Zappo’s Final Assignment
Before starting the analysis it should be taken in consideration that Zappo’s business is done thru e-commerce and it managed to introduce itself at the early 2000’s when society had trust issues with making business online, which is the platform that Zappo’s used to create trust and enhance it’s value proposition.
Zappo’s strategy for acquisition is to aim to prospect customers by: Word of Mouth - The best policy for adquiere a client trust is thru a good referral, this fact is exponentialize when applied to e-commerce Excellence in Customer Service - Achieved by an easy contact either thru the website and most importantly thru the call center, whose goal is not only help the client to complete their transaction and resolve any problem they may encounter, but to go beyond and create a connection with every customer.
Actions speak louder than words, this is true for the WOM policy on Zappo’s which have made them famous since the company started, Zappo’s understood in their early stages that the influence of “external effects” such as advertising or direct marketing, where not good enough tools to convince society to engage with the new trend of e-commerce.
One of the main problems with e-commerce is trust (Specially in 2000’s), Zappo’s managed to break the trust barrier by making themselves available 24/7 and by implementing one of the most flexible return policies in the market. This two elements take away the risk of buying online, since the client has the chance to give back the product if they don't like it or it doesn't fits, because of these, the buying experience is just as if you go buy the same product on a store. Once the risk has been stabilize, zappos creates value by providing an easier shopping experience where customer can go thru an online catalogue and buy from home.
By excellence in customer service, clients are constantly in a delight stage bringing high satisfaction levels since they receive way more than what they would expect from any other company and even from zappos itself!
Client service and returned policies have created several switching cost, which enable them to retain their clients and also very important they created strong imitation barriers against competitors
Evaluation cost - once the customer has tried and trust Zappo’s service, buying the same products from a competitor will require time, cost, effort and most importantly risk, which makes it simpler just to stay with zappos. Benefit loss cost - This is not a “premium customer” benefit, but the generous return policy is given to every zappos client, and it represents a big switching cost that might be stronger than strong price reductions, since the money being saved on buying the product, might not be worth nothing if they can't trust that the product will be delivered in time, with the quality expected, with a return policy, etc..
Relational Switching Cost - The call center staff is instructed to create personal bonds with customers, even if it means to talk about non-purchasing themes for hours, everything so that clients have a personal relationship with the brand (not only one staff member, but all of them)
All these combined had created both attitudinal and behavioral loyalty, which translates into positive wom and continued repurchase habits. No matter the cost, the repurchase habits on clients must be kept specially if we take in mind that zappos might constantly increase their product assortment.
Having this in mind, even when the cost of the returned policy and the call center seem high, the company is investing in the Customer Lifetime Value, as said in the article, once a customer gets acquainted with the shopping experience thru Zappo’s their repurchase levels increase as Zappo’s keeps growing their catalogue it`s assuring future purchases of their loyal customers.
As seniority in clients grows so does their social value,...
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