Why Zappos Pays New Employees to Quit—And You Should Too
I spend a lot of time visiting with companies and figuring out what ideas they represent and what lessons we can learn from them. I usually leave these visits underwhelmed. There are plenty of companies with a hot product, a hip style, or a fast-rising stock price that are, essentially, one-trick ponies—they deliver great short-term results, but they don’t stand for anything big or important for the long term.
Every so often, though, I spend time with a company that is so original in its strategy, so determined in its execution, and so transparent in its thinking, that it makes my head spin. Zappos is one of those companies. Two weeks ago, I paid a visit to Zappos headquarters in Henderson, Nevada, just outside Las Vegas, and spent time with CEO Tony Hsieh and his colleagues. I could write a whole series of posts (and just might) about what I learned from this incredible operation. But I want to focus this post on one small practice that offers big lessons for leaders who are serious about changing the game in their field—and filling their organization with people who are just as committed as they are.
First, some background. As most of you know, Zappos sells shoes—lots of them—over the Internet. The company expects to generate sales of more than $1 billion this year, up from just $70 million five years ago. Part of the reason for Zappos’s meteoric success is that it got the economics and operations right. It offers customers a huge selection—four million pairs of shoes (and other items, such as handbags and apparel) in a warehouse in Kentucky next to a UPS hub. (If Imelda Marcos visited that warehouse she'd likely have a coronary on the spot.) It also offers free delivery and free returns—if you don’t like the shoes, you box them up and send them back to Zappos for no charge.
So the value proposition is a winner. But it’s the emotional connection that seals the deal. This company is fanatical about great service—not just satisfying customers, but amazing them. The company promises free, four-day delivery. That’s pretty good. But most of the time it delivers next-day service, a surprise that leaves a lasting impression on customers: “You said four days, but I got them the next morning.”
Zappos has also mastered the art of telephone service—a black hole for most Internet retailers. Zappos publishes its 1-800 number on every single page of the site—and its smart and entertaining call-center employees are free to do whatever it takes to make you happy. There are no scripts, no time limits on calls, no robotic behavior, and plenty of legendary stories about Zappos and its customers.
This is a company that’s bursting with personality, to the point where a huge number of its 1,600 employees are power users of Twitter so that their friends, colleagues, and customers know what they’re up to at any moment in time. But here’s what’s really interesting. It’s a hard job, answering phones and talking to customers for hours at a time. So when Zappos hires new employees, it provides a four-week training period that immerses them in the company’s strategy, culture, and obsession with customers. People get paid their full salary during this period.
After a week or so in this immersive experience, though, it’s time for what Zappos calls “The Offer.” The fast-growing company, which works hard to recruit people to join, says to its newest employees: “If you quit today, we will pay you for the amount of time you’ve worked, plus we will offer you a $1,000 bonus.” Zappos actually bribes its new employees to quit!
Why? Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for. It’s hard to describe the level of energy in the Zappos culture—which means, by definition, it’s not for everybody. Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick—and it’s willing to pay to learn sooner rather than later. (About ten percent of new call-center employees take the money and run.)
Indeed, CEO Tony Hsieh and his colleagues keep raising the size of the quit-now bonus. It started at $100, went to $500, and may well go higher than $1,000 as the company gets bigger (and it becomes even more difficult to maintain the all-important culture and obsession with customers.)
It’s a small practice with big implications: Companies don’t engage emotionally with their customers—people do. If you want to create a memorable company, you have to fill your company with memorable people. How are you making sure that you’re filling your organization with the right people? And how much are you willing to pay to find out?
More on Employee Management:
- Showcase Your Company's Employee Experience
- How Do You Motivate Employees?
- 10 Reasons Gen Xers Are Unhappy at Work
- The Steinbrenner Management Method
- Memo to a Young Leader: What Kind of Boss Are You?
