Optimizing Your Fraud Investment in 2024
3 Ways Tony Hsieh's Customer Experience Legacy Lives On
"It’s early morning after a shoe sales conference in Santa Monica, California. A group of friends – including Tony Hsieh, head of the online clothing giant Zappos – is stuck in a hotel room, hungry and a little inebriated.
Room service doesn’t deliver after 11 p.m. Hsieh dares someone to call Zappos and order a pizza instead.
The customer service rep who answers the phone is polite, if a little confused. She puts the group on hold. A few minutes later she returns with a list of the five closest pizza joints in Santa Monica that are still open and delivering."
This is just one of the stories in Tony Hsieh’s book, Delivering Happiness, but it’s one that has stuck with me ever since I read it years ago. The thing about it is - this wasn’t an anomaly. It’s just one small example that encapsulates what was so incredible about Hsieh’s outlook and mission in life and in business.
Tony Hsieh’s book, speaking sessions and example have had a profound impact on me as I’ve developed my own professional career and perspective, and I’m by no means the only one. He taught the whole world what a true customer-centric organization looks like, by taking it to the extreme in the most positive way.
These are 3 ways that, in my view, Tony Hsieh changed not just his industry, but the way business is done today. And it’s the influence of these 3 lessons that has led me to Identiq, where I am today. I couldn’t be more grateful.
Lesson #1. Great Customer Experience Must Come From Every Department
As a part of the unique way Hsieh ran Zappos, and made a customer-centric mentality part of every aspect of the business, all employees work on the customer service desk during their four weeks of new-hire training and also help out during the busy holiday season.
When Hsieh was CEO of Zappos, he did it too. (True to his philosophy of building relationships with customers, he certainly didn’t confine his topics of conversation to shoes!)
This is a fantastic way to emphasize that customer experience is the responsibility of every employee, in every department. It also keeps employees in tune with customer needs, and what customers are saying.
One example is the experience of Mike Normart, the senior director of women’s footwear at Zappos. He was helping out with customer calls during the holidays, and he noticed he was getting a lot of calls about wide-calf boots. It was a lightbulb moment for him - he remembers thinking, “Wow, people are really looking for this, and this is an opportunity for us.’”
The more every department is encouraged to be customer-centric, the more the company and the brand can be tailored to what customers actually want. That’s a true business opportunity.
How it Led Me to Where I Am Today
This was one of the things that drew me to Identiq in the first place. Fraud prevention is a department which often struggles to be customer-centric. It’s fundamentally about preventing fraudulent orders and accounts, which frequently adds friction for good customers as an unfortunate side effect.
I love that Identiq bucks this trend. It enables companies to collaborate directly to leverage each others’ knowledge of which customers to trust - without ever sharing any sensitive user data. The essence of this model is positive validation, making sure that trustworthy customers are easily (and invisibly) identified, so that they can have a frictionless experience.
Rather than looking for the bad actors, and necessarily being suspicious of lots of good ones in the process, Identiq focuses on the good customers, to smooth their path. A customer might be new to your site, but they’re probably known and trusted by lots of other sites. Once you can access that trust, you can give them a great customer experience even the first time they visit your site.
Lesson #2. Don’t Follow Convention. Follow the Customer’s Needs.
In 1996, Hsieh left a job at Oracle to co-found an online advertising network, LinkExchange, which was then sold to Microsoft for $265 million two years later.
One of his co-founders at LinkExchange, Ali Partovi, said, “Tony often proposed the opposite of the conventional approach, and astoundingly, he was often right. For example, one of our big cost centers was customer service. Conventional wisdom would be to try to reduce the cost. Instead, Tony wanted to spend more on it: he viewed customer service as a marketing investment that would grow the business. These instincts led later to the amazing brand that is Zappos.”
The same mentality was at play in Hsieh’s search for a different kind of management structure in his company, one that would give even low-level employees a high degree of autonomy, and enable fresh ideas to surface and trial.
There was a certain amount of scepticism when Zappos moved away from the traditional model to holacracy, but there’s a lot to be said for trying different ways of doing things, rather than sticking with convention: In 2017, Harvard Business School professor Amy Edmondson and researcher Michael Y. Lee (now an assistant professor of organizational behavior at INSEAD) published a paper which looked at the limits of hierarchical organizations, and examined Zappos as an example of an organization which was trying a different kind of organization to overcome these limitations. Even though some of the things they tried weren’t successful, there’s a lot about this fresh approach which has been beneficial.
