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CHAPTER FIVE

Transform Your Employees into Passionate Disciples (Because Love Is Truly Infectious)

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Chapter Overview

You and your company may provide the best products or services in your industry. But if consumers are not spreading the word in a big way, your products or services are doomed to a mediocre reception at best.

Sure, advertising generally helps. But the return on advertising can be spotty; besides, advertisements portray every business in a positive way. And consumers know that, so they look upon advertising with a jaundiced eye.

So what’s the key to building a brand that is a cut above and that consumers begin to hear about and then embrace?

Headline: Start with Your Employees

Your employees can, and must, become your true disciples. They spread your words; they make the all-important connection with consumers; their genuine belief in the “good” that you offer becomes your trademark and your trust mark.

Treat your employees with extreme care; help them come fully alive with your customers. Most important, listen carefully to their words every time they mention a concern or an issue. Their frontline feedback is essential to your brand. Suggestions from the selling floor can become a source of advantage and intelligence. If you are quick to respond to an issue, you eliminate a problem. If you are quick to respond to an opportunity, a request, or a need for additional product, you grow the top line.

What’s your ultimate goal? To build a staff of employees who not only believe in your product as much as you do, but who are so ardent about it that their positive vibes and good acts will be noticed by your customers. Once they are empowered, your employees and your customers will take care of getting the word out.

In this chapter, we provide two case studies demonstrating the ability of passionate employees to stimulate loyalty, repurchase intent, advocacy, and profit. If you follow their lessons, you too can achieve a disproportionate share of your consumer’s spending and drive higher profitability.

Best of all, your company will be seen by and will attract a growing and loyal customer fan base—customers who will adore your brand for life and who will go out and spread the word about how wonderful your company is to all their friends and colleagues.

The two companies profiled in this chapter are Four Seasons, the luxury hotel chain, and Zappos, the online shoe and clothing retailer. They both demonstrate the ability of passionate employees to connect with consumers on an emotional level. This doesn’t happen by accident; it’s all part of a deliberate and conscious plan by management to energize the company’s employees to a higher level of commitment.

You will learn how the leadership drives staff recruitment, nurturing, engagement, enablement, and selfless service, and how this all pays off in tremendous branding. Yes, both companies do pay their employees significantly more than many of their competitors, but more money is not the driving force. In the end, their secret involves forging and fostering the right working environment. It’s about belonging, tribal connection, and the nurturing of emotional ties. And when this is done correctly, the consummate prize is a workforce made up of employees who care deeply about the company, and customers who bit by bit come to be delighted by the brand—and, best of all, can’t wait to tell others about it.

Zappos

Tony Hsieh was born on December 12, 1973, the son of Taiwanese immigrants. He grew up in the Bay Area of San Francisco. His first real job was at Oracle (where he lasted just five months). He is a computer scientist with a Harvard degree. He is also the noted developer of the Las Vegas Downtown Project and the author of Delivering Happiness, which was ranked number one on the New York Times bestseller list for 27 weeks.¹

His company is Zappos.com, Inc., an online retailer with a difference. Most online retailers try to minimize the amount of time that their sales staff spends talking to customers. They try to push all contact to e-mail and their website. That’s because it’s costly to have salespeople talk to consumers: the fully loaded cost of a U.S.-based call-center staff amounts to as much as 60 cents a minute on the phone. But Zappos—the name is a play on zapatos, the Spanish word for shoes—runs a phone-click-chat service that is the best in the online business. Its phone number is very prominent on its website and on every package. The sales staff is actively encouraged to talk for as long as the customer wants. In fact, the firm’s 600-strong customer-service department tracks the length of phone calls with customers and celebrates the longest calls. The objective is to make an emotional connection on every call and thereby build loyalty and attachment.

Zappos makes its employees take pride in knowing how difficult it is to get a job there. This leads to commitment and to getting the job done right. There is no script, just natural conversation and engagement. This way, an emotional connection is created. The objective is that every customer is satisfied, feels that he has been listened to, and raves about Zappos later. It helps that each rep is empowered to do virtually anything necessary to satisfy the customer—not only to describe product benefits and suggest additional items based on prior purchase information, but also to warn about inappropriate products and offer substitutions, expedited shipment, and next-day replacement.

During our visit at lunch in the company cafeteria, a customer service rep who had joined Zappos five years ago told us about how she had given away $200 shoes to a customer who complained that the first pair was shipped worn. “I told her, ‘That was a mistake.’ I apologized three times. We talked about how to make it right. We agreed that she could keep the shoes or give them to charity, and that I would have a new pair in her hands tomorrow morning. Period. No obligation. Just an apology from us.”

“We love our customers,” the 28-year-old said over a lunch of BBQ chicken and corn salsa. “We aim to make a personal connection with everyone that calls. When someone calls, my job is for them to say ‘Wow’ afterwards.”

This giving away “free product” to make something right is not an isolated story. It is programmatic. Another Zappos staffer, who used to work in customer service and now provides guided tours around the firm’s newly refurbished headquarters in Las Vegas, said: “I once was on a call with a customer for four hours. The customer was from the same area of Pennsylvania as me. It creates conversation. We had not done a good job getting her a pair of riding boots for an event. I ended up telling her to keep the first pair of boots we sent. And then I sent her another pair overnight. And I told her it is all free. Four-hundred-dollar boots. Free. She is our customer for life. Periodically I check up on her orders. It’s all about creating a PEC—a personal emotional connection.”