Also of Interest:
- What It Means to Work Here ($6.50)
- Harvard Business Review on Talent Management ($19.95)
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William C. Taylor is an agenda-setting writer, speaker, and entrepreneur. His new project, Practically Radical, chronicles the radical shifts transforming business and the practical steps that will determine who wins. His most recent book,Mavericks at Work, has been a New York Times, Wall Street Journal, and BusinessWeek bestseller. As cofounder of Fast Company, he launched a magazine that earned a passionate following around the world. He is an adjunct lecturer at Babson College and a former associate editor of Harvard Business Review.
Comments
Wow! This is very cool. Many companies would do well to follow in Zappos transparent footsteps. As a consumer, my respect for the company has grown 10 fold. As a life coach, WOW - this is really a edifying for all parties involved. I'd be interested to find out what the retention rate is with a program like that. No doubt the HR team there is razor sharp.
PS. my twitter account is @pronoiapierce if you'd like to take this subject on 140 characters at a time.
- Posted by Melissa (Pronoia) Pierce
May 19, 2008 3:28 PM
What an awesome article and an inspiration for all of us in business.
Business needs special people, who continually raise and keep the bar at a high level.
It is these innovative thinkers who are the trail-blazers, who after having acquired success with their strategy, will be replicated by businesses for years to come.
In one sentence, I was able to pick out the following set of keywords: original - strategy - determined - execution - transparent - thinking - head spin.
Great article! Kudos to http://www.zappos.com and Tony Hsieh! Keep up the good work!
Vicky H
- Posted by Vicky H
May 19, 2008 3:48 PM
This is very impressive. Do you know if you follow Tony on Twitter or send him a DM he answers you even if he hasn't a clue who you are? When a CEO (or even his assistant) does this, it certainly goes very far in making you feel connected to the experience and keeping the buzz about the operation going. It doesn't make you feel like there are layers of hierarchy or a sense of others being above to all those below.
After all, isn't everyone a potential customer for shoes? :^)
- Posted by Susan Cartier Liebel
May 19, 2008 3:53 PM
The Twitter effect makes me feel like I am buying from friends, not a big company. I follow Zappos folks from both the Vegas and Kentucky facilities and with each Tweet, not only am I entertained, but I also become a more loyal customer and most importantly, an advocate.
- Posted by Judy C
May 19, 2008 4:47 PM
It is wonderful to see people who get it.
Zappos is awesome for so many reasons like this:
http://www.zappos.com/twitter/order-confirmation-email-contest.zhtml
So now I'm following Tony Hsieh on twitter and the more I read the more I like him and I don't plan on buying shoes anytime soon but I tell all my family and friends to shop there. I guess I'm what Seth Godin calls a sneezer.
Here is the exact opposite situation: My internet speed was cut in half for no apparent reason four days ago. I have had this exact problem before(it took 2weeks to fix) so I know all of the company procedures and hoops I have to jump through to get anything solved. I found a forum,(dslreports.com) where my ISP's own employees tell you that their customer service (in Bangalore) is a waste of your time. So they say to try to escalate the problem to "Tier 2" to actually get a person who is capable of helping you beyond telling you to reset/reboot your equipment etc. ok so it's four days later and I have talked with three different CS people and I'm right where I started no escalation and nothing solved, I hate my ISP (starts with a W BTW)
In a bizzaro reality if Zappos was an ISP, I would gladly pay double or triple to them get the kind of customer service they have.
- Posted by shannonpatrick17
May 19, 2008 5:09 PM
I wish there were more companies like this! Unfortunately most seem consumed with maximizing profits, rather than delivering a good product or service.
- Posted by Lyndon
May 19, 2008 5:45 PM
Bill,
Please write the rest of the posts you are considering about Zappos! This is a fascinating story, and a company that apparently does such a great job should be commended, and thus recommended.
Thanks for this great post,
Jeremy Vaught
- Posted by Jeremy Vaught
May 19, 2008 6:30 PM
Yes, truly a forward thinking, dynamic, professional company that *gets it* -I am lucky to have won an online Twitter contest put out there by Tony Hsieh where I fly to Las Vegas for 2 nights with my hubby, tour Zappos HQ, have lunch w/Tony - I will definitely keep people posted!
- Posted by Suzy T
May 19, 2008 8:03 PM
"This is a company that’s bursting with personality, to the point where a huge number of its 1,600 employees are power users of Twitter so that their friends, colleagues, and customers no what they’re up to at any moment in time."
