Alex Genov, Zappos: Using psychology to design meaningful customer experiences

In this episode of Conversation CX, Alex Genov, Head of Customer Experience Research at Zappos, discusses customer-centricity, empathy, and personalization in the digital space and how technology comes into play when creating truly unique and memorable experiences
 
Watch the interview to learn some of the reasons behind Zappos’ massive success:
- Explore how the brand always prioritizes the customer, consistently achieving a NPS of over 90
- Listen to Alex's insights on personalization and the best ways to measure it
- Discover his approach to empathy and how to scale customer care
 
About Alex Genov:
Alex is a research professional, holding a PhD in Experimental Social Psychology. He applies his Psychology background and his passion for research, design, and innovation to solve important customer and business problems. He is currently leading Customer Research for the Zappos Family of Companies. 
bestselling author. Howard helps executives at large brands transform their customer experience to win in today’s digital world.
 

More info:

Alex Genov's LinkedIn profile

Interview highlights :
 
You have a PhD in psychology, what led you to become involved in the field of Customer Experience?
 
I came to the States to study psychology, and then I went on to get my PhD. It was a good thing in the long run, but in the short term, it was a bit unnerving because it was very hard to find professor positions, and I was headed that way for a little bit. Then I said, OK, let me look for other jobs and this was many, many years ago. I started doing online searches for jobs, including psychology. And then usability started coming up at companies like Microsoft and Boeing. I lived in Seattle all the time. And I looked into that, and the usability turned out to be a very practical application of psychological research, with all the measurements, the metrics, the methods. So I started applying both my knowledge in how you measure things, and how you define things in terms of psychological constructs through the software industry and lot of those concepts are very theoretical, like what is ease of use mean? You need to define it. It's not a hard core metric like temperature or height or weight and so on, so you need to have some rigor in defining that. And at the same time with experience, of course, I realize that we need to balance that academic rigor with the business needs which are very different to me. At some point, I had this epiphany that those two are very different ball games, different games with different rules, you know, academic research and researching in the business industry. And so once you realize that, I think then it's much easier to start helping the business and being seen as helpful versus academic or theoretical and so on.
 
Zappos was an early pioneer with this customer centric attitude, and therefore your NPS is consistently over 90, which is incredibly impressive. Can you speak to any achievements you've had in this, in your role related to experimental social psychology and how it played a part in this sort of success?
 
Sure. So that was first of all, I need to state that Zappos was extremely successful as a customer centric company long before I joined. I joined in about seven years ago, Zappos was in its 14 or 15 tier. And Zappos success was based on this really counterintuitive, brilliant move to focus on customer service early on. They realized that people can buy shoes anywhere. And indeed, most people were buying shoes in stores. So then we realized, we need to make people comfortable with this new way of doing business of shopping. And I said the way to do it is to really focus and invest in customer service and on the predominant model as customer service on the phone. And so that's what defines Zappos, it's this amazing, unprecedented customer service which really exemplifies. Not only customer centricity, but this idea of trust which we measure customer trust as well. And we use this question that was developed by the Net Promoter creator, also Fred Reichelt developed this other question which to me measures trust really well and it's states that, let's say, retailers or Zappos or any other company always has my best interest as a customer in mind. So when you look at the way we run our customer service, this is 100 percent true. There is no wait times, like we pick up right away, and then if we have to talk for a minute we talk for a minute and if you have to talk for like two hours, we talk for two hours with you. There's no way we cut you off. And you know, we hire the best and the brightest people for customer service, really happy people that projects that and will make you laugh. You know what I mean? They'll talk to you about your life's problems if you want to do that. And then if we don't have the product on Zappos, then we'll look for product on a competitor site and point you to that. I mean, this right says : OK, I have your best interest as a customer in mind. So that was built into the DNA of Zappos. So when I joined, one of the interesting challenges for me was to bring some of that spirit to the digital experiences. And so again, we have a great website. It's probably in my opinion and I'm biased of course, better than a lot of competitor websites out there. It's easy to use and It looks good. But in my opinion, it really can be enhanced by bringing that spirit of customer service to emulate some of that. And so one of the projects for example, you ask how I apply my social psychology and bring the focus to the customer a little bit on the digital experiences, was when I joined Zappos, I realized at some point that nobody was reading customer comments from the websites and the channels. So back in the day, we were in the self-organization mode. So my group started the voice of the customer, what was called a circle and then it got attached to higher level circles and so on. And it's been a journey. But right now, we got to a point where the executives read customer comments. And now you know, the focus on the customer is really much sharper, in addition to focusing on important business metrics like, you know, supply chain things and then availability of products and selection and our relationship with our vendors you know these are the pillars. right? But now we're in this process of listening to customers more and then responding.
 
And so to quote you, Alex, I know that you said customer obsession is great, but what is best is customer care. And there's obviously been a lot of talk about the need for empathy in the last 18 months and what we've been experiencing as a globe playing it. But what do you mean by care versus obsession and why do you stipulate the difference between the two?
 