Headline: Personal Emotional Connection

The PEC is a very powerful approach. Enthused by their one-on-one experience with a rep, customers commonly tell their friends why they too should shop at Zappos. The reps have created great names for themselves. They are called Customer Loyalty Ambassadors, and they think of themselves as Jedi Masters from Star Wars. By our calculation, each happy Zappos customer generates eight times the value of her own purchases through testimonials to friends.

The training in PEC takes two months. It is true on-the-job training. New recruits listen to and learn from experienced employees. After a few days, they are put into the “cockpit” with dual headsets. Their mentor is with them on every call, and they do a play-by-play review of the interaction. They learn the dos and don’ts, and they develop their own style. At the end of eight weeks of trial, they are offered either a full-time position or a one-time payment to quit.² It’s not a job for everyone, but trainees have a successful graduation rate of 80 percent.

Headline: Happy Employees Create Happy Customers, and Fun at Work Makes the Difference in Attitude and Morale

People spend up to half their waking hours working and thinking about working. If you make their work fun, you will earn their loyalty. Laughter at work is good.

When we took the tour at the remodeled Zappos headquarters in Las Vegas, we experienced workplace vibrancy, harmony, and collaboration. The headquarters consist of the former City Hall and police station, located in the heart of a once-seedy part of downtown Las Vegas. The building is shaped like a round starship with a tower rising from one end. It has been given a painstaking 18-month renovation to build a totally open environment, with areas to play, eat, rest, work, and accidentally connect with coworkers and suppliers. As we walked into the center courtyard—the one and only entrance into the building—loud music from the score of the Broadway hit Grease came alive. It’s like a college campus, with students aiming their big dorm speakers onto the college green. The energy is contagious, and the beat of the music sets the pace.

When you enter the main lobby, security guards dressed in neon yellow shirts and black pants hold the doors open for you. They smile as they let you in. The three receptionists—twentysomethings wearing tie-dyed T-shirts and sporting streaked hair—give you a very warm greeting and offer you a free drink: water, Mountain Dew, Red Bull, or Muscle Milk. You are then directed into a small room to watch a four-minute video on the company. After the movie, the lively, slightly wacky tour guides (they are called culture guides)—who are also dressed in bright neon T-shirts and colorful shoes—fire off questions to the audience. “What year did Amazon and Zappos get hitched, married?” they ask simultaneously in high-pitched excited voices. The first person to say “2009,” when Amazon bought Zappos for $1.2 billion, gets a set of Zappos shot glasses.³

And then you are whisked off in small groups to tour the premises. You meet the customer loyalty reps who take thousands of calls every day. You see the brilliant, vibrant pop art—paintings of Marilyn Monroe, Lucille Ball, Leonardo DiCaprio, and George Clooney, plus imaginative fun sculpture, as well as casual seating areas with art. You see posters celebrating a diverse range of company benefits, including full free healthcare, free prescriptions, the fitness center, free healthy food options, the library, mothers’ nursing rooms, employee discounts, and a program where every month, each associate can nominate a different coworker to receive a $50 gift certificate. There is an in-house concierge, a mobile beauty shop, and a car wash service. There is a Ping-Pong room, a wall of hammocks for rest, and a conference room filled with rolling balls for fun.

As you enter the office areas, you see that off to the left is a corridor with a row of chairs, desks, and PCs. Employees call this “Monkey Row.” These are the open-air offices for the CEO, the vice president of finance, and the vice president of merchandising, as well as their assistants. The only people with closed-door offices are the on-staff company life coach and Zappos lawyers.

Everyone seems to be smiling.

Our guide on the tour is a 5-foot 5-inch former Las Vegas hotel worker. He’s been at Zappos for five years and, like many employees, started on the customer service line. He is friendly, joking, and warm. He’s about 50 years old and has had many jobs before Zappos. “None have been the total delight that I have here,” he says. “I love working here. I can’t wait to get here. I love what I do.”

His comments are echoed in the firm’s Culture Book, which is published every year. It looks a lot like a college yearbook, with signed commentary from nearly all the staff members on what they love about Zappos. It has 244 pages with photos, inspiring comments, and connecting words.

Here are a few excerpts:

“Friends, family, and fun. The three Fs that make my life awesome.”

“Zappos means having an extended family that always has your back. Doing for others while expecting nothing in return.”

“For the first time in my life, I can honestly say I love my job!”

“Oh Zappos, how I heart thee! Let me count the ways: 1. You treasure my uniqueness; 2. You are interested in my talents; 3. You want to make a difference; 4. You help me grow as a person and an employee; 5. Most important, you legitimately care about me.”⁴

Headline: Creating a Corporate Utopia with Family Core Values

Zappos is a bubbly place like no other we have ever visited. It can be zany and amazing. Given this happy culture, it is not surprising that many employees hounded the company for employment. It has become a millennial refuge: most workers are in their twenties and thirties. The workforce is roughly 60 percent female.⁵ Team spirit is downright bouncy. Typical language in the office is alliterative, hip, and offbeat.

But, for all this, Zappos is a serious business, selling shoes, accessories, and clothing with daily sales as high as $28 million. It contributes more than $1 billion a year to Amazon revenues. For consumers, its value proposition starts with the enormous range of products, the depth of the inventory, next-day delivery, free returns within 365 days of purchase, and a phone call service that is the best in the business by far.

The 1,600 Las Vegas employees are essential to its success. This is why Zappos treats them so well, and why getting a job at Zappos is harder than getting into Harvard. Zappos looks for people with the right fit, the right personality, and the right value compass. Each recruit goes through a painstaking interview process. They say that one in a hundred gets hired. It’s like The Container Store’s principle of one worker equals three—but with a twist. The recruits have to fit in socially, intellectually, and emotionally. They have to be ready for their new family. Cultural fit is the key hurdle.