It’s something Hsieh spoke about passionately: “Most other companies, the CEO is saying, ‘Here I’m going to go approve these next 100 businesses to launch,’” Hsieh told employees at a Zappos conference in April 2019. “And all the research has shown that top-down approach doesn’t scale well and doesn’t work well for the long term. That’s part of going on this decentralized, self-organization path we’re going on. Really, whoever is closest to the customers should be making those choices and decisions.”
How it Led Me to Where I Am Today
I’ve been working in the fraud prevention industry for some time now, and I thought I knew how it worked. Fraud teams want as much data as possible to base their decisions on, so they work with lots of third party data providers to get information about users’ IPs, addresses, phone numbers, emails and so on. They put all that together, work out whether it shows a fraudulent or legitimate purchase story, and make the decision.
Identiq blows that convention out of the water. Instead of buying into this third party provider model, it’s gone providerless: no third parties at all, only companies working together directly. To expand on what Hsieh said, the companies users buy from are much closer to the customers than the third parties. So they should be working together. The fraud decisions are much more accurate when they’re based on this fresh information.
Moreover, Identiq breaks the chain of sharing user data with other companies to enrich it. There’s no sharing of personal user data at all. Ever. No one on the Identiq network shares sensitive user info with Identiq, or with any other company on the network. No exceptions. It’s entirely anonymous.
That meets a customer need as well. Customers today care deeply about the privacy of their data: a whopping 97% of American consumers have indicated that data privacy is important to them. If companies can fight fraud without sharing that data with lots of third parties, then it’s a safe bet that that’s what customers would prefer that they do.
Lesson #3. Your Product Isn’t the Only Way You Should Serve Your Customers
Tony Hsieh famously described Zappos as a “service company that just happens to sell shoes.” That’s an approach you can see echoed in the pizza story I shared at the beginning, of course. And it’s reflected again in the joy Hsieh took in the fact that a Zappos employee once spent 10 hours on a single customer call. It’s also shown in the company’s response to the pandemic.
As other businesses were apologizing that their customer service experience might be more limited due to the situation, Zappos set up a Customer Service Anything hotline and announced that their team was available to talk to people about anything they felt like, any everyday issues or concerns - no purchase required.
It’s such an incredible statement of what Hsieh thought a business should be. He didn’t see Zappos’ role as being to sell shoes. He saw it as helping customers - even if they weren’t customers right now, or hadn’t become customers yet. He wanted to help, even if shoes weren’t involved.
How it Led Me to Where I Am Today
This was a mentality that resonated strongly with me when I thought about joining Identiq. Privacy isn’t really a part of the fraud prevention industry’s job. There are exceptions in GDPR and CCPA for stopping fraud and other kinds of crime. We don’t have to care (yet, at least, though who knows what future regulations have in store).
But I thought, channeling Hsieh, that we should care. Identiq not only cares, it’s providing a solution - better, more accurate identity validation, which doesn’t share personal user data. That’s something that makes our whole online ecosystem better and safer for everyone. I think Hsieh would have approved of that vision.
It’s also something I love about the approach Identiq takes to its customers. It’s not just about Identiq, it’s about helping people in the fraud fighting industry collaborate and get together and share knowledge, even in ways which have nothing to do with Identiq. Take our roundtable discussions as an example - they’ve got nothing to do with our product or our business, we just enable industry experts from different companies to talk to each other and exchange insights.
I love that. I get chills down my spine when one of those discussions kicks off. I feel like part of a service company that just happens to provide identity validation.
Tony Hsieh’s Legacy Lives On
Tony Hsieh’s legacy runs deep and will, I believe, have a long-lasting impact on how companies operate and, more than that, how they think about their customers. The three things I’ve discussed here are part of that, and they also represent something of great personal importance to me: The ways this legend of e-commerce, entrepreneurship and customer experience impacted how I think, and what I care about.
Tony Hsieh’s example and words taught me that if you’re not putting your customers first, you’re not doing it right. I can’t even imagine working for a company that doesn’t believe the same thing. I’m so grateful for his example, and proud to be a small part of carrying on his emphasis on customer experience - and taking it into the field of identity verification.
Raz Vicerabin is the Head of Sales at Identiq. He's passionate about tech, fraud prevention and most importantly customer experience. He loves sports, is allergic to parties, and can put his feet behind his head.
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