Tony Hsieh didn't just build a billion-dollar online shoe store. He's launched an expert economy website that could Kindle a revolution in publishing.

Zappos.com is a $1 billion online retail business based in Las Vegas that began life as the Web’s shoe store. So, you have to be wondering – how do you even begin to sell shoes online? Aren’t shoes the definition of a commodity you need to handle and try on before you buy them? For many consumers it is a hurdle, but Zappos’ response to the conundrum was to institute a 365-day return policy with free shipping both ways.

Not sure whether you’re a size 9 or a 9.5? Get both pair and send one back. Don’t know whether the pumps are “bone” or “beige”? Try them on with the outfit and return them if they’re not perfect. Zappos wants to make you happy.

What began as the answer to a tough online sales problem therefore gave rise to the retail poster boy of customer service “culture.” And now, the company and the CEO who created that culture, Tony Hsieh, is looking to evangelize it through a membership Web site that charges $39.95/month for access.

As the membership site describes itself, ZapposInsights.com is a B2B focused site that allows “Fortune One Million” companies (like yours) glean insights from the cultural lessons of Zappos.com’s dedication to customer service. The site offers “inside access” to Zappos.com management and contacts and provides guidance and direct answers to user-generated questions via video response. But that’s not all.

Ancillary Products: Books and Bootcamp

Since the membership site itself is a kind of ancillary product, it’s only fitting that Zappos Insights’ most audacious product -- Zappos Bootcamp -- is also a way to extract patronage from Hsieh's biggest fans. It’s free to visit Zappos’ headquarters in Los Vegas and take an hour tour. You can buy the company’s The Culture Book and a guidebook from company “coach” Dr. Vik ($17.00 and $17.95 respectively).

But if you’re really serious about transforming your own corporate culture, you may be asked to consider Zappos emersion: a three-day, on-site, limited attendance “bootcamp” for “people who are willing to embrace and drive change.” The cost, which included two nights’ lodging and transport from the airport, but excludes air fare: $4995.

Why, you ask, would anyone vie for the chance to compete for such an opportunity? Here's our summation of Zappos' strategy:

1. Appeal to your biggest fans

Ideally, an “ancillary product” such as Zappos Bootcamp represents for the ZapposInsights' membership site, is one that is marketed to your best customers – people who may have “drunk the Kool-Aid” so to speak. They may already be chastised for delivering poor customer service, and, in seeking answers to their issues, they’ve probably discovered your blog (http://blog.zappos.com) and your Twitter feed (@Zappos). They may have heard you speak to newspaper publishers at an NAA conference, or at South By Southwest.

They’ve probably tacked your “Ten Core Values” to their corkboard.

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

If they’ve gone the extra step – if they’ve sent for a copy of your Culture Book, or signed up for any of the free information on your membership site, then they’ll be the first to receive a personal email invitation

It will note that, awhile back you requested a copy of Zappos Culture Book.

It will report that many people say they’d love to create a strong customer service culture at their companies, but don’t know how. Since they’ve made a habit of listening to their best customers (by implication – you), they’ve come up with a solution. A live, 2-day event in Vegas.

But, by all means don’t sit on the opportunity – the application to attend is due by the end of this week!

2. Accentuate urgency. (Point made.)

3. Emphasize Exclusivity.

Even something immediate doesn’t rise to a sense of urgency without conveying the sense that this particular opportunity is so exclusive and so life-changing that one daren’t miss it.
Not only are just 20 people allowed to participate, but they must actually apply to be accepted!
The application itself isn’t that daunting, and doesn’t involve the exposure of any deeply held corporate secrets. It’s just a 5-point questionnaire:
1. What is your biggest frustration when it comes to your business?
2. What is your biggest goal for your business?
3. If you could learn anything from Zappos, what would it be?
4. How willing are you to embrace and drive change in your organization?
5. How can we reach you?
Please note: Submission of application does not guarantee a seat. Accepted applicants will be contacted within seven days, and seats will not be guaranteed until full payment is received within 48 hours of notification.

One certainly gets the feeling that this is the kind of experience that will be tailored to your specific concerns and targeted towards application, not mere powerpoints and note-taking.

4. Acknowledge your expertise.

You might use a video to show people how your culture is different and to emphasize your personal endorsement of the program. You would certainly mention that companies like Lego and Southwest Airlines have come to learn at your feet. But don’t sugarcoat it – the right kind of participant really wants to figure out how you do what you do. The best way to learn how to apply Zappos culture according to the man who perfected it is to come to the source, and see it for yourself.

5. Retain every relationship.

Even if you had to decline the invitation, you were offered a “thank you” for checking out the offer: a free download of Zappos’ interview questions and employment application. Often recurring revenue circles, there’s a “bonus” for signing up early. But Zappos goes the extra mile, believing that every exposure to its culture creates fans and engenders future opportunities.

6. Infuse excitement.

From the very first exposure to the Zappos LIVE event, fans of the company are encouraged to share their knowledge of the event with friends and colleagues. As you can see above, Hsieh offers a personal video on the “landing page” (the Web page where Zappos has an opportunity to convince customers to attend). Right below the video is a Twitter button that takes users directly to their own Twitter home page and automatically types into the “What are you doing?” box: “Watching a video from @zapposinsights on their 2-Day bootcamp http://bit.ly/yklJA.”