It should be "know" instead of "no".
That is all.
- Posted by jay
May 19, 2008 8:38 PM
"Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for."
Really? Is that "obviously" what this demonstrates?
Maybe Zappos is weeding out people who are working for the money and not the "experience" - a concept that infuriates and confuses managers but resonates mightily with those of us trying to pay the mortgage.
Companies always want people who are willing to work long hours and be paid in "enthusiasm". Zappos actions are certainly clever but not necessarily laudable.
- Posted by Jimbo
May 19, 2008 11:06 PM
When did Imelda Marcos die? AFAIK she's alive; there's some internet articles with her as recent as March 2008...
http://www.news.com.au/heraldsun/story/0,21985,23352695-5005961,00.html
- Posted by Bean
May 19, 2008 11:31 PM
Imelda Marcos is still alive.
- Posted by Max S
May 20, 2008 12:51 AM
Indeed, absolutely fantastic. Smaller companies tend to put off such measures and practices under some pretext of "...when we get larger" but the truth is there is no excuse not to practice these NOW! Sure there is the cost aspect, but nothing that working your figures right cannot work around. Setting up Moses-like commandments, unalterable (even by you) is a good way in my opinion to implement such wonderful operational principles.
- Posted by Dini Dangerfield
May 20, 2008 3:33 AM
Thanks to Max S. and others for pointing out that Imelda Marcos is still alive. Bill's post has been amended to reflect that.
Paul Michelman
- Posted by Paul Michelman
May 20, 2008 8:03 AM
It looks more appropriate for industries/individuals where the prospects for re-employment is higher. Hence it makes sense to have "The Offer" only for new recruits. Also, I hope Zappos does some soul searching thru the leaving recruits or it might turn out to be a one night stand for most.
- Posted by ANS
May 20, 2008 8:40 AM
Very insightful article, Thanks!
This is a great strategy to build a powerful company.
- Posted by Julian Schrader
May 20, 2008 8:59 AM
This is the first time I've heard of zappos shoes, cause we don't get them here over in our country. Anyway, the effort that they put in to get the right employees to serve the customers is just great. I love this culture.
Oh yes, I don't remember Imelda Marcos being dead.
Cheers to Zappos.
- Posted by Sangesh
May 20, 2008 9:12 AM
It looks more appropriate for industries/individuals where the prospects for re-employment is higher. Hence it makes sense to have "The Offer" only for new recruits. Also, I hope Zappos does some soul searching thru the leaving recruits or it might turn out to be a one night stand for most.
- Posted by ANS
May 20, 2008 9:27 AM
So... now everybody knows they can join their training program and get easy money?
- Posted by Alexander
May 20, 2008 9:35 AM
>>
"Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for."
Really? Is that "obviously" what this demonstrates?
Maybe Zappos is weeding out people who are working for the money and not the "experience" - a concept that infuriates and confuses managers but resonates mightily with those of us trying to pay the mortgage.
Companies always want people who are willing to work long hours and be paid in "enthusiasm". Zappos actions are certainly clever but not necessarily laudable.
- Posted by Jimbo
>>
You definitely have a point, but I think you're missing an important aspect. If a candidate is willing to pass on the offer for a mere $1000*, it's a very good sign the employee cares about money much more than the other benefits and intangibles your company has to offer. This isn't necessarily a bad personality trait -- as you said, maybe the candidate is just trying to pay off debt, but a person's motivation is good to know as an employer.
If someone's primary motivator is money, there's a likelihood they won't be committed to your company for the long-haul; they'll be continually seeking out the next job with more money. That's true even if you pay your employees a fair salary.
*Yes, $1000 is not pocket change, but it's not enough to sway the decision for most professionals.
- Posted by Al
May 20, 2008 10:36 AM
Awesome concept, Bill!
Culture can be the most difficult competitive advantage to build and maintain. Thanks for sharing it so succinctly.
