Is Delivering Happiness A Successful Business Model?

Tony Hsieh, CEO of Zappos .com, gave a record PSAMA luncheon audience of over 300 attendees an inside look at his own company’s approach to customer service, and says there is no doubt in his mind that “Delivering Happiness” is, indeed, a route to building a long term sustainable business.

Based on his New York Times bestselling book, Delivering Happiness: A Path to Profits, Passion and Purpose, Tony shared his philosophy on why customer service and delivering the best customer experience for customers, employees and vendor partners can pay dividends. After all, he sold Zappos to Amazon last year for over $900 million.

But Tony is quick to stress that delivering a WOW customer experience is about much more than financial success. It’s about personal fulfillment and pride. It’s about having a passion for your job that builds a fierce loyalty to do the right thing every time. And it’s about having a company culture that strives to make every person in the company feel that they are part of something bigger than selling shoes. Happiness is a framework for business that can produce profits, passion and purpose both in business and in life.

At Zappos, they let their customers do their marketing for them.
Tony describes the Zappos approach to business this way, “at the end of the day, we aren’t in the selling shoes online business, we are in the stories and memories business. If we can create a WOW customer experience every time someone interacts with our brand, then those customers become our best marketing effort.”

To create and sustain that WOW experience, Zappos constantly asks these important questions:

1. What do customers expect?
2. What do customers actually experience?
3. What emotions do customers feel?
4. What stories do they tell their friends about us?
   

Answers to those questions led the way for Zappos to offer free shipping both ways and a 365-day return policy. It’s also why their website features a 1-800 number at the top of every page on the site. Tony says “we want our customers to talk to us, so we can build a relationship with them and better serve their needs”.

At Zappos, the telephone is their number one branding device.
A big part of the Zappos experience involves interaction with customers on the telephone. To make each call a special experience, there are no rules, no pre-set scripts, and no attempts to make calls more efficient by limiting the amount of time a call center employee spends on the line with the customer.

Zappos wants their customers to say “wow” when they get off the phone”. Tony offered several anecdotes on call center efforts to deliver that special experience to their customers, including a very funny story involving a 3:00 AM desire for pizza and the Zappos call center employee who took it upon themselves to find open pizza restaurants that would deliver at that hour. How many of your employees would go out of their way to satisfy a customer to that extent?

If we get our culture right, the WOW customer experience will follow.
Tony stressed more than once that company culture is the number one priority at Zappos. Their attention to maintaining a consistent culture begins with the employee interview process, which involves two separate interviews – one to determine skill set and a second interview to determine the cultural fit. They also offer five weeks of training before anyone is allowed to interact with a customer, so that everyone is on board with the core values of the company and how to express those core values to customers.

Tony related an interesting twist to their employee hiring process. Midway through the training period, employees are offered a $4,000 bonus to quit. That’s right. They will pay you to quit on the belief that if you are only working for the money, it’s unlikely you will be a good fit with the company culture.

Other culture builders include an annual “culture book” where employees are allowed to provide unedited comments on how they are “delivering happiness” in their own departments. And they also use Twitter to provide an opportunity for employees to get to know each other better and to share their experiences.


As he concluded his talk, Tony re-emphasized his belief that a strong, high touch customer service experience was a successful business strategy. But he also stressed that his message was not to adopt the same core values as Zappos in order to be successful. But rather, it was to say that it doesn’t matter what your core values are as long as you commit to them. That’s the real secret for business success.

At Zappos, their secret is to deliver happiness through the best possible customer experience. What’s your secret? Or is it a secret?

- Don Morgan, Raindance Consulting

Who is your primary customer?

Executing a successful business strategy often requires making tough, sometimes uncomfortable choices. But we frequently avoid making choices in the mistaken belief that we can have it all. Robert Simons, Professor of Business Administration at Harvard Business School, addresses this issue in his latest book, Seven Strategy Questions: A Simple Approach for Better Execution.
He identifies what he calls the questions that will “stress test your strategy”. His goal is to help marketers identify the weakest parts of their business strategy in order to understand where confusion and inefficiency lie.

While the questions may seem obvious, the choices they represent can be tough, and their full implications are not always immediately clear. The seven questions are:

1. Who is your primary customer?
2. How do your core values prioritize shareholders, employees and customers?
3. What critical performance variables are you tracking?
4. What strategic boundaries have you set?
5. How are you generating creative tension?
6. How committed are your employees to help each other?
7. What strategic uncertainties keep you awake at night?
   

