Zappos Paying Employees To Quit; Recognizing That Customer Service Isn't A Cost Center

from the fascinating dept

Wed, May 21st 2008 12:48pm — Mike Masnick

Let me admit upfront that when Zappos first came along, I didn't think much of it. The founder had done amazingly well for himself in selling LinkExchange to Microsoft during the bubble years, and had then started a incubator called Venture Frogs -- with (I kid you not) a corresponding restaurant (also called Venture Frogs). The restaurant wasn't bad, even if all the dishes were named after dot com companies. I remember eating there (I think I got the CNET Curried Chicken) one day and seeing huge signs all over the restaurant for Zappos -- an online shoe store. This was pretty much near the bottom of the downswing after the dot com bubble had burst, so it was quite surprising to see someone opening up a pure e-commerce startup, especially one in a category that had failed miserably in the past. E-commerce for shoes seemed exceptionally difficult, due to the fact that shoe sales (even more than other clothing) really depend on the unique fit of each item. However, over the years, Zappos overcame all of the concerns by lowering the barriers (super fast free shipping and free returns on anything that you don't like) and an almost maniacal focus on customer service. In doing so, it's built up a hugely loyal set of customers -- including me.

Of course, to do that right, it's meant treating customer service not as a "cost center," like almost all companies these days, but as an integral part of making happy, committed customers who also act as evangelists. A good company recognizes that customer service isn't a cost center at all, but the best way to build a loyal customer base and to learn from your customers as well. Of course, in order to do that, you need to have a loyal, committed customer service staff as well -- and Zappos has done some unique things there that are worth understanding. It doesn't do many of the typical call center things: no scripts, no time limits on calls and no limits on what the customer service reps can do to make customers happy. But, in a post on a Harvard Business blog, it's explained that Zappos also offers to pay each new employee $1,000 to quit, one month after they've joined. Basically, it's offering any employee who's not truly committed to the way the company does business an easy "out" after one month. Thus, those who stick around are even more committed to living up to the service ideals the company has set. It's nice to see in an era where "good customer service" seems so rare.

Apparently about 10% of folks take the money and scram. While traditional HR metrics might think this is terrible, as the cost of recruiting, hiring and training new employees is quite high, the long term benefits of having a more strongly committed staff cannot be overstated. Basically, the company has realized that a little cost upfront can help it make a lot more on the backend.

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Filed Under: customer service
Companies: zappos

19 Comments

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Chuck Norris' Enemy (deceased), 21 May 2008 @ 1:10pm

Discovery
If you find out that you suck at customer service or can't handle being "nice" then $1k wouldn't seem like a bad deal since you most likely would get the boot later, with nothing.
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Nate, 21 May 2008 @ 2:08pm

Brilliant!
This is actually a brilliant idea. Most people that are bad at customer service, probably don't enjoy their job. This would give them incentive to get out, and improve the customer's experience. I can't believe no one else has ever thought of this before.

http://www.custompcmax.com
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Anonymous Coward, 21 May 2008 @ 2:21pm

why is there a useless custompcmax dot com comment following every techdirt post?
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Anonymous Coward, 21 May 2008 @ 2:43pm

Someone has done this before. Look for Don Pepper's and Dr. Martha Roger's books on one-to-one customer service. Their new one is titled "Rules to Break and Laws to Follow."
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jota, 21 May 2008 @ 2:43pm

I had to call xbox customer support this week and it was a horrible experience. I was connected to a woman that, while she had a grasp on the english language, she certainly wasn't able to enunciate very well. I was repeatedly asking her what in the world she was talking about. She also had no clue about xbox hardware. I wish more companies would understand that keeping current customers happy will create more business than ignoring previous sales and only going for new sales. If I have a good experience with a company, I tell all my family and friends, and I will continue to shop from that company even if it costs a little more than elsewhere. I love shoes, I may have to check out zappos.
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Anonymous Coward, 21 May 2008 @ 4:05pm

Re:
AFAIK Anon, its only Nate. Second post I've seen with him. His name links to the future of storage and he has that custompcmax site as a sig.