As if that’s not enough, the next day – a day before the show – the offer is sweetened with two scholarships – free passes – to the event. One scholarship goes to the person who writes the best essay on why they should be selected to attend; the other to the person who writes the best blog entry on the importance of corporate culture. (The blog must link back to the corporate Web site.)

Not only is the event publicized in the blogosphere, whichever blogger the company chooses to come along for the ride will document the event as an informed and enthusiastic outsider. This will only enhance the “buzz” surrounding any repeat experiences.

The Making of a Culture Icon

By age 24, Hsieh, had built his first company, LinkExchange, into an affiliate marketing powerhouse and sold it to Microsoft for $265 million. Zappos was one of 20 investments he and his longtime college friend and LinkExchange CFO made with this payout, but Zappos quickly turned into their core focus.

Ostensibly, the business of Zappos.com was to sell shoes (and now clothing, handbags, eyewear, jewelry and electronics). The company has turned selling other companies’ branded merchandise online into a $1 billion business (another brick in the “expert” wall.)

But, as Hsieh puts it, “Internally we want the Zappos brand to be about the very best customer service.” He jokes that various Zappos customers over the years have suggested Zappos start an airline or run the IRS. “We won’t do any of that this year, but we wouldn’t rule out an airline sometime in the future.” After all, it’s certainly an industry that could benefit from better customer service.

He calls the company’s call center the “customer loyalty team.” On any given day, 75 percent of the company’s orders are from repeat customers. Hsieh says, “We view customer service not as an expense, but as our true marketing cost. All we’ve done is take most of the money we’d have spent on paid marketing, put that into customer service, and let our customers do the marketing for us.” The employees do the same, since the company was named one of Fortune Magazine’s 100 best companies to work for.

Other cultural comments/practices:
• “We put our 800 number on top of every single page of our website because we actually want to talk to our customers. Customers are being bombarded by thousands of messages. The phone is actually one of the best branding devices out there because you get your customer’s full attention for 5-8 minutes.”
• The customer loyalty team has no call scripts and no fixed “handling” times. “When you give reps the freedom to actually deliver great service, then they’re very inspired and motivated. “
• Everything the customer could possibly order online is in stock at the company’s warehouse in Kentucky. Shipping is guaranteed within 4-5 days, but frequently given a “surprise upgrade” to overnight shipping.
• Every position hired requires a five-week training course on company culture. Everyone in every department, from technology to HR to finance, spends two full weeks in which they’re on the phone to customers, and a third week picking, packing and shipping from the company’s central warehouse in Kentucky. Not only does it sensitize everyone to every nuance of the operation, each class of 40 people “bonds” with its peers, enabling cross-departmental communication. “It breaks down the silos.”
• After the first week of training, every prospective hire is offered $2,000 to quit. “We don’t want people who are just here for the paycheck. It actually saves us money if that person would have only lasted for 6 or 7 months.” Only 1 percent of prospects take the offer.
• Everyone in the phone room is trained that, if a customer wants an item that is out of stock, loyalty reps will offer that customer up to three competing websites where they can find the item. “We may lose the transaction, but we’re maximizing the lifetime relationship.”
• Everyone in the company is hired, and may be fired, for their fit within company culture; 50 percent of the employee performance review focuses on contribution to company culture. “Our number one priority at Zappos isn’t customer service. Our number one priority is company culture…. The customer service happens on its own.”

Walking the walk

The company’s Culture Book is unedited, except for typos, and includes both positive and negative comments from employees in every department of Zappos. Hsieh says, “That’s part of our philosophy – being open and honest is one of our core values.”

Hsieh tells two stories revealing how culture must be hired, and can’t be the subject of a company procedure.
• A woman bought a pair of boots for her husband. She received a surprise upgrade to overnight shipping. Unfortunately, her husband was killed in a car accident on the way home from a business trip, and never received his gift. The widow related the story to the customer service rep she consulted about the return. In addition to offering sympathy, the rep sent flowers with Zappos condolences. The widow wrote back saying how touched she was and that not just she, but 30-40 of her friends at the funeral to whom she related the story are customers for life.
• A woman bought a wallet and later returned it, not realizing that she had left $150 in it. The warehouse worker who processed the return sent it back with the note. She responded with a letter of thanks, flabbergasted that the warehouse worker would be so conscientious.
“We don’t have policies and procedures for such things… we might have had cameras in the warehouse and strip-searched our employees, but instead of that expense we just invest in our culture and the rest takes care of itself…. Brand is about a personal, emotional connection,” and all Zappos employees know it. “Figure out your values and culture, and from then on it’s about living the brand. Your company’s culture and your company’s brand are really just two sides of the same coin.”

Finally, Hsieh quotes former Vice President Al Gore from President Obama’s inaugural: “If you want to go quickly go alone. If you want to go far, go together.”

Resources:

Hsieh can be reached at: Tony @ zappos.com; and via Twitter @zappos.

The company’s consolidated Twitter page (where all employees tweet): http://twitter.zappos.com
The blog page: http://blogs.zappos.com.

Company culture is consolidated at: http://about.zappos.com list, and the membership page is http://www.zapposinsights.com.

For a lesson in search engine optimization, search Zappos in Google.com. When we did so, there was only one brand advertising against the brand when we checked, and it was Victoria’s Secret, but it would be many pages of naturalized search results before articles by or about company success gave way to any information supplied by competitors. And this wasn't necessarily Oscar-worthy. One example was this employee video blog item: "Be adventurous, creative and open-minded."

Hsieh’s slide presentation to the Newspaper Association of America in March.