- Posted by Chris Goward
May 20, 2008 12:44 PM
Actually, Imelda Marcos is still alive... and she wouldn't have a coronary on the spot because about half the shoes she owns were given to her by people who well knew her love of the darn things. Zappos is actually the anti-Imelda - shoes for people who ACTUALLY BUY THEM.
- Posted by MichelleSF
May 20, 2008 1:25 PM
Does Zappos offer the third world laborers who make the shoes the same offer?
- Posted by Chomskyhonk
May 20, 2008 1:32 PM
I'm laughing at the two folks that took time out of their days to note a grammatical error in this column.
Grammatical atrocities aside, it seems to me the takeaway here is passion, "thinking outside the box" and cultural fit are all important and, arguably, undervalued factors in determining a company's success. I personally feel an employee's fit with a potential company is a hugely under scrutinized part of the selection process.
Zappos practice is vaguely reminiscent of Jack Welch at GE during his heyday and lopping off the bottom 10% of employees, a practice that's now unofficially mimicked by many, including GS.
- Posted by Chris
May 20, 2008 1:43 PM
Companies always want people who are willing to work long hours and be paid in "enthusiasm". Zappos actions are certainly clever but not necessarily laudable.
- Posted by Jimbo
What exactly is wrong with a company that wants its employees to love what they do? Wouldn't the world be a better place if everyone went to work with enthusiasm? People need to give themselves more credit. There is something out there for them that they can be passionate about. Is it right down the street? Is it easy to find? Maybe not, but it should be something people look for rather than just settling for clocking in so they can collect a paycheck and then pay the mortgage. We spend too much time working to be doing something we don't like.
Zappos is about selling shoes. Billions of dollars of shoes, in fact. Not unlike every company, their bottom line is sales. What sets a company like Zappos apart is that they realize their employees are the ones who make them successful.
So why exactly are Zappos' actions not laudable???
- Posted by Dave Klonke
May 20, 2008 3:56 PM
The article contained enough information to pique my curiosity to check out their website for the cross-trainer shoes I normally buy. They had them listed ... at $64, when the MSRP for this show is $59.95. I guess all this quality customer service comes at the price of not even being in the neighborhood of being cost-competitive. (My preferred supplier is offering this shoe at $47.95)
- Posted by Kevin
May 20, 2008 4:45 PM
This is great article. I bought shoes from zappos a few weeks ago, and it was my first time buying shoes online. All around a fantastic experience. In 5 minutes I'd found a pair I liked, and I had them two days later. Wearing them right now, even. Next time I buy shoes, I'm going there, for sure. Good to know that the good service comes from good policy and actual concern for customers.
- Posted by James
May 20, 2008 6:00 PM
Great article,
I've worked for several customer service companies / call centers; Bell Business Internet (Canada), 1-800-O-Canada and Road Runner to name a few.
All of these companies could learn much from your article.
- Posted by Ben
May 20, 2008 6:21 PM
Seems like they're sorta like the newegg of shoes and other apparel but with a more personal twist to keep the customer as happy as they can be. Many companies can learn from what this company is doing.
- Posted by silicon
May 20, 2008 7:14 PM
Hey Zappos, how about implementing a four day ten hour work week (three day weekend) if you want to push the bar even higher. Good on ya for the customer service and personalization.
- Posted by ijostl
May 20, 2008 7:23 PM
Just because someone doesn't take the offer does not mean that they are fanatical about the company and will work hard. Unless you already have another job lined up (as in the very next week) you'd be an idiot to accept the offer.
- Posted by Lakawak
May 20, 2008 7:38 PM
Simply Amazing. I shall bookmark this and be sure to check out their line next time I buy.
Kudos to Mr Hsieh, and please please PLEASE someone else adopt his business model to another industry!
- Posted by Daniel Lewis
May 20, 2008 7:51 PM
Yeah, good question. Is Zappos also guilty of the crime of all the other footwear retailers in that they have indonesian companies sell them slave labour made shoes?
- Posted by Daniel Lewis
May 20, 2008 8:26 PM
What a great way to measure employee engagement. Perhaps companies should do that more than just once. For example, after a year?
- Posted by Preston Smalley
May 20, 2008 8:30 PM
That is pretty amazing strategy. I don't normally read the entire article, but this one I read. Love it!
