CASE 8
Zappos: Delivering Customer Satisfaction
CASE NOTE FOR INSTRUCTORS
This case discusses Zappos’ unique management style of focusing upon employee happiness as the key to
the firm’s success. According to Tony Hsieh, CEO of Zappos, the company’s emphasis on employee
happiness translates into high quality service for customers. The care that Zappos shows to its employees,
customers, and other stakeholders has earned it praise for its ethics as well as its fun work environment.
Zappos takes a customer-centric approach to make the shoe shopping experience fun and easy. It
maintains a live inventory web system, a 100% Satisfaction Guarantee Return Policy, and instructs its call
center employees to maintain non-scripted conversations with employees until customer issues are
addressed fully (some calls have lasted hours). Zappos maintains a relaxing and fun work environment
but is selective in whom it hires. Employees are required to undergo a five-week training program, and
any who decide Zappos might not be for them are offered $2,000 to walk away. All employees must
spend two weeks manning phones during the training process. Although pay for Zappos’ call center
employees is less than the industry average, employees receive full health insurance, free lunches, paid
volunteer time, and more.
QUESTIONS AND DISCUSSION
1. Does Zappos effectively focus on stakeholder happiness, and how does this approach affect the
ethical culture?
There is no right or wrong answer, as long as the students defend it. Most students will likely answer
98 Case 8: Zappos: Delivering Customer Satisfaction
2. Has Zappos developed long-term relationships with customers and employees that provide a
competitive advantage in the purchase of shoes and other products?
Students’ answers will vary and should be supported by reasoning. Some may say Zappos has
developed long-term relationships with customers with its return policy. Because making purchases
on the Internet is seen as a risk, especially when it comes to purchasing shoes, Zappos eliminates that
risk for the customer by offering free shipping on returns. Real time inventory listings is also an
3. How has Zappos managed ethical risk, and what are potential ethical risks in the future?
Most students will likely agree that Zappos has managed its ethical risks fairly well. For instance,
when an ethical issue does arise—such as laying off employees, mispricing products on its website, or
merging with Amazon—the company tries to be as transparent as possible with stakeholders. By
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ADDITIONAL RESOURCES