Zappos says it is all about people. The company’s recruiting materials state: “You’re not just a number—you’re a real person with a real personality and real skills.” Zappos promises not to let anyone fall into a recruiting black hole and to give each applicant a chance to interact, ask questions, and understand what roles are available. It asks potential employees to join up as Zappos Insiders. Insiders hear about openings, can chat with Zappos “ambassadors” (current employees), and have access to online events.

Recruits are asked to send a video cover letter and to write something to the company along the lines of, “Be adventurous, creative, and open-minded.” This is an actual assignment, aimed at identifying applicants who conduct themselves in the desired way and who are independent thinkers. Recruiters use social media, including Twitter, Facebook, Instagram, and Pinterest. Zappos will be one of the early users of Google Handouts, where potential employees can interact with recruiters and employees. Access to named specific individuals in specific job functions is offered; recruits are given details of that person’s interests and hobbies.

For recruits who make it to campus, the ultimate decision to offer someone a job is a group decision. Almost all recruits are picked up at the Las Vegas airport by the company van. The driver is often asked, “Yes or no?” on the recruits. Zappos wants employees who treat all coworkers with respect. If the van driver says, “Not for us,” the recruit will not receive an offer.

The reasons to join Zappos are many. As the firm’s recruiting literature puts it: “Fun, extreme perks, flextime, inclusion, career development, Green DNA, corporate responsibility, and the good jobs.” According to Zappos, one day 30 percent of all retail transactions in the United States will be online, people will buy from the company with the best service and the best selection, and “Zappos.com will be that online store.”⁶

The motto inside Zappos is, “Where culture thrives, passion follows.” The driving force behind this approach, and its success, is Tony Hsieh, the chief executive. He is a former whiz kid with drive, energy, charisma, and deeply held principles about corporate culture as the foundation for the brand. He is soft-spoken, but when he speaks, everyone hangs on his every word. This is because he is widely recognized as the person who created the core values, the sense of empowerment, the sense of community, and—frankly—the weirdness. An intense intellectual, he has gobbled up most of what has been written on psychology, worker joy, and consumer connection. He has devised his own unique company cocktail.

He became a computer programmer in his early teens and majored in computer science at Harvard. Upon graduation, he took a job with Oracle, which lasted just five months. He then started an imaginative, original online advertising company; he ran it until he was “not happy” and was able to sell it to Microsoft for $265 million.⁷ Still only 24 years old at the time, he started to dabble in his own venture fund.

That’s when he was introduced to Zappos.

Founded in 1999, at the top of the original dot-com bubble, Zappos was a struggling e-retailer when Hsieh joined the company as an investor and advisor (he became CEO in 2000). He set about rebuilding the company from the outside in, solving problems for the consumer and then engineering the company to break all the compromises in shoe purchases and satisfaction. He aimed to deliver any shoe for any occasion in every size the next day, with free returns.

He is renowned for his focus on creating happy employees to create happy consumers. He rattles off the things that customers really value—and he drills them into his employees:

Customers value convenience and saving time, even over saving a few dollars.

Customers value “curation,” even above overwhelming selection (a paradox of choice).

Customers value customer experience and customer service, even over saving a few dollars.

Customers value simplicity over too many choices.

Customers value ease of use and fewer steps over complicated customization.

Customers value a box-opening wow experience over saving a few dollars.

Zappos goes through all this extensive screening of employees because, deep down, what the company is really looking for is employees who will become passionate cheerleaders for the Zappos brand. It is not interested in just finding smart workers. It wants to find only those individuals who will answer customer calls cheerfully and actively spread the good word about the company. This is the key to how Zappos builds its brand.

After establishing a real blueprint for what kind of employees Zappos wanted to hire, Hsieh put some very smart programs into place. First, he moved the Zappos distribution facility to Kentucky—a place with lower labor costs—and created a centralized inventory, a modern inventory-control system, and a proprietary system for distribution; the facility was also in close proximity to UPS, the global logistics firm. The idea was that this would ensure that Zappos could deliver on the promise of fast delivery. Second, he moved the corporate headquarters from San Francisco, with its high-cost labor and high expense, to Las Vegas, which was more affordable. Third, he invented a place where employees could be happy every day, where they could work with people whom they liked and who shared a similar passion for Zappos.

The heart of Hsieh’s approach is something that he calls the Zappos Family Core Values. This makes him unusual. Years ago, he worked for a conventional “big” company and witnessed the CEO telling a 1,000-person sales force, “We are not a family. We are a team. You need to earn your place on the team every season.” He warned, “If you do not perform, you will be cut.” “Back then,” Hsieh says, “we thought, ‘Does this threatening message really resonate, or does it cause the sales team members with options to go to another company?’”

Hsieh’s use of the word family is intentional. He is hiring people for the long term and taking responsibility for their mental and physical health, well-being, care, and future. “When we started, we didn’t know what we were doing. We had never sold shoes. We never ran a call center. We never managed a warehouse. But not knowing how other people did things was an advantage,” Hsieh said. “We did what we thought was the right thing. It evolved over time. We were committed first to employee happiness. We were committed to the Golden Rule.”

Hsieh believes in a very supportive model of employee engagement. In his words, there are 10 key values:⁸

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.

These 10 values are quoted every day in conversations around the office. At the end of their training, employees need to know the values by heart and be able to explain them to colleagues. They can add their own words, explanations, and interpretation—but they must be able to repeat the core messages.

By drilling these values into its employees, Zappos knows that those employees are now better positioned and prepared to “spread the gospel” about the company and about how employees come first, and also that customers are to be treated so well that they will feel only goodwill toward the company’s name and brand.