- Posted by Linda
May 20, 2008 8:58 PM
Zappos is a damn good retailer. i've been buying shoes from them for years. I actually returned a pair of shoes i never wore like 9 months later for a full refund. they have great customer service and ship fast as hell.
- Posted by Matthew Lenz
May 20, 2008 10:35 PM
I find it interesting that some people have mentioned that other companies are more focused on profits than providing customer service. I don't think zappos is here just to make people happy. They make people happy because it equals profit. They just happen to be a very progressive company that understands that in the global village we live in these days, making people extraordinarily happy with your product/the way you do business leads to far GREATER profits in the future. This concept isn't new, but I do find their HR procedure fascinating. If more larger companies actually gave more than one shit about the people they hired business would be much different
- Posted by bewareofthecow
May 20, 2008 11:06 PM
I have worked in a call center for about five years and would get paid the $1,000 by bring in two people to work with us. I think a much better use of the money.
That being said, I'd jump ship to work for Zappos from the sounds of it.
- Posted by rick
May 21, 2008 1:17 AM
An excellent idea but one small hole.
Lets say you are looking for that ideal job but dont want to sit idle.
Just join Zappos, go through the 4 weeks getting paid and at the sam time look for the job you really want. At end of the time you get 1000 too.
I can see people joining up just to get the money.
- Posted by Suraj
May 21, 2008 3:39 AM
Thanks alot for sharing this with us!!!!!!!!!
It is one of the most impressive article I have ever come across.
- Posted by aditi
May 21, 2008 4:40 AM
Great to hear more about Zappos. I sell slightly used designer shoes on eBay. Zappos is my 'hero' for Customer Service. I offer free shipping both ways, etc.
Jeanne
- Posted by Jeanne
May 21, 2008 6:47 AM
Cutting Edge!
I have been helping companies recruit and maintain top performers for over ten years and I live by the rule that there is addition by subtraction at times.
To every one "By excepting change it just might become your style". Way to go Zappos
- Posted by Wade A. Sied
May 21, 2008 9:09 AM
What a great post / article. Thanks for writing that up. I knew quite a bit about the company, but not that much! Awesome work!
Yesterday, on my blog, I wrote up a piece on "Positioning." My wording was more geared towards software/Internet companies but applies to any company. What's great about your article and what Zappos is doing is that it highlights one of the points I was really trying to drive home -->
What are the primary extremely compelling differentiators that make this unique?
Zappos has come up with extremely compelling differentiators from a service and customer-interaction point-of-view. Hats (or shoes) off to them!
- Posted by Steve Barsh
May 21, 2008 9:13 AM
Sounds great, but there's something to be said for robotic customer service representatives, so long as they do their job. I encounter memorable people on a daily basis. The Starbucks drive through voice trying to pre-sell me on something disgusting-sounding and who won't take "no" for an answer. The colleague who won't shut up about how great Apple is or whatever when I obviously don't care, or care what he or she thinks. If I were running a customer service department, I might go and hired those self-rejects. They seem pretty smart and difficult to brainwash.
- Posted by darkcoffee
May 21, 2008 9:13 AM
What the heck is going on out there? Thanks to everyone for the torrent of ideas and feedback on my post, and I hope you keep them coming. I've been asking myself why this post has struck such a chord with visitors to Harvard Business Online, and here's my current theory. Deep down, we all understand that our job as leaders is to make our companies at least a little remarkable. The "middle of the road" has become a road to nowhere. We've all got to try to become "the most" of something—the most accessible, the most fashionable, the most friendly, the most affordable, the most responsive.
But if we want our companies to be remarkable, we've got to figure out how to fill them with remarkable people—and frankly, most leaders haven't devoted nearly the brainpower to innovation on the human factor in business as they have to finance, marketing, or R&D. When we learn about a truly original people practice, like the one I wrote about at Zappos, we get energized.
So here's my question to all of you: What's your version of the Zappos offer—not paying new employees to quit, but a tangible practice that helps to fill your team or company with remarkable people.
Let's turn these comments into a group brainstorm!
