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

from the fascinating dept

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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Companies: zappos

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

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jota says:

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.

Michael Whitetail says:

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.

Anna (user link) says:

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 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.

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