In short, the attitude is one of “Hey, I can buy shoes anywhere, but when I go and shop at Zappos, I know I’m going to be treated in a very special way.” That’s the key to the company’s branding.

Headline: Transparency Is Not Always Risky for Your Business

Competitors can gain full access to the Zappos way of doing business. While we were touring the headquarters in Las Vegas, there were 10 businesspeople from a competitor in Australia who were also taking the tour. Hsieh believes that culture is the big strategic competitive advantage that cannot be easily copied. That’s the real secret, and Hsieh and his management team have worked relentlessly to develop that culture, which pays off in his brand.

He tries to lead the way in transparency.

As if to prove the point, he let us peruse his personal e-mail over a period of several months. It’s clear that he gets by on very little sleep—as little as three hours each night. His e-mails are about strategy, customer service, and details on improving the business, including inventory investment. In one e-mail, he asks for greater focus on the 20 percent of customers who create 80 percent of orders and the 20 percent of the 1,000 vendors who create 80 percent of the volume. He is never satisfied with what he has achieved. This is the company’s trademark. Deliver as promised. Package perfectly. Make good on the promise. Be better than any other shoe retailer. Build the brand constantly.

Headline: Why a Call with a Customer Can Lead to Repeat Business and Long-Term Growth

“Speak to customers in a way that resonates with their mindset, values, and language.” Hsieh’s injunction to his staff is clear. He knows that only 4 to 5 percent of customers will actually call. But he firmly believes that a successful call will lead to recommendations and more business—and the vast bulk of the business comes from repeat customers.

Shoes are a pathology for some shoppers. Our research suggests that consumers either love them and amass a collection or just buy them as a necessity. A real shoe lover can buy as many as two pairs a month—and keeps on accumulating them. So a call to Zappos is a real chance to connect and to learn from an expert in the shoe and apparel business about the latest trends, the most up-to-date fashion news, products the company has started to carry, fit, form, and function.

One repeat customer is Lauren, a 26-year-old Zappos apostle. She is a lawyer in a midsize firm, makes more than $100,000 per year, and lives in a very affluent part of Chicago. She is a striking woman—5 feet 11 inches tall, fit, and clean-cut, with all-American good looks. She played basketball, volleyball, and tennis in high school. She still plays sports most days. No one would know that in her closet are more than 200 pairs of shoes—sandals, wedges, flats, sneakers, gym shoes, running shoes, boots, flip-flops, work shoes, going-out casual shoes, going-out dancing shoes, and expensive shoes for that big night on the town. When she shops on Zappos, she uses all the online shopping filters for size, width, occasion, color, heel height, platform height, brand, price, materials, patterns, and product accents. The site lets her look only at products that the company has in stock and that are ready to ship. It makes decision making fast and focused. For a time-squeezed professional, it provides an economy of effort that she craves.

“Zappos is an integral part of my weekday evenings spent on the couch, with my laptop in front of me and the TV in the background,” Lauren explains. “That’s my way to laze around and recover from a tiring day.” Although she is in a committed serious relationship, she does her shoe shopping “in the closet,” away from her boyfriend’s eyes.

She says Zappos is “stylish, cool, yet practical with a sense of humor.” She continues: “If I have to personify Zappos, I would imagine a guy. Mr. Zappos is stylish yet practical, wearing dark denim jeans, slim fit but not suctioning his legs; brown loafers, not suede; a button-down shirt; and a blazer. He has a sense of style and a kind personality.”

This does not fully describe Hsieh. In fact, he himself is not very interested in shoes. For him, shoes are the vehicle to create a business where people can work happily and earn good incomes.

Lauren estimates that the total value of her Zappos collection is $7,500. Although she is a multichannel buyer—department stores, specialty shoe stores, monobrand shoe stores, and fashion-brand shoe departments—Zappos has a 40 percent share of her shoe budget. And this share is growing.

But Lauren’s value to Zappos isn’t just in what she spends. It’s also in what she does to influence others to spend at Zappos. “I taught my friends that Zappos exists, since not too many people my age know of it,” she says. “Their shoe collections have expanded after spending time with me.”

And this is exactly the payoff that Zappos is looking for. Not only does Lauren represent a hooked customer for life, but she also tells her friends about Zappos. You can’t do better than that. She’s become a disciple thanks to Zappos employees. She has become a walking endorsement for the Zappos brand.⁹

Headline: The Economics of the Business Have to Work

Engaging customers like Lauren is critical to the success of Zappos. It is dependent for new online visitors on the “shoe” conversations that take place. It does not spend very much on advertising. Instead, it relies on word-of-mouth messaging to generate referrals and testimonials, and that happens only as a result of the total emphasis not only on finding the right employees, but also on making sure that they are well trained in how to connect with their customers. This is no accident.

Zappos call staffers are important for another reason, too. Selling shoes is normally a skinny-margin business. The original markup is 100 percent, but most products are sold at sale prices, with a net margin of 20 percent and an operating margin in the low single digits. Zappos, however, sells most of its products at the full retail price. It doesn’t play the sale game. Even on Cyber Monday during the Christmas holiday season, when most online retailers drop their prices, Zappos resists the pressure to put up “sale” signs. This is a very risky strategy in the shoe category. However, receiving the full margin allows the firm to pay for massive central inventory, high-touch service, overnight delivery, and free returns. In effect, Zappos is asking, “Can we earn a price premium for premium service?” This strategy sets Zappos apart from most online retailers, with their flash sales, almost daily promotions, and buy-one-get-one-free programs. So far, the signs are that while growth has slowed, profits have increased.