- Posted by Bill Taylor
May 21, 2008 10:54 AM
I first heard about Zappo's unique style (and the fact their CEO is on Twitter) from Shannon's article.
I continue to be impressed - this is definitely a company to follow. Never before heard of the 'bribe you to quit' - surprised recruiters aren't covering this in detail.
Data points, Barbara
- Posted by Barbara Ling
May 21, 2008 11:18 AM
I think we can all learn something from their example. I've always felt that custom service needs to be at the top but they have proven it.
- Posted by Silicone Wristbands
May 21, 2008 11:28 AM
I love Zappos - you are dead on with your word "amaze." Customers like me are used to bad service, bad products and worse support when things go wrong.
Zappos is the opposite of this problem! The first time I bought a pair of shoes from them it was 5 p.m. on a Tuesday. By 11 a.m. on Wednesday they were on my front porch - amazing! They are now the only place I buy shoes online.
- Posted by Sarah
May 21, 2008 1:32 PM
I find it refreshing that this company gets it. It seems that most companies today have lost the art of customer service. It is a every man (or woman) for themselves mentality. Frankly I wish the company I work for would employ the paying employees to leave strategy. I have co-workers that are a huge drain on our department not only in lost productivity but also emotionally. Their lack of customer service skills would make Zappo executives cringe. Maybe if more CEO’s would spend time with Tony Hsieh the corporate environment would change around America. We would regain the spirit and pride in workmanship we used to hold so dear. Thank you Zappo, and hang in there. Keep the customer as number one!
- Posted by Dennis B
May 21, 2008 4:32 PM
Any idea what their attrition looks like for the associates that choose to continue on with the company and not take the $1000?
- Posted by Chris Duffy
May 21, 2008 5:49 PM
Quite interesting how a totally new concept has proven to be a run away success!!!
But adopting this strategy to all kinds of businees will have to be well evaluated lest it works to the company's disadvantage where employees come & go as a short gap arrangement.
- Posted by Sulatha
May 22, 2008 3:03 AM
Sir,
As per my earlier comment I was really thrilled to read your post as a budding HR Manager it was an insightful experience for me. Since then I am thinking of (wht you called a tangible practice) introducing an innovative way to retain remarkable people.
- Posted by aditi
May 22, 2008 5:14 AM
I wonder how much money they have paid out. Given that the pay out rate has changed I suppose I am wondering how many folks have taken up, 'the offer'.
- Posted by Ryan Segura
May 22, 2008 7:38 AM
Cute. Do they make any profit?
- Posted by Sam B
May 22, 2008 11:29 AM
Lyndon--being "obsessed with their bottom line" and providing great quality and service are not mutually exclusive characteristics. In fact, the companies that make the greatest profits in the long run are usually the companies that do both. To me, this is the beauty of competition in free markets--the companies that do the best in the long run are often the ones that recognize that maintaining customer loyalty requires, not only a great product or service, but instilling employee loyalty to their companies as well. This is often achieved by only hiring and keeping those employees that believe in and support the brand or service. In return for this level of employee loyalty, the great companies recognize that they must must treat their employees well to keep them from going elsewhere.
- Posted by Amy
May 22, 2008 1:46 PM
Well, this sounds cute, but looking at the long term, it is a very expensive way to hire, as people being aware of the process can waste the company's time by going through the training process, and taking the offer at the end to get that 1, 000, no big deal they can just move on to another job for the company- resources were wasted training this person. I would think a more extensive interview process surrounding what they are really looking for in an employee would be ideal.. they are great companies out there with excellent employee retention and awesome JDPOWERS awards one that comes to mind has won this award 7x back to back and they just have a realistic and extensive interview process. zappos sounds like a great company with good intentions to secure a high level of customer service, so I would hate to see an cute idea take a financial toll..
- Posted by cassy
May 22, 2008 2:20 PM
This probably isn't true and is instead some kind of marketing campaign. A 1-month training course... for customer service in the shoe department? Right.
If it is correct ... take the money and run! This is a cult!
