grande Jonathan: I'll see what I can find out for Timmy. Timmy: awesome. and can we please continue to talk about Timmy in the 3rd person? Timmy likes to boost Timmy's ego by talking about Timmy that way Jonathan: Jonathan would be happy to neglect the use of pronouns for the duration of this conversation. Timmy: Jonathan and Timmy shall get along just fine Jonathan: Will Timmy be able to measure Timmy's wrist? Timmy: Timmy's wrist is big, but not Biggie-Smalls big. Timmy doesn't have the required measurement instruments. 41

42. Teams and Relationships Relationships – Socialize with co-workers – ZCN Clubs – Twitter – Facebook Manager’s Role: – Drive the culture – Build their team (Team Building) – Inspire new ideas and creative thinking – Help employees find their calling, reach their peak – Personal Development for employees (Pipeline classes) – Recognition 42

43. Staying Focused “One team --- One dream!” 43

44. Thank you for allowing us to put a little happiness in your day! 44