Spam IMO
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Peter, 21 May 2008 @ 5:08pm

Dumb
I think it is foolish and opens a company up to scammers. www.PioneerTelephone.net
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ehrichweiss, 21 May 2008 @ 5:28pm

Re: Brilliant!
How about a filter to remove the "custompcmax" spam, that's what I would call customer service.
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ehrichweiss, 21 May 2008 @ 5:29pm

Re:
I JUST got that book. It seemed very interesting, I'll have to dig it out of my stack and check it out.
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ehrichweiss, 21 May 2008 @ 5:32pm

Re: Dumb
Yeah, scammers that have to work a month before collecting the $1,000. That's likely not 2 weeks of work so one would be hard pressed to say it'll open them up to scams.

YOU on the other hand are scamming by pretending to show an interest just so you can drop that link.
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Overcast, 21 May 2008 @ 5:54pm

True enough - customer service = word of mouth advertising. Maybe the company's most potent tool in keeping existing business and generating new business.
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Wesha, 21 May 2008 @ 7:43pm

There's a link in TFA where some lady tells how she wasn't able to return shoes in the required timeframe because of her mom's death, so not only Zappos arranged UPS pickup for her, but sent her flowers with condolences.
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Anonymous Coward, 21 May 2008 @ 9:17pm

Re:
'cause Nate's a shill
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Michael Whitetail, 21 May 2008 @ 11:10pm

Customer Service
For the last 12 years or so, I have worked customer service as well as levels 1,2, and 3 help desk support; both internal and external, for various major telco's, cell carriers, and now cable companies.

The one thing that always got me was that *every* center was focused on call metrics of one type or another, and not on the customer or their issue. Center management always seems to want to hit those metrics at all costs, and the issue getting resolved is always secondary to that goal.

The artificial barriers always seem to be handling times, average speed of answer, overly compartmented areas of responsibility, and adherence to the script/call formula. Even when customers beg you to help them, the rep is forced to follow the preset steps in order to *keep* their job. Who suffers for that? The customer.

Why not just empower the agent by providing the required training, tools, pay, and respect by treating them like people? You'll have a competent and well motivated staff who will bring you a loyal customer base just from the simple act of being kind *and* fixing the issue without making them jump through unnecessary hoops.
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Sean, 22 May 2008 @ 2:05am

Long Term benefits
Basically, the company has realized that a little cost upfront can help it make a lot more on the backend

And there you go, that's the magic that works so well when it's put into the pot.
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Anonymous Coward, 22 May 2008 @ 5:25am

Re: Re: Brilliant!
I don't mind it so much: a constant reminder of where *not* to go.
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Anonymous Coward, 22 May 2008 @ 11:12am

Re:
What is TFA? Where can I view this?
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Anna, 10 Jun 2008 @ 11:35am

Satisfied Employees Lead to Great Customer Service
The bottom line is that satisfied and happy employees provide great customer service. As a customer, who wants to deal with an unhappy employee? It affects the overall customer experience. I think this is a great idea for Zappos or for any other company to weed out employees who could potentially affect the customer experience in a negative way. For instance, let’s say that I am a satisfied and loyal Zappos customer that spends on average $250/ year at Zappos.com. This means over the next 25 years I will spend $6,250. One day I get on the phone with an unsatisfied employee that really pisses me off. Because of this negative experience, I stop purchasing from Zappos. That’s $6,250 worth of potential revenue lost. How about if the unsatisfied employee pisses off four other similar customers in one month? Zappos will lose $31,250 worth of potential revenue. Imagine if you had a couple more unsatisfied employees and they piss off at least 5 customers a month. You do the math. If you think $1,500 is too much to weed out unsatisfied employees think again. http://www.iccds.com/customerexperience360
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Bill Gates, 12 Jun 2008 @ 5:10am

Re:
why is there a useless custompcmax dot com comment following every techdirt post?

So you will click the link and the guy will sell more PCs. And, having his link appear on TechDirt pages increase his website's SEO.
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