While all of these are important questions, I was struck most by the first, and most obvious, question – who is your primary customer?

In his book, Professor Simons identifies two companies where changes in their basic customer strategy have paid significant dividends. The first example he offers is McDonald’s.

In the 1980’s and 1990’s, McDonald’s considered its primary customers to be not the people who ate in its restaurant, but multisite real estate developers and franchise owners. By focusing most of its resources on those customers through centralized real estate development, franchising, and procurement functions, McDonald’s went on a worldwide expansion and opened 1,700 stores a year.

But by 2003 same-store sales were declining around the globe. Worldwide markets were saturated, and expressed dissatisfaction with the chain’s standardized fare. This crisis prompted the new CEO, Jim Cantalupo, to make a tough decision and refocus their business strategy with the statement that “the new boss at McDonald’s is the consumer”.

The company’s subsequent changes in resource allocation have had a profound impact on the company’s sales. McDonald’s completely revamped its menu strategy to offer new products that conform to different consumer tastes by region and by country. They reallocated resources from a centralized corporate function to regional managers who were encouraged to customize local menus and store amenities.

As a result, in the United Kingdom, McDonald’s now serves porridge for breakfast; in Portugal, it offers soup; in France, it sells burgers topped with French cheese. And, as of last January, McDonald’s had delivered 81 consecutive months of increasing store sales around the world.

The Home Depot is another company identified by Professor Simons that has reaped significant benefits by rethinking and redefining its basic customer strategy.

In 2000, CEO Bob Nardelli concluded that the consumer home improvement business was saturated, and shifted significant resources away from consumers in order to cater to professional contractors. His goal was to treat both consumers and professional contractors as primary customers. In order to generate the resources needed to serve the professional market, Home Depot laid off customer service employees and went on a buying spree by acquiring 30 wholesale housing-supply companies.

The acquisitions nearly doubled company revenues, but trying to serve multiple customers did not work. Consumer satisfaction scores suffered the biggest drop of any U.S. retailer ever. At the same time, the wholesale supply operation was not getting the support required to obtain the efficiencies needed for a low margin business.

In 2007, a new CEO, Frank Blake, announced that home owners would again be the primary customers. Home Depot sold its wholesale businesses, increased the number of service associates on the floor, and rehired master trade specialists to offer how-to advice. Consumer satisfaction scores and same-store sales and profits have begun to rebound.

There are two important lessons that can be learned from these examples. First, your choice of primary customer may change over time. When you do change your customer focus, as McDonald’s has done, you need to recognize that such a change will most likely require restructuring your business. The second lesson is the difficult task of trying to serve more than one primary customer. Good strategy dictates that you maximize resources for your primary customers and minimize resources devoted to everything else. The Home Depot example shows how trying to serve more than one primary customer can have a negative effect on both.

During the early 1990’s, I faced a similar situation with a client – NAPA Auto Parts. At the time, NAPA was facing intense competition from AutoZone, a relative newcomer with a strong emphasis on retail customers. In response to AutoZone, NAPA management determined to remake the company from its historical wholesale heritage into a retail chain. Their new strategy was to increase system-wide sales from their current 80% wholesale focus to a 50/50 combination of wholesale and retail, and I was hired to head a team to effect this change.

It soon became obvious to our team that trying to serve two primary customers would not work. Many NAPA store owners were former mechanics who had built their business by supplying parts and accessories to independent service centers and shade tree mechanics. Most had little to no retail experience and our field research identified a lack of specific knowledge or even desire to radically change their business practices.

NAPA shifted focus back to being the best wholesale suppliers they could be and we introduced a new national advertising campaign “We Keep America Running” that celebrated NAPA’s long standing heritage as the premier auto parts supplier. That campaign, combined with an integrated program designed to standardize the brand presentation and the introduction of the NAPA AutoCare Program to provide even greater service and support to independent service centers resulted in dramatic sales increases. And a rekindling of pride among their 6,500 store owners and personnel at all levels of the company.

There are many other questions you should be asking yourself and your management team, but the first, and most important, question is “who is your primary customer”. All other elements of your business strategy are derived from this one answer.

The questions may seem obvious. The answer isn’t always so clear cut.

