The Best PR that $1.6 Million Can’t Buy: Authenticity in Action at Zappos

by cv harquail on May 25, 2010

Gotta love those folks at Zappos. They screw up, they explain, they apologize, and they fix it.

And we applaud.

Why? Because Zappos’ actions support the company’s stated purpose, and Zappos’ actions support its claims about who they are as a company. It’s Authenticity in Action.

The Zappos’ Mistake Story in a Nutshell

201005251208.jpg An online pricing error at 6pm.com ( Zappos.com‘s outlet & clearance site) puts everything on the site, even Manolos, at $49.99 or less. The glitch goes unnoticed from midnight to 6am, when it is finally corrected. Despite the potential lost revenue,

Zappos decides not to take the official line in its own boilerplate in their Terms of Use:

(“In the event a product is listed at an incorrect price … due to error … we shall have the right to refuse or cancel any orders placed for product listed at the incorrect price.”)

Instead, Zappos gives its customers the benefit of the incorrect, lower price.

Aaron Magness, director of brand marketing at Zappos, wrote on their blog:

While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $1.6 million – ouch) selling so many items so far under cost. However, it was our mistake. We will be honoring all purchases that took place on 6pm.com during our mess up.

In a postscript to that blog post, CEO Tony Hsieh:

- Explains the details that lead to the error,
- Admits that they were planning a system upgrade but hadn’t gotten there yet,
- Promises that the system was being fixed, and
- Assures us that no one involved was fired.

Zappos did some problem analysis, they identified the systemic issue, leaders took responsibility, and the problem was not blamed on the poor folks who made the coding error. That’s learning from mistakes, and that’s leadership.  And, for Zappos, it’s authentic behavior.

Authentic Actions Demonstrate Core Values

zappos_tony-Their response to the pricing error is authentic behavior, because of how Zappos’ response demonstrates their commitment to their core values.

Specifically, the actions demonstrated value #7: Build Open and Honest Relationships With Communication.

“It’s important to always act with integrity in your relationships, to be compassionate, friendly, loyal, and to make sure that you do the right thing and treat your relationships well.”

Also, Zappos’ actions demonstrate another core value, value #1: Deliver WOW Through Service.

Nothing says ‘wow’ like honoring the mistaken price, even when you aren’t required to. Loyal Zappos’ customers may have gotten used to the occasional free overnight delivery, so that ‘wow’ might be tired. However, to have a business accept responsibility for its errors in a way that benefits the customer? That’s still rare, and remarkable.

Even Authentic Actions are Vulnerable

Some people did question the lag time between the discovery of the error, the posting of the explanation, the subsequent followup by the CEO, and Hsieh’s tweeting about the situation. Could the lagged tweeting and information sharing about the event have been intentional, to help Zappos take advantage of the mistake by generating (even) more positive press all the way into this week?

Certainly, the “free” publicity about the $1.6 million dollar mistake has generated some buzz for Zappos. It has also increased people’s awareness of the 6pm.com site/business itself — and so the whole situation can be seen as a $1.6 million dollar ad spend.

Maybe that’s cynical, and maybe there’s some truth to it. Maybe it’s both.

Authentic behaviors are vulnerable to second-guessing by observers.

zappos-teamObservers never really know whether actions have occurred for the reasons that organizations claim, or whether these reasons are just post hoc spin. With authentic behaviors (like altruistic behaviors), it’s not hard to find a more base, less noble, instrumental explanation for these actions.

Authentic behaviors operate at two levels– they express real commitments, and they also generate positive reactions from others, because people recognize these authentic  actions as the ‘right thing to do’.  The positive reaction is nice, but it’s not the reason for the action itself.

Would it have been somehow more ‘authentic’ if Zappos had not been public about their mistake and their response?

The estimable Seth Godin, in response to a comment in Jeff Jarvis’s post on Buzz Machine, pointed out that keeping the mistake secret, quietly honoring the prices and working to ensure that word didn’t get out would not have demonstrated Zappos’ commitment to transparency. It would have been inauthentic behavior. Thus, Godin asks, “Why exactly is it wrong for Tony to tweet this, whenever he tweets it?”

Responding to Mistakes, Organizations Demonstrate Their Character

I’m sure that some wise person stated, in a pithy way, that the ways we respond to mistakes demonstrates our real character. This is true for individuals, and for organizations.

Laurel Papworth notes that Zappos’ error — and response — is the kind of mistake that ends up being great for a company’s reputation. In social media “mistakes often make, more than break, a company’s reputation.”

Social Media and Reputation

Social media is important for reputation not just because social media make a mistake more public, but because they make the resolution of that mistake public. Social media allow us to see both the breach and the resolution. Not to mention, social media allow use to see everyone  else’s opinion about the quality of the resolution, amplifying and supporting our own conclusions.

By itself, this particular action by Zappos doesn’t prove that Zappos is an authentic organization. Instead, it’s Zappos’ pattern of actions, over and over, that create an ongoing experience of Zappos as an organization striving to demonstrate its values through its actions.

That’s the kind of authenticity that no amount  of money can buy.

See Also:

(from back before I liked Zappos: If Stephen Colbert were the CEO of Zappos: Explaining a layoff to your employees

Hat tip to @TechDirt for the story.

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