Well, I mean, it's a famous quote by Jeff Bezos, it's a quote for like, Amazon is customer obsessed, and I think it's a great and a very emphatic statement, right? It's kind of shows like passion for the customer and so on. And I think that's terrific. I'm not negating that. I'm saying in addition to that, what Zappos is doing, is this personal touch. You know what I mean in terms of what comes through when it comes to customer service on the phone, right? When we talk to customers within our Zappos culture, the emphasis was on interpersonal relationships, so a lot of the culture was built around first of all, selecting the right people, so you're surrounded by nice people, brilliant jerks are not tolerated. That's right. It's those people with egos that overpower everything, they're not the selected in a way or they self-select out. And then once you have a great group of people, then the people are encouraged to not only work together but have fun together to get to know each other. And that actually to go back to your initial question the pandemic, that's what really helped things out when we moved to work from home. Those relationships sustained and helped us work really well together online. Of course you cannot substitute in-person interactions and so on, but I think that's one of those typical Zappos hallmarks of not only focusing on the customer in terms of, let's say, numbers, but also focusing on customers as humans, and for example, me and my group that's what we help the organization with. Again, we work hand in hand with our colleagues, who are much smart people than us in data science and analytics, they crunch the numbers when we need to do that. But that provides the what's happening, and then what we help the organization with is to get some sense of why this is happening and you need to have both views and that's where the psychology comes in. I do understand that, you know, sometimes you need to achieve a business goal and say, why don't we increase sales in this area? But then you understand your customers in this specific context. And then say, what's the best way of doing it right and what's the best timing and what's the best way to talk to them and so on?
 
So I have a two part question for you, Alex. Obviously one. What is Zappos definition of personalization, like what does that mean to your company? But then do you feel that personalization can actually be scaled effectively?
 
Right, two very meaty questions there. I think one of our really great exercises here was to really first realize that personalization is an important thing everybody is talking about, especially in retail. If you go to these events, you've been to too many of those I'm sure, 80 percent of vendors are personalization technology, personalization this personalization that. To me, a lot of that technology is pretty awesome, but at the same time, if it's not coupled with a deep understanding of the customer, It can be a bit misguided and It ends up being just best guess recommendations based on data based on averaging people. And that's one of my topics that I'm passionate about incoming from psychology is you cannot average customer experience. It's like if I put your head in a very hot oven and feed you a block of ice, I would say on the average, you'll feel pretty comfortable, right? Comfortable. Seventy five degrees, right? But you can imagine the actual experience. So I think that brings to light what averaging customer experience does, right? So we said, OK, personalization is important, are we measuring it? And we realize, OK, we're not asking our customers how they feel. So we have the voice of the customer look at that dimension in the beginning. We included the question "How personalized is the Zappos experience to me", And then we luckily, added a text field underneath like, "why do you say that?" And we reached out to our customers and then we started getting really top marks. I mean, again, we have a great website. In my mind, when I thought of personalization I didn't think we were doing a lot to personalize, right? And then when we read the comments, people talked about great customer service, great selection, people are just happy with Zappos so they're going to write and say, Oh yeah, it's personalized. Maybe because they can find the sizes that they're looking for and so on. So then we followed this up with in-depth survey where we asked people about what they consider personalization and so on. And so a lot of that, this was extremely insightful. What we found was that about half of respondents didn't want personalization, they wanted to be anonymous, they wanted a great selection and great tools. And then another half almost, said you have my data? so use it to help. The way I interpret that, and again going back to the psychology of the consumer, to me the common denominator, is the consumer 's trust. And again, I talked about measuring that, We measured that within the general population of U.S consumers on a quarterly basis. And it's really not great, and that's probably due to a variety of factors. But you know, a lot of data breaches happen, and a lot of things happen, so some consumers, at least don't want their data saved, they don't want their information saved. So when you think of personalization again, don't assume. So I would say personalization should start at that level of permission like "Hey we want to use your data to get you better results when you search" for example. And then if you say yes, then ok and everything flows. So that answers the first part of your question. And then can it be scaled? I think it can be scaled, I think we have all the data, It's when you build a trust. I think earning the trust is the first step. Like let's say I want to personalize some experiences for you I need to get to know you, like if you go to a financial adviser and say, I want to do x y z, you know, they're going to start asking questions that are extremely personal, right? And only if you open up and you tell the financial adviser everything, that has to do with, you know, family health, I mean, you name it like the most personal, intimate details that I do have to divulge. If you're not ready to do that, the advisor can't help you like I think it's the same way. Trust has to be built. And then it can be scaled because it's not rocket science, right? Like, for example, if you're going, I'd say buy a grill backyard grill online, guess what are you going to see next after you buy one, you're going to see? 10 more. Why don't you buy 10 more? Those are similar ones or other customers also bought these grills and in my head, l'm like why do I care what other customers bought. But instead, if I ask you a few other questions like it need to be scaled like, "why are you buying a new grill checkboxes", I bought a new house, I'm renovating my backyard. And based on that information, then OK, maybe you need other things... Maybe you need to entertain and maybe you live in Minnesota and you need a heater for the winter. That feels much more personalized, right? Versus just buy more of the same.
 
