How Zappos finds success by building empathy for customers

Nine years ago, when Alex Genov joined Zappos, “nobody was reading customer comments.” It was all about high-touch service over the phone.

It’s been quite the journey since.

Genov, head of marketing insights and customer research for the company, presented at NRF Nexus about building deeper empathy for customers in uncertain times and beyond. He told the tale of developing Zappos’ robust voice of the customer program, which has now collected over 800,000 customer comments, and even more ratings. Those customers rate ease of use, how personalized the experience feels, trust and other factors. The trust rating has consistently been the strongest predictor of whether someone will be a promoter or a detractor.

Building and maintaining trust, Genov said, comes from focusing on customers as human beings, giving them a voice, allowing them to give feedback — and thanking them for it.

He presented the audience with two opposing trends: the fascination with data science and its reliance on numbers, statistical averages and algorithms, as well as the quest for cultivating long-lasting customer loyalty. It creates inherent tension, he said.

"No business can hope to create long-lasting customer loyalty if they don’t understand and treat their customers as human beings instead of just numbers.”

Alex Genov, Zappos

“Every company that wants to win the hearts and minds of consumers today — and tomorrow — has to resolve that tension. In other words, no business can hope to create long-lasting customer loyalty if they don’t understand and treat their customers as human beings instead of just numbers.”

Numbers are easy to line up and average, and they behave in predictable ways. Customers, not so much. Business, then, must be about relationships, and that trust is of paramount importance.

Zappos has performed an annual survey on trust for multiple years. When it comes to the statement, “Retailers always have my best interest as a customer in mind,” the “really troubling” result is that consumers increasingly disagree.

At Zappos, the Net Trust Score is positive, but there’s still a sizable gap between it and the company’s Net Promoter Score. “It speaks of opportunity,” Genov said. “People say, ‘I recommend Zappos because it’s one of the best out there, but does Zappos always have my best interest as a customer in mind? Not quite.’ Then, we can start thinking about ways to increase that.”

Genov also busted a number of myths about customer centricity. The first is, “If you build it, they will come and will stay.” The reality: Sustainable success will come from a customer-first model. It’s becoming increasingly difficult for companies to win on the basis of product centricity, he said, thanks to the ease of starting a business and the level of competition in putting customers first.

Second, there’s the myth that personalizing the customer experience just takes collecting lots of data. The reality is that meaningful personalization involves understanding customers on a psychological level. Someone buying a grill, for example, doesn’t want recommendations of other grills right after the purchase. Rather, what about asking the customer why they’re buying the grill, and making relevant recommendations for related items?

The third myth: Customer experience can be averaged. The truth? Customer segmentation needs to be meaningful. Genov presented the idea of two British men of the same age, both living in castles, both exceptionally wealthy. One is King Charles III; the other is Ozzy Osbourne. The men are the “exact same demographic,” he said, but do you sell them the same things?

Finally, there’s the myth that if sales channels are optimized, customer satisfaction will increase. In fact, he said, customers have no idea what “channels” are. They’re more interested in a seamless customer experience.

Genov admits it took a while to get the attention of leadership. But it has gone well beyond just being top of mind. The company is “literally saving millions of dollars,” he said, based on discoveries about the customer experience.

“If you really let your customers tell you, there’s a lot of noise, but the more volume you have, you’re going to get more signal from it.”