Headline: The Lessons of Zappos

Hsieh is a deep thinker. When asked where Zappos will be in five years, he leaned back in his chair and visibly sighed. We guessed that this was a sigh combining pride, anxiety, and a continuous search for a better way. There were at least 30 seconds of silence in the room. “I can tell you where we will be in a year. I can tell you what we will aim to be in 10 years. In a year, we will have many more passionate customers. In 10 years, we will have expanded dramatically—more categories driven where our customers want us to go,” he said, keeping the mystery of the medium-term future to himself.

Going forward, Hsieh says that his number one priority is company culture. “A company’s brand and a company’s culture are two sides of one coin.” He has created a customer service orientation that is extendable into a wide variety of businesses. This includes extensions as broad and as far as airlines and hotels. “Our brand is a platform that makes everything possible. Whatever we do, we will bring innovation from outside the industry.”

He recognizes the importance of organizational tension to propel the company forward. Such tension comes from contrasting the way things are today with the way they could be. He is intent on creating what he calls “a complex adaptive system” that resolves organizational tension and creates the freedom to recognize each person’s individual gifts.

If there is a mystery about the medium term, there is no mystery about Zappos’ past success. It ranks employees first, customers next, and profits last. Even its owner, Amazon—which is a very different company, one that ranks growth first, category position second, and competitive advantage third—is starting to learn from Zappos.

Hsieh knows that unhappy employees can be a destabilizing force. Amazon now offers the same $2,000 posttraining resignation bonus as Zappos. This is all part of Zappos’ search for totally committed and passionate employees who buy into the brand.

Hsieh’s deal with Amazon, made at the bottom of the Great Recession, has left Zappos ring-fenced and largely independent from Amazon. The deal was shrewd from Hsieh’s perspective, because Amazon’s shares have appreciated enormously during the five-year period. In the last year, some elements of integration have occurred. Zappos has migrated distribution to Amazon-managed facilities and is now transitioning the Zappos website to Amazon technology. It is a much larger and more sophisticated system and permits a greater analytical capability, including suggested sales, product adjacencies, easier navigation, detailed product information, and customer references.

Four Seasons

Isadore Sharp was born on October 8, 1931, to Polish immigrants.¹⁰ His first job was as a construction worker for his father. He is an architect by training. He is married to his high school sweetheart. He is an author, a noted philanthropist, and the founder of Four Seasons.¹¹

On the day after Christmas 2004, the Four Seasons Resort in the Maldives was quiet. Around 6 a.m., tremors were felt from an earthquake nearly 1,000 miles away. The Sumatra quake was the longest quake ever recorded and released energy equal to that of a 100-gigaton bomb. It was measured at 9.1 on the Richter scale, high enough to cause total destruction and violent, permanent changes in the topography. Three hours later, a tsunami with a series of 14-foot waves began to ravage the island.¹²

According to one guest: “As wave after wave smashed against the resort, we watched, helpless, as in the distance we could see many of the 50 water bungalows that faced the reef disintegrating, instantly turning to matchwood as the waves pounded them, dumping guests, four-poster beds, TVs, and air conditioning into water so rough it was like a washing machine gone mad.”

Another said, “I got outside and saw a wall of water, boiling, frothing, angry as hell, bearing straight down at us. There was a strange mist that looked like thick fog that blocked out the sun. I stopped breathing and tried to decide where to run. But where could I run, when there were no double-story buildings and we were just one meter above sea level, and there was deep water on all sides?”¹³

This terror continued for two hours. One guest stated, “It looked like Titanic, Lost, Lord of the Flies, and Survivor all rolled into one.” Miraculously, no one at the resort died—but the devastation was widespread. The full force of the tsunami crushed palm trees, destroyed hotel rooms, and swept guests into the sea. During the day that followed, all 400 staff members at the hotel put their lives on the line for the 200 guests. They brought them to safety, gave them scarce supplies, and provided emergency medical care to guests who had been cut or had suffered broken bones and other injuries. That evening, all the guests were helped to what was left of the restaurant, where they huddled together until sunrise. The Four Seasons staff went above and beyond to ensure the safety and comfort of guests. Witnesses say that not a single staff member left the property for three days.¹⁴

Jet Li, the Chinese-born Hollywood actor, was staying at the resort. He was fulsome in his praise. In his blog, he wrote: “Throughout the initial chaos and the entire disaster, the Four Seasons staff demonstrated selfless bravery and compassion, the finest human qualities, in assisting us and the other hotel guests, even though their own family members were likely endangered.”¹⁵

We first heard the story from the hotel manager of the Maldives resort. “This is what we do,” she said simply. “We serve our guests.” Isadore Sharp expanded on this point. “When the tsunami hit our hotel in the Maldives, our employees risked their lives for the guests. No one told them to do it. They each did it on their own. No amount of money can generate that response. There was an outpouring of gratitude from many, many guests. One wrote, and I quote, ‘Let me stress that your group’s strength rests on rock, made up of the local employees who, while having been selected for doing their job well, have shown in a time of utmost crisis a level of dedication that no training and no amount of money can ever generate.’”

Headline: Automatic Response in a Crisis Does Not Happen by Accident

Just how do you create a company where the employees are so passionate that they will go the extra mile and, in the process, convert customers into loyal advocates? How do you create a company where the line between self-interest and company interest is blurred? How do you motivate from the front line back?

As the word about the dedicated Four Seasons employees began to spread, one could see how the Four Seasons brand continues to shine and stand out. Loyal customers were not surprised, and potential hotel guests were amazed, asking, “Wow, can you imagine a hotel staff that would put their guests first, even in the face of a dangerous tsunami?”