So, Alex, your customer service success has been driven with some high level technologies. But what is your vision of A.I? And what do you think are the most promising applications in the CX world?
 
You know, sometimes when I talk about, focusing on consumers and psychology and so on, i don't want to sound like I'm putting down AI. AI is an extremely important part of life now. Without AI, we cannot live our lives the way we do. That started with the Google question, I can't imagine life without the Google technology, that's A.I. That's based on a ton of data, billions and trillions of even more data points that they're crunching, sophisticated algorithms and all of that. Another really important piece of AI that we use for voice of the customer program is text analytics. By the way, this is one of my favorite examples when I say we cannot do it without AI, because if you have read 10 customer comments and try to classify each comment into different dimensions and different root causes, and now multiply that by 10000 or 100000 like it's humanly impossible, you cannot do it, one person cannot do it. But there's powerful A.I. that does that. So there's really great applications, it's just a matter of balance. That's what it is. if you start with just extremely smart people writing awesome technology and then say, well, how can we now use it? That is like off balance. On the other hand, if you just say we only need psychologists that put people on couches and talk to them for hours with a paper, a pen and then get these brilliant insights about them, that's not going to work. So where's the balance? And I think things can be scaled and empathy can be emulated by technology in an authentic way. I think it's doable. It's just people haven't really tried focusing on it.
 
So let's get to the actual communication channels in engaging with consumers. These communication channels, I'm talking chat video SMS. Everything has been pretty widely adopted by a good majority of generations. But what are your tips in general for making the best use of these channels when building out your customer relations? You mentioned text analytics and extrapolating insights and things like that.
 
So that's on the back and if you want to really understand what's going on, and If somebody complains, you want to understand what's going on. That can be also a part of even those chat solutions, right? And I think it's on a very rudimentary level. It is, but it's just very basic matching of certain words with other pre, hard coded things. And that's where it starts. The AI starts to fall apart. So I think I'll go again back to my point about if you want to create memorable customer products and services and trigger great experiences in customers and create loyalty, you need to really start with the customer need in mind, of course, all this has to be balanced with the business priorities. Businesses need to think about the bottom line and so on without doubt, but I think you can achieve that and also focus on the customer. You cannot start with the technology. If you start with the technology, you're going to end up with Clippy. But if you say here is the customer need and what they need to accomplish and here's their mental models and what they're used to, then you say that's the what then you have the how and you have a long list of technologies and hows. You know, in general, younger people like to try new technology or more adventurous people and open mind people versus other people who are more conservative and prefer to stick to what they know. You know what I mean? So that's that. Then you start matching that technology with the consumer and even with forums for Zappos, you know, famous customer service. Again, there's different types of people. You know, some people like to talk, some people don't want talk. They say, don't give me this little chit chat I'm in a hurry, skip the chit chat. And then you have to adapt to them and say, OK. Some of them say put me on hold, it's fine and other people say, I want to talk to you while. So that's when it comes to phone, but then you understand some people want to use text. Why? Because they don't want to be committed to a phone conversation, they can multitask. And then, when you understand why people need certain solutions, then you can match it with the wide host. The same thing with video you may think, OK, like a video conversation during customer service will be great, like we're doing right now, but in reality, that's really not the best idea because somebody might be a great customer service but they don't want to be looking at another person or they may be distracted because they're multitasking, they're looking here, looking there, and on the phone it comes up very naturally. But on video would be completely awkward. So I think that's my biggest advice, Do not start with the technology.
 
So I think you're being modest before Alex, you've helped build out this customer experience empire that is Zappos for seven years with your psychology background. But being Zappos what are you guys focused on next? Obviously, it's specific for your CX research side of things, for someone who's already got an NPS at 90 and more. And what is the next obstacle you guys are keeping your eye on?
 
So again, Terrence, I can take no credit, I'm just making small contributions there, but I would say, Again knowing how the world is changing and, you know, the pandemic changed a lot and how the consumers are changing, you need to start there and then just focus on the customer. For example, I told you about a lot of the business model innovation that Zappos are doing to help vendors and to help customers during the pandemic, that everything got upended. So for example, in addition to wholesale, Zappos also now doing drop shipping and direct fulfillment and consignment and all these other business models. Then again, on the customer front, because our employees are empowered to listen to the customer and to come up with different solutions. For example, one employee during a conversation with the customer had the idea to sell single shoes, thinking of all the people with special needs out there and the millions of them. And also now Zappos is selling single shoes. You can buy one shoe right or mix and match. And that's another example of this innovation, so if you for example are a small business owner and you need some kind of special equipment. I don't know for, landscaping, you can call Zappos and they can do the research for you because you know what I meant. It's a part of Zappos DNA, we can help you with anything in a way. It sounds, you know, kind of far fetched, but it's really that's what makes Zappos Zappos. So I think. It's focusing on the customers and on commerce and helping our vendors and taking this holistic view of, you know, customers, commerce, community and culture. These are the four pillars of Zappos.
 
Alex, it was an absolute pleasure. Thank you so much for joining us. And this was again Alex Genov, head of customer research at Zappos for today's focus using psychology to design meaningful customer experiences. Alex, thank you again.
 
 

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