Why the Zappos Way May Not Deliver Happiness to Your Company

Jun 2, 2014
7 Min Read

The last time you had a really horrible experience at a restaurant or received stellar service at a hotel, you may have jumped online to write a review.

Or, when you needed your air conditioning fixed, you may have consulted what others were saying about the business before giving the repair company a call.

Welcome to the age of age of customer feedback, where businesses can be made – or torpedoed—based on what Irene in Iowa says about her customer service experience.

Such feedback has become highly valued by companies hoping to grow quickly. What better way to succeed than having customers rave about their experience?

Of course, that means employees have to roll out the red carpet for every customer, no matter if they spend $5 or $5,000. Zappos often is held up as one of the gold standards for customer service, and every business is rushing to emulate them.

But is that really such a good idea?

Wharton University marketing professor Peter Fader thinks it’s not. While that may be a controversial idea, he believes more companies will begin to consider it.

“I have a tremendous respect for Zappos, and their culture is really unique,” Fader says. “But even they could stand to be a bit more choosy” about who gets top-drawer customer service.

Fader explains that 20 years ago, providing stellar customer service was a way for a company to distinguish itself and could reap the benefits of loyal customers. But now, customers expect such treatment and therefore aren’t as impressed – or as loyal – to companies that provide that service, he says.

“Today, the bar has been raised so high for companies that it’s harder and harder to distinguish themselves and the ROI gets less,” he says.

If an employee spends too much time trying to please a customer that may never return to the business no matter what – even when offered numerous freebies – then that employee’s time and the company’s resources may be better spent elsewhere, he explains.

“There are some customers that will be loyal no matter what. Then there are the customers that no matter how well you treat them they are not going to change how they feel about you because they don’t want a relationship,” Fader says. “What you have to do is find those customers in the middle. The ones where you can really move the needle” and have them become loyal customers.

He says that one company getting it right these days is Delta Airlines, which recently revamped its loyalty rewards program and now calculates points based on how much money you spend on air travel, not how many miles you travel.

“It’s brilliant, because Delta is now rewarding the customer based on value,” he says.

Another industry that is doing customer service the right way is casino hotels, which closely track customers in areas such as their favorite rooms, food and drink preferences. That means a repeat customer may be given a room on a quieter floor he or she prefers, or brought a margarita on the rocks while gambling. All that shows the casino is paying attention without bugging the customer with endless surveys or emails.

And that brings up another problem with companies trying to grow quickly and snare as many customers as possible: They can become a bit creepy with their constant interaction with customers, Fader says.

“You can really become intrusive with some interactions, and everyone can cite a time when a company has crossed the line and feels like they’re stalking you,” Fader says. “Maybe it’s the constant emails trying to get you to buy a book similar to another one you bought online for your sister-in-law. For the rest of eternity, they’re going to be recommending those kinds of books to you.”

Fader says that even if companies are trying to grow their customer base quickly, they have to slow down enough so that they are ensuring they’re wooing the right customers and not blithely handing out so many goodies that customers are no longer impressed.

In addition, employees must receive the kinds of incentives that prompt them to distinguish the customers that will provide a long-term payoff and those that they may not see again. Then, the company culture has to support these employees in making judgments about the right level of service that has the greatest ROI, Fader says.

“There’s going to be some trial and error,” Fader says of finding the right level of service for each customer. “You need to let employees be personal and selective and not overdo it. Then it pays off for everyone.”

Do you agree with Fader's idea of differing levels of customer service, or is he off target?

You May Also Like:

5 Things to Do When Clients Don't Listen

Recomended Posts