As one of the world’s most recognized e-tailers, Zappos is well known for two things: selling a variety of shoes and apparel, and delivering great customer service. Zappos staffers develop long-standing relationships with their customers by proactively communicating with them through familiar electronic means like email and chat services, as well as newer social media like Facebook and Twitter.

We spoke with Aaron Magness, Zappos’ Director of Business Development, to get tips for using social media the right way for your business and how a firm commitment to customer service shaped their company’s success.

BuyerZone: According to a recent Fast Company article, Zappos gets 75% of its business from return customers. How has Zappos been able to consistently get customers to keep coming back?

Aaron Magness: Back in 2003, Zappos started thinking about what we want to be when we “grow up.” Was it to be the best online shoe site or best online retailer? In actuality, we wanted something bigger and that was to put our resources behind providing the best customer service experience for our clients that makes them want to keep coming back.

By having top-quality customer service as a focus, we’re able to expand the business beyond just shoes to include clothes, handbags, cosmetics, and even housewares. Once you concentrate on the best customer service possible, your customers are more inclined to keep going back to you because you’ve built that trust.

Thanks to our customer service vision, the company grew by word of mouth about how well we work with customers. While other companies put huge marketing dollars into their advertising and marketing programs, we continue to reinvest in the customer experience. This includes constructing a full distribution center and heading up 24 x 7 x 365 live customer service.

We also provide surprise extras for customer orders like free shipping upgrades. While others may view this as an expense, we see it as a valuable marketing investment opportunity for the company.

BZ: How does a company find new marketing channels outside of traditional means?

AM: Obviously, we look at marketing differently than most companies. We strive to develop a personal relationship with our customers through open communication and learning what they want so we can deliver it.

We’ve received a lot of publicity lately about how we use social media tools like Twitter, not to grow our customer base, but to open a new line of effective communication with our customers. Social media has allowed Zappos to talk to our customers instead of at them. With a one-to-many communication tool like Twitter, we’re able to let customers know that we’re interested in what they’re doing.

A secondary benefit to using social media is that it strengthens the internal bond we have with our employees. Customers and on-lookers were able to see what our culture was like and online culturists and people interested in those types of relationships really got behind it. Once you peered into this open window of how we work together, you feel like you’re doing business with a friend rather than a faceless company.

BZ: Why has social media been so effective for a non-technical concept like selling shoes online?

AM: The fact that we’re not high tech is why it works! We have direct communication with regular people doing regular everyday stuff. Our audience knows we work at Zappos because it’s aggregated on sites like twitter.zappos.com. They know we’re not trying to pull one over on them and that they’re building relationships with people working at our company.

And it’s not all praise and well wishes we receive. If a customer has a problem with a delayed order, for example, we invite them to publicly post it on Twitter or other online discussion forums. Zappos employees keep an eye out for these messages, and respond immediately to find the best way to correct the situation. This lays everything out on the table for the audience so they know what to expect from us.

BZ: How can other companies in different industries effectively use social media?

AM: You can develop a trust with your audience with three simple attributes: honesty, openness, and transparency. Look at the various types of communication around you to see what can best accomplish this. On Facebook, for example, you can set up an account for your company and post videos that share your company’s internal culture. When people see how well everyone in your company works together, it goes a lot farther than just dictating a brand to the public.

If you’re honest and transparent, social media can work for you regardless of your industry. You just have to be an active participant with a genuine interest in communicating with your audience. Don’t hire a PR firm or ad agency to run your social media platform. If it’s too much to do yourself, have multiple people do it. Of Zappos’ 1,450 employees, 450 of us have a presence on Twitter as the “voice of the company.”

Once you work with social media, use it to communicate with your customers and not just when you have a special deal or new product to offer. Learn what their expectations are for their purchases. Find out what you could be doing better to help them. Overall, use social media to reach out to your customers as real people, not just another sales tool.

Also, keep your goals in perspective. If you’re looking for ROI from a Twitter campaign, for example, you’re already way off base. Social media shouldn’t be just another marketing channel, and your customers will notice if you’re only interacting to sell to them. Set your goals around communicating and helping your customers – that’s how social media has the greatest impact for any industry.

BZ: Explain how customer interaction has helped shape Zappos over time.

AM: We always reach out to our customers to get new ideas and thoughts. It also has been great for getting feedback – we ask our customers about everything we test on our web site.
For example, when we launched a new search function, our CEO Tony (Hsieh) tweeted it to his followers asking them what they thought. We heard everything from great praise to concern that this would be the only way they could search for products. We made sure we listened carefully to customers’ concerns and used the feedback to come up with a solution they liked that was easy to understand.

It was all about listening to our customers, finding ways to adjust to criticism, and reacting quickly. If all we did is focus on growing our customer base, how would we ever say that a new product launch is a success or failure?

And sometimes, you have to be willing to make sacrifices. When we decided to focus on our customer service efforts, Zappos had 25% of its business coming from drop ship vendors. We couldn’t get a handle on the customer service aspect that way so we turned it off to go after the big picture. Yes, we lost revenue, but it had a much longer lasting impact that made a lot of our future decisions much easier.

BZ: Do certain industries have a tougher road than others when reaching out to their customers?

AM: It’s certainly easier on the service side. We consider Zappos to be a service company that happens to sell clothes, bags, shoes, etc. Since “service” is right there in the name, it only makes sense to foster that relationship with your customers.

For industries that deal more in the manufacturing and distribution of products, social media may not be the best fit. Still, you can find ways to reach out to your customers. If you’re a construction business, for instance, there are plenty of discussion forums or online trade web sites you can join. Find out how that customer base is interacting with others and become part of the conversation. Introduce yourself, be genuine, and offer your help for any questions participants have.

The value lies in being proactive – don’t make the customer come to you first.

BZ: Any final tips or suggestions for businesses looking to grow their customer base and improve relationships with their customers?

AM: Building that relationship may take some time and will depend on where you are in your growth cycle. If you’re in the early stages, you may need to first rely on other things like affiliate marketing or paid search to build your customer base. But once you have that in place, word of mouth growth is contingent to your company’s success. If you build a customer experience that everyone talks about and is excited about, that’s worth far more to your long term success than getting a visitor to click your keywords in an online search.

Make sure you listen to your customers and what they want. Do you have a way to interact with them so they’re voices are heard whether it’s social media, live chat, or easy-to-find comments boxes? Let them know what you’re about, and that’s when the opportunity will really take off for you.

Finally, you can only achieve your business goals when you hire the right people. Learn what their vision is and how they think that vision can mold the company. Let them determine what the culture of your company will be and it will shine through for both your staff and your customers.