What’s In A Name?

Shakespeare was wrong. A rose by any other name just wouldn’t be the same.

A recent issue of Bloomberg Businessweek carried an interesting article titled The Twitter Effect: The struggle to create the next perfectly weird company name.

As I read the article, I agreed with the author’s premise that “the corporate name game” is difficult. There are more than a million names, slogans and logos registered at the U.S. Patent and Trademark Office. And, according to VeriSign, a global domain name registry, 11 million Internet domain names have been registered in the last 12 months, a 6 percent increase versus a year ago. VeriSign says that 193 million Internet domain names are now owned or in use.

So how does a company go about choosing a new brand name? The author chose Twitter as a brand name to illustrate his point that a brand name must be “weird” to stand out in today’s crowded marketplace. The author also cited Google, Verizon and Häagen-Dazs as made-up “weird” words that are successful brand names.

Where I disagree with the author, however, is that the name has to be weird to be successful. Different? Okay. Unique? Yes. But weird? Not necessarily.

I’ve always felt that a successful brand name carries something extra. It should communicate what the brand is about – it’s values, it’s benefits, it’s reason for being. Unless you have a lot of time and cash to seat the name in the customer’s mind, a name that carries some connotation of what the brand is about is essential.

Too many brands today are based on invented, meaningless words. A brand name that connects to a known idea and your brand promise is much more powerful.

Pollywog, a Minneapolis-based branding agency says this about naming a brand, “Unlike naming companies and consultants, we understand what a brand name needs—instant meaning, impact, emotional connections, nuance—to go beyond being merely an identifier to becoming a brand building force. Pollywog publishes an annual list of Best and Worst Brand Names. Here are their 10 best for 2009:

1. Rolls-Royce Ghost
Who would give a new product a name that reminds people of haunting, horror and death? Rolls-Royce bravely did when it introduced the 2009 Ghost. Though the name is likely a nod to the British automakers 1906 “Silver Ghost,” this is a car for the unapologetically intimidating, with a ride that’s smooth as mist drifting over a moor.
2. Droid
Verizon licensed this name from the “Star Wars” universe for the cellphone it hopes will lead a rebellion against the iPhone empire. Droid was probably worth whatever Mr. Lucas charged. It communicates extremely advanced technology, yet it’s familiar and a little bit cute—it makes the phone seem like a pocket-sized C3PO or R2D2. How could gadget geeks resist?
3. Mars Fling Candy Bar
At 85 calories per serving, Mars’ new candy bar aimed at women promises a brief, mostly harmless indulgence. Summed up by its fitting tagline, a Fling is “Naughty, but not that naughty.”
4. Hunch
This online decision-making tool learns about you through your answers to a series of preference questions. Then Hunch makes suggestions about what you might like—from movies to travel destinations to what you should eat for lunch. The name is apt, human and engaging, and it refreshingly under-promises the service’s accuracy.
5. Shard
Looking like a small, pointy chunk of metal, this new multifunction keychain tool from knife manufacturer Gerber is appropriately named the “Shard.” Though the Shard has no actual blade and is officially airline-safe, the danger implied in the name adds to its appeal and is likely a key factor in the flurry of online chatter from customers who can’t wait to get their hands on the soon-to-be released tool.
6. Envy
Only a laptop as slim, sleek, smart and sexy as this glossy-screened beauty from HP could pull off the name “Envy.” Even Apple may be turning a little green.
7. Fever
The first in a new category of drinks dubbed “stimulation beverages,” Fever claims to enhance feelings of euphoria and even stimulate the libido thanks to its mix of several herbal ingredients. The name communicates excitement and a physical effect on the body, without crossing into the risqué.
8. Thinair
Thinair is a wind turbine with just one blade. In severe weather, the Thinair turbine parks its blade horizontally, with the narrow edge to the wind to minimize damage. We like the slightly mysterious quality of the name and how it communicates the blade’s ability to effectively vanish from destructive winds.
9. Peek
The Peek is a pocket-sized device that sends and receives email and text messages. That’s it. No phone, no calendar, no music, no camera. A device with such limited capabilities needs a proportionately modest name. Suggesting a quick, casual look, “Peek” hits just the right note for customers who don’t want to fuss with complicated hardware.
10. SweetLeaf
Three stevia-based sweetener brands—Zevia, Truvia and PureVia—made our Top Ten Worst Brand Names of 2008 list because of the similarity of their unimaginative, contrived names. So it was nice to see SweetLeaf enter the market this year with a name that conveys “natural sweetener” using—duh!—natural words.