Headline: Invent a New Segment—Four Seasons Created Luxury That Was Aspirational, Inviting, and Centered on Service

Isadore Sharp did not open his hotel with a grand master plan. He did not forecast that he would go from one hotel to nearly 100 and create billions of dollars in value. He was a humble home builder when he opened the Four Seasons Motor Inn in Toronto in 1961. In fact, he came very close to calling the property the Thunderbird Inn.¹⁶ At the last minute, he agreed with a coworker that Four Seasons would be a better name. But what did Sharp know at the time? He was working for his father’s construction company, Max Sharp & Son, digging ditches, laying bricks, and building walls. He had every intention of building more homes, apartments, and office structures. But he was also a dreamer. And he dreamed of a hotel that took care of its guests’ every wish.

“When you are young, you have the courage to try things,” he said, sitting in the living room of his palatial modern home overlooking a golf course in Toronto. “You can think of all the possibilities. When you get older, you think more rationally and temper the possibilities with the probabilities. But it was my night job. I was a builder by day.”

Now 83 years old, Sharp is still handsome and witty. He speaks with force and passionate memory. The hotel he dreamed of was “not for dukes or duchesses but for people who wanted to be treated with respect, kindness, genuine hospitality.” To achieve this, he realized that he needed hotel workers who were committed to delivering the very highest-quality service and hotel managers who would recruit and nurture the very best talent.

Today, some customers remember the grandeur of the hotels themselves. Oprah Winfrey once said, “The Four Seasons bed is the only bed better than my own.” It is certainly a hallmark of Four Seasons hotels that they have architectural imagination and beauty, wonderful floral arrangements, distinctive and beautiful touches, clever room design, elaborate bathrooms, spas, restaurants, and reception areas.

But from the beginning, Sharp knew that the most important thing is a hotel’s staff—including the doormen, maids, waiters, and dishwashers. Ultimately, he believed, “They are the real product. They are the differentiator.”

What he discovered along the way was that a major result of having superb and loyal employees was that his customers noticed. Not only did they become repeat customers, but they also began to become apostles for the hotel chain. In short, they told their friends.

The service culture of Four Seasons has become the model for other companies. According to Sharp, in the book The Apple Experience, “Steve Jobs has acknowledged that the Apple Store was inspired by the Four Seasons.” Its executives modeled its now-famous Genius Bar on the hotel group’s concierge desks, where no guest question is inappropriate, and where no request for help is met with anything other than earnest attention. Also, many luxury competitors have modeled themselves on Four Seasons—for instance, Ritz-Carlton, St. Regis, Peninsula, and others.

Again, it’s all about building the brand.

Headline: Use a Common Phrase as the Point of Engagement and the Decision Point on What the Right Answer Is—The Golden Rule

From the beginning, Sharp had big ambitions, although he had no idea that his vague premise concerning the highest-quality hotel would translate into a global institution, a synonym for luxury. “We wanted to be the best in midsize hotels up to 250 rooms,” he explained. “We had it in our mission statement to be the best. We still have it written down. But we did not have a master plan. What we had was a passion to take care of people and to apply the Golden Rule.”

He continued: “The Golden Rule is, ‘Do unto others as you would have them do unto you.’ That very simple statement is the foundation upon which the company built its core values. It is a universal belief system. It is the first line of human rights. It is reproduced in every religion. It is a way of life. My parents were immigrants. They spoke Polish and Yiddish. But it was the way they lived their lives.”

But what did this mean in practice? As Sharp said: “How should our people behave?” His answer was simple. “They should be polite, thoughtful, and caring. It’s not what you say—it’s what you do.”

Headline: Screen, Train, and Enable Your Team

Sharp set the bar high for workers at a Four Seasons hotel. But he had no doubt that he could find the right people. “The world is filled with people who are good in their hearts. We believed there was an unlimited supply of people who are genuine, caring, and service oriented.” His confidence was well founded. In 1992, when the Four Seasons New York opened, there were 30,000 applicants for 400 jobs.¹⁷ This distinctive hotel—designed largely by I. M. Pei, a Chinese-born American architect—is 46 stories high, has 400 rooms, and boasts a penthouse suite with a rack rate of $40,000 per night.¹⁸

But to get a job at the Four Seasons, applicants need to make it through five interviews. It is a rigorous, highly selective procedure, Sharp said. Each interviewer is looking at a specific angle. The HR director assesses willingness to work. The division head tests specific skills. The department head is looking for cultural fit. The resort manager assesses growth potential. The general manager, who meets with every prospective employee, is charged with looking for the potential to perform at another property. The company states that it receives 20 applications for every job.

Sharp says that the company is looking for recruits who are all of the following:

Intuitive

Dedicated

Considerate

Attentive to detail

Creative

High communicators

Possessed with the ability to see situations from the guest’s point of view

“It’s all about the guest experience,” he said. “We want people who care, people who will go the extra mile.”

Recruits are asked to describe themselves, their experience, and their sense of the role at the Four Seasons, and to problem-solve potential guest service situations. They are also asked to provide examples of past experiences in which their true personalities can be demonstrated. Typical questions include: “Would you serve a guest a burned croissant?” “How do you stay healthy?” “What are your top weaknesses?”

The ones who make it to hiring receive extensive training and enculturation.

The result is an annual turnover rate of 11 percent, substantially below the hotel industry norm of 27 percent.¹⁹ In the case of the New York hotel, the result is a property that holds a perennial spot on the AAA Five Diamond Award and Condé Nast Traveler Gold List.

