Zappos Reputation Gets Tested with Data Hack

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Data Privacy
Customer Experience
While Zappos has made a name for itself with its customer-focused culture, not everyone is a fan. This weekend it became the target of hackers.

I opened my email today to a message from Zappos telling me my account may have been hacked. But I'm not alone. 24 million other customers received the same email. While Zappos has made a name for itself with its customer-focused culture, not everyone is a fan. This weekend it became the target of hackers. And the situation may test the relationship it has with customers. According to a report on CNN, "Zappos said that hackers gained access to customers' names, e-mail addresses, billing and shipping addresses, phone numbers, and the last four digits of credit card numbers and encrypted passwords." The company reports that full credit card numbers and other payment info were stored on a separate server which was not hacked.

Everything the company has done has led to this moment. It has made a name for itself by focusing on customer centricity and employee empowerment. How the company is affected by this will depend on the strength of its relationship with customers. If customers trust the company to act in their best interests, this may just be a small blip on the company's radar. But if customers think that Zappos is either not competent or does not have the right intent in its actions, it could unravel everything Zappos has built up to this point.

Take its decision to turn off an important customer touchpoint -- the phone. CNN reports that Zappos has preemptively shut down its telephone system. The system would likely be overloaded with calls, resulting in a poor customer experience when people can't get through. Instead, Zappos has asked customers to email the company with any questions. This system is more flexible (and cheaper) and can handle the deluge of inquiries better than the phone.

Upon first glance, this looks like a bad decision by Zappos. Eliminating customer service channels does not sound like a good idea during upheaval. However, the company has already built a strong reputation for quick response and proactive outreach via non-traditional, less expensive channels like email, Twitter, Facebook, and its website. This reputation means that customers will trust that they will get an answer via email. Very few companies would be able to get away with this decision without customer outcry.
If Zappos can keep up with the barrage of email inquiries it is likely to receive, it might be a lesson in how to proactively meet customers' needs in a crisis.

This story is only just beginning to unfold. The moves Zappos makes in the next few days will be critical to whether or not it can quickly bounce back from such a big hack.

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