While I agree with their thinking on building an emotional connection to the brand and its benefits, I disagree with one of the brand names they listed as Worst – Bing. When I first heard the name Bing, I got a sense of immediacy and impact. I envisioned snapping my fingers. These are images that reinforce the basic brand premise, that Microsoft’s search engine does something specific . . . it gets you to the answer in a hurry.

So what do you think? Would a rose by any other name smell as sweet?

Mobile Apps for Healthcare Marketing: Smoke Signals to Smartphones

GUEST BLOG
Jill Alm

At the Healthcare SIG luncheon last week, Jonathan White, VP Sales and Business Development for Healthagen, explained how mobile marketing is changing healthcare now and in the future. He compared mobile marketing to how Ebay created a whole new business model.

The early roots of marketing began as cave carvings and smoke signals. Then came the Yellow Pages that became king, but you need the book to access the information. Fast-forward to the web, Google, and now Smartphones. Smartphones allow marketers to communicate a clear message, on the go (your phone is always with you), and to a very broad audience. Mobile is the new monarchy.

Currently, Smartphones have a 25% penetration in the U.S. Estimates say that this holiday season, this number will increase by 10% and to 50% by the end of 2011. Searches on mobile devices outpaced desktop searches for the first time this year. Smartphones are the only device some people use as they replace home usage of their PC’s for Internet access.

Why mobile for healthcare marketing? Mobile is an empowering solution. It allows patients to take charge of their healthcare decisions, provides easy access to information, and demystifies the healthcare system. For providers, it guides and attracts potential patients to your facility. Not only is it a communication tool, but it also engages patients and they can be pre-screened for appropriate level of care. This helps the payers too, by reducing the number of unnecessary ER visits. Jonathan referenced that 50% of hospital admissions come from the ER.

Jonathan used two case studies to illustrate the growing power of mobile apps in healthcare marketing. The first study involved a West Coast hospital that had low ER wait times, but struggled with a poor payer mix. A marketing campaign was launched based on traditional media and advertising and incorporated iTriage, an information-rich encyclopedia of healthcare symptoms and procedures with links to local healthcare providers. The results showed a huge improvement in the mix of patients coming to the ER. Combining the online app with the marketing campaigns led to a growth in a new patient payer mix.

A second case study involved an East Coast hospital. The #1 complaint here was long ER wait times. So, they decided to focus on process improvement and marketing their ER wait times. They took a year to develop ways to decrease the wait time and then starting advertising it through website, text messaging, and an iPhone app which led to a 15% increase in traffic.

The advantage of mobile is that people have their phone with them all the time. They search, they use GPS, they find movies, restaurants and now they can find hospitals and healthcare information. Jonathan stressed that if you don’t have a mobile strategy, you need to have one. It compliments, but does not replace your current marketing strategies.

Where should you be now with your mobile strategy?

1. Have a mobile version of your website.


2. Encourage physicians to jump on the bandwagon and begin advertising in the mobile space.


3. Utilize all aspects of mobile advertising to combine full potential of mobile—print, radio, podcasting, video, photo.


4. Get familiar with mobile advertising networks (AdMob, Jumptap, Grey Stripe, Getjar, iAds).
   

Where should you be in 12 months?

1. Mobile pre-registration demand is on the horizon. In 2010, Health Leaders Media article proclaimed advertising ER wait times as the healthcare marketing trend of 2010. In 2011, pre-registration is expected to be the next marketing trend for medical providers.


2. QR codes will become an increasing part of ads tracking so plan for QR codes for each advertising campaign. A QR Code is a matrix barcode (or two-dimensional code), readable by QR scanners, mobile phones with a camera, and smartphones. The code consists of black modules arranged in a square pattern on white background. The information encoded can be text, URL or other data.


3. Be aware of new technology to prevent patient leakage when doctors refer outside of your hospital system.
   

Mobile apps for healthcare are another way that new technologies can have a positive impact on our marketing strategies. Are you looking at mobile apps for your company? Why not? The smoke signals are there.

Guest Blog by Jill Alm, Channel Manager at Bodypoint, Inc.