Employees at the Four Seasons are not scripted. They are trained to be friendly and conversational and to share things about themselves. As Sharp explained: “We aim to nurture the full potential of every employee.” All employees go through a three-month on-the-job training program. At a Four Seasons hotel, the service culture requires a groomed appearance; a welcoming approach, with smiles, eye contact, and an attentive voice; and a deep knowledge of the hotel. The goal is demonstrable care for the most discriminating guests. This code applies to everyone, from the general manager to the dishwasher. “When people believe they have a role to play, they play it. For a dishwasher, it is important that every piece of cutlery is perfectly clean and that no glass has cracks. They need to see that they prevent the guests from cutting their lips.” Each employee has a mentor on-site. Employees start by shadowing an employee who is in their target job. They learn by doing. At daily department meetings, they hear about issues, opportunities, and action plans. Guests are identified for special needs and treatment. You learn through imitation.

At one Asian Four Seasons property, a 30-year-old worker named Tam told us that Four Seasons changed his life. “I had nothing when I came to work here,” said the slender, charming waiter. “Four Seasons transformed my life. I am married now. Next month, my wife and I are going to Hawaii. I was employee of the month, and my reward is an all-expenses-paid week as a guest on the Big Island. I will get to enjoy what you enjoy. I never dreamed that would be possible in my life.”

Sharp said that hotel managers play a key role in the development of the staff. They are meant to be “communicators, not commanders; coaches, not cops.” He extols the virtues of an approach called proximity management. With this approach, the general manager meets with every employee group on a regular and informal basis. The purpose is to fix any problems immediately. The company defines a problem as a recurrent area of guest complaint (for example, speed of check-in, quality of room-service delivered food, beverage needs, or services). “Senior managers who can’t walk the talk are winnowed out,” said Sharp.

But all hotel workers who deliver at the high standard are amply rewarded with a generous benefits package. Four Seasons pays in the top quartile. It’s “a magic ratio that attracts the right people,” revealed Sharp. Also, employees get pensions and dental and health insurance, as well as the privilege of being able to stay with their immediate family at any Four Seasons hotel worldwide for free, as Tam discovered. There’s another bonus too: cash rewards for years of service. This is something that is paid out frequently, a reflection of the loyalty that Four Seasons engenders among its employees.

In 2014, Sharp attended the thirty-fifth anniversary of the Four Seasons hotel in Washington, DC. Its fortunes were transformed when Ronald and Nancy Reagan adopted it as their favorite in-town location, and prosperity was born.

Sharp revealed that this came about because Reagan, when he was a candidate for the presidency, was planning a major Washington fund-raiser. Reagan’s chief fund-raiser asked the Four Seasons for a donation. Instead of a contribution, Four Seasons graciously offered the former governor a complimentary suite whenever he was staying in Washington. And more important, he was treated to a full dose of Four Seasons hospitality from the hotel’s staff.

Within a couple of weeks, Reagan had held a three-night fund-raiser at the hotel. Then business leaders and other contributors filled the hotel and got their first taste of the Washington Four Seasons. They were all hooked. From that day onward, the hotel was Nancy Reagan’s favorite Washington property, and the hotel brand continued to spread.

The hotel attracted great loyalty from its staff. “There were people who had been at the hotel since it opened and … 241 people who have been with us from 5 to 35 years,” said Sharp. “There was a lot of history at that meeting. It is those employees that have made that hotel great. We have a work environment where people are treated with respect. We embrace it in a manner that is sincere and appreciative. People are attracted to that.”

Headline: Get Inside the Moment-by-Moment Emotions of Your Consumers

Sharp is understandably proud of his achievement. But what do the customers think? To find out, we conducted a major quantitative survey. A typical respondent was Mary, a 47-year-old HR professional with an investment firm in San Francisco. She’s upper middle-class, with a family income of about $400,000.

She checked Four Seasons as her favorite brand in the world. “I love the Four Seasons. I love the way it makes me feel to enter one of their lobbies. I love the way they treat me, and the way they treat my children,” she says. She and her family have been to 10 of the hotels. She aspires to go to all 93 of them. “They are not pretentious. They are genuine. It’s a lot more expensive [than other hotels]—but it’s good value. Remember, I buy my groceries at Costco and Trader Joe’s. I don’t like to spend $900 a night. But for $900 a night, I feel good. I am served by people who are happy to take care of me. They make you feel welcome. They are pampering.”²⁰

Sharp always says that the job of the Four Seasons staff is to create memories. And Mary has one particularly fond memory. “They made my son feel like a rock star. He’s a finicky eater. But the server allowed him to create his own menu. My son specified what he wanted, how he wanted it prepared, and they allowed him to go back into the kitchen to make sure it was exactly what he wanted!”

Summing up, she said: “It is like an oasis. They don’t skimp on anything. Other hotels are places to sleep. The Four Seasons are to enjoy and savor. I’ve told all my friends, Four Seasons is the hotel for you.”

Headline: The Lessons of Four Seasons

The success of Sharp’s approach to luxury hotels is defined by brand strength and differentiation. New properties live on the endowment of prior properties and guest loyalty. In 2007, Sharp sold Four Seasons to Microsoft founder Bill Gates and Saudi Prince Al-Waleed bin Talal in a $4 billion deal.²¹ He kept 5 percent. Despite the global economic slowdown, there is no plan to scale back the company’s ambitious growth plans. Today, there are 93 hotels. Within the next eight to ten years, Sharp expects Four Seasons will design and operate 150 hotels around the world. In China, there are already 9 hotels, with another 13 under development. He thinks that eventually there could be 250 hotels in the 194 cities that he believes are capable of hosting the Four Seasons brand.