- Posted by TD
May 22, 2008 3:26 PM
how do you get a job there
- Posted by melissa
May 22, 2008 3:56 PM
>> The article contained enough information to pique my curiosity to check out their website for the cross-trainer shoes I normally buy. They had them listed ... at $64, when the MSRP for this show is $59.95. I guess all this quality customer service comes at the price of not even being in the neighborhood of being cost-competitive. (My preferred supplier is offering this shoe at $47.95)
Hmm . . . yeah, see the idea is that Zappos is NOT trying to be the low-cost provider of shoes to the masses (i.e. the Wal*Mart of shoes). They are trying to go after consumers who value the experience of buying shoes online, superior customer service, hassle-free returns, etc. and who value their time more than their $. There are a lot of those people out there. Not ever site has to be "low cost". ALSO - remember that their shipping costs are $0, including for returns.
- Posted by Ted
May 22, 2008 5:33 PM
Disclaimer: I work as a team lead in the Zappos Customer Loyalty Team.
TD: While I can't argue the Zappos family being referenced to as a cult (we have a head shaving event coming up on the 29th, hehe), I can assure you that the article is 100% true. The "Offer" is not done as a marketing ploy, and we do train our CLT team members for 4 weeks, not including an additional 3 week "incubation" period. As for many employees taking the money and running, we do have a fairly rigorous hiring process, so the number of employees actually taking the offer is kept to a minimum.
In the end, we primarily consider ourselves a service company (I've even seen our CEO Tony take calls). In order to meet that goal, any less training would be doing a disservice to ourselves and to our customers.
- Posted by Jeff
May 22, 2008 7:44 PM
Hi!
I just read Guy Kawasakis book and one important point was...get in touch with your customer and give the customer a chance to do this e.g. send name and a picture of the guy who repairs a damaged cd player to the customer. So the customer will definitely think that the company cares about him. A good example is IKEA were every customer is treated very well. A bad one is the music industry where the major labels and the RIAA sue their customers. The result is that everyone hates them now
- Posted by Michael
May 23, 2008 9:55 AM
I think that some people should read the article a little more carefully.
The offer for the $1000 is given after the first week of training, not after the fourth week. So if the candidate takes the offer to leave, then the company is actually saving three weeks worth of training dollars.
Also it was stated that about 10% of the offers are accepted. So it seems to me that the interview process probably does knock out many of the people who just want to get into it for some quick bucks.
And who would go through an interview process, and if they get an offer, quit their job just so that they can get a paid week of training and $1000? Does not make much sense to me.
Eric
- Posted by Eric
May 23, 2008 11:06 AM
It's definitely an interesting and innovative practice. I suppose for a customer point of view, it's all benefit : happy people offering you a kick ass service.
But I'm not completely sure about the 1000$ bonus, though. I agree recruiting motivated people for your company is a great thing. But isn't it a bit of an emotional blackmail ? A few month down, how do you ask for a raise when you've clearly stated that working for Zappos meant more to you than a thousand bucks ?
Any feedback from a long time employee ?
- Posted by Blaise Galinier
May 23, 2008 11:21 AM
Blaise Galinier: I have worked here for about two years, and I can honestly say that Zappos is very good about employee pay. I can also tell you that even without that, most of us would likely still be working here based on the top-notch benefits and awesome work environment. Without sounding too much like an ad (I work in Customer Loyalty, not Marketing :D), feel free to check out our blogs if you are interested in checking out said environment.
http://blogs.zappos.com/blogs
- Posted by Jeff
May 23, 2008 1:58 PM
I saw this by way of a note from Chris Carfi . . . This is what big media companies like mine have done to cut staff. They offer buyouts on the order of $1,000 for every month worked up to some limit. A person with seniority can earn $30K to $50K to give up a job. Back to Zappos I am astonished to learn that "about ten percent of new call-center employees take the money and run" after just opne month on the job. I guess if it's gonna cost $1,000 a month to cut the people who don't reall;y want the job, it makes sense to make the payment upfront.