Sharp is under no illusions about the challenges that lie ahead. Since the 1960s, when he invented the high-service model of luxury hotels, there have been a slew of imitators, including Marriott’s Ritz-Carlton, the Peninsula, St. Regis, Shangri-La, and Mandarin Oriental. This has increased the competition for luxury customers and obliged the Four Seasons to move with the times and do some things that it has historically resisted—for instance, launch a loyalty program. Sharp says that the average hotel loyalty program is a giveaway, effectively a discount. He expects the new Four Seasons recognition program to be different, gathering guest information in a positive way and driving improved service delivery through an even greater understanding of guests’ needs. Sharp’s traditional approach to service, and the development of people who can deliver it, is arguably more valuable than ever in the fast-moving digital age. “For us, 99 percent customer satisfaction is not good enough. That 1 percent with poor experiences can tell thousands of people. What counts is what you do when something goes wrong. Do you make a sincere attempt to try to help them? Do you explain? Do you work to solve the problem? It used to be that one person will tell 10 if you have a problem. Today he will tell 10,000 online.”

“When we look at what Four Seasons really stands for, it’s really the people behind it. It’s all about the team effort. It’s not about ‘me,’ it’s about ‘we,’ and that’s the way Four Seasons has got to where we are. It’s the participation of many playing their part when needed and standing up and taking a solo when required,” Sharp explains.

Amid the growing competition, this strong service culture should help Four Seasons continue to grow. “We have 40,000 employees now, and 90 percent are culture carriers. They understand the core values. It will continue to perpetuate. They will make sure it carries on.

“My approach is to see things through the customers’ eyes,” he says proudly. “Our objective is to retain the culture, to build the brand, and to never compromise. The first priority of the Four Seasons is the sanctity of the brand.”

This special brand has made its way into the honeymoons, weddings, anniversaries, vacations, annual meetings, and business trips of millions of the most affluent people in the world. Consumers such as Mary count on Four Seasons for memories and stories that last a lifetime.

Ask Mary, and she is happy to tell you where to go on vacation for that special touch. More than that, she has been so thrilled by her experiences that she happily tells her friends and family. That’s the key: convert your employees, and they will convert your customers, who will convert their friends—who will become your future customers.

*****

One Conclusion

Zappos and Four Seasons are very different companies. Zappos serves mostly younger consumers with younger service people. It is low touch, but high service. Few customers ever come on campus. It invented a new way for consumers to access an almost unlimited inventory of shoes. Tony Hsieh is messianic in his desire to provide happy employees with a satisfied work life. The central service site in an isolated part of Las Vegas allows total control of the work environment and the delivery interface with consumers. A lot of this is electronic—but the pizzazz is voice to voice.

By contrast, Isadore Sharp’s Four Seasons is all about high-touch, in-person service, exceeding expectations every day and all around the world. He has created a brand model that can be comfortably re-created in his hotels, whether they are in Prague, Moscow, Bangkok, or New York.

Yet, despite their differences, the Zappos creed and the Four Seasons mission are very similar. Their culture drives their brand. Happy employees will take a bullet for their company. Little things make a big difference, and there is a particular emphasis on physical nourishment, encouragement, and safety. Transparency makes people feel safe. Every day on the job can be a celebration.

Both leaders take the view that if you can transform a job into a calling, and if you can enable those on the front line to make decisions on the spot, you can and will win the hearts and minds of the consumers for life. Both companies are dependent on these consumers becoming repeat customers and, most of all, spreading the good word to their friends.

In their different ways, Four Seasons and Zappos have found employee-based models that work to turn consumers into converts and thereby deliver brand apostles. The front line of contact with the consumer is so well trained, so memorable, and so service-oriented that it is impossible to not say, “Wow.”

Four Takeaways

1. Your recruits are your future. When hiring, always remember that an individual’s attitude will not change. What you see in a recruit will continue when he becomes a veteran. A great attitude, humility, and engagement should be visible immediately in every recruit you meet. Set high bars. Never settle for the bottom of the barrel. Pay attention to detail. Ask all who interact with her: “Does this person fit?” If your workers have the power to make decisions, they become much more confident in their role and in dealing with clients and consumers.

Great employees are like wine. If you are making wine for long-term consumption and savoring over the next three decades or more, what you recruit today is the raw material for your future. If you start with bad grapes, you will create bad wine. If you start with the finest grapes, and then add skill, care, attention, and investment, you can create inspiration. Great employees are infectious, hypnotic without being creepy, and self-deprecating without exaggeration, and they beat the drum in a genuine celebration of associates’ success. Spirits lift, and work becomes a calling.

2. Successful new businesses redefine the world. The inventor sees what is already there and does not imitate, but rather creates something new—something that is distinctly different and distinctly better, with a clear target consumer. Four Seasons redefined luxury to provide leverage for the user (a consistent experience where dependable provision of all daily needs allows busy executives to concentrate on the work at hand) and created delightful touches that energize the recreational guest. Zappos combined a superextensive shoe selection—which was available the next day with no worry about returns—with service that is memorable, entertaining, and distinctive.

3. Promote the culture carriers. The limit to your growth is your ability to bring on people who can become culture carriers. These people do the right thing every day on the basis of their experience with you and your direct reports. They also do the right thing according to their internal compass. Create employees who have your mission in their hearts and regard it as their own.

4. Follow the Golden Rule. The Golden Rule (“Do unto others as you would have them do unto you”) is a universal touchpoint—so easy to say; so tough to do every day everywhere. If you really, really do it, magic happens.