- Posted by tom abate
May 23, 2008 6:41 PM
Great post! One of our team members recently wrote about a buzzworthy customer service experience that she had at the Zappos outlet store in Vegas, where a manager actually went to great lengths to help her buy a pair of shows from a competitor:
http://www.facebook.com/topic.php?uid=6151154587&topic=4546
To put the icing on the cake, she wrote the manager's manager shortly after to commend him on the service received from Zappos, and, to her surprise, received a response a couple weeks later from Tony Hsieh (the CEO) himself, apologizing because he had been out of the country on business.
It's cliché but accurate to say that any good service-based company consists almost entirely of the people that make it up. But, to take that one step further, I would say that any service company's brand can't be much better than its worst customer-facing employee. One "bad seed" in a customer-facing position can result in a handful, or more over a long period of time, of bad customer experiences. As we all know, bad news travels 10 times faster, especially on the web; therefore, if you assume that "brand" = "reputation" today, a few bad customer experiences on an ongoing basis can largely negate all of the hard work put into organizing a company around providing good customer service and branding itself well.
I can see Zappos' strategy being an effective and innovative way to weed out the "bad seeds" before they interact with customers or, worse yet, become engrained in the organization.
While our company prides itself on being an extremely service-oriented hosting provider, there is always a lot to learn from other innovative companies, particularly those in other, non-competitive industries like Zappos.
- Posted by Robert Sauchyn
May 23, 2008 7:24 PM
I see a number of comments from people who are looking for the holes in the strategy: "It's after only one week;" "Maybe someone is just looking for filler employment;" "Maybe they're attracting losers who just want a free ride."
There could be a little "missing the point" going on, here.
Any team smart enough to come up with this concept would most certainly have done their homework and have thought these possibilities through.
They will mitigate the possibilities of Death by Dead Weight, because they'll have rigorous screening processes. No one is perfect; some people lie -- but in the end, a smart screener can detect most BS.
They'll build compelling, engaging training processes that can actually proselytize all but the most creepy candidates. This would show each candidate their highest Service Threshold -- and inspire them to reach it.
But most of all, they'll have done a cost-benefit analysis, and know whether it's a good idea or a bad one. Long before anyone ELSE (that would be -- us) hears about it.
Well done, zappos. Keep up the innovative work.
- Posted by betsy
May 23, 2008 9:35 PM
WOW is right - way to go Zappos! They are one that DOES get it right and for two reasons - they are consistent/repeatable and deliver a truly awesome experience. They were not afraid to change the game and have shown it is the way to make a difference. We have been encouraging businesses to do this for a very long time and I have to be honest, most are scared to leave "the pack" and venture out on their own to change the game. If we had more Zappos, we would raise the bar domestically and internationally to a new standard - we are just too complacent as a country to do this - sad. Thanks for reporting on this, very inspiring and leading edge.
- Posted by Blaine Millet
May 24, 2008 11:46 AM
I want to work for this company! If they are willing to do this to its employees they must good to work for! I hate the company I currently work for! They treat all of the employees like ****. They dont want you to work more than 30hr per week. It sucks!!!!!!!!!
- Posted by Donny
May 24, 2008 3:13 PM
Great concept from this forward-thinking company. Would be interesting to see if it gains enough notoriety and traction to become a tactic used more frequently by others. Reminds me of an idea one of our large insurance clients had a little while ago - as I described in this post:
http://buildabetterbox.com/journal/2008/3/18/hey-buddy-want-a-job.html
By letting their department workforce know what they were getting into ahead of time, they effectively weeded out a lot of [potentially] dead wood before wasting time and money.
- Posted by Steve Lovelace
May 24, 2008 5:57 PM
Great thought makes great corporate!Just find your customers and not just satisfy them, but amaze them.In order to do this well ,firstly,you must recruit many right people no matter how much it cost you(Maybe you lost something,but what you get is more than that)!
- Posted by XiaZelin
May 24, 2008 6:24 PM
I thought that Zippo was a lighter manufacturer in Bradford, PA. I guess thats why I did not go for a MBA, settled for a JD.
- Posted by Stan
May 24, 2008 9:25 PM
how amazing Zappos is! its an inspiring to know that there are still companies like Zappos who has the committment to give maximum satisfaction to customers. not just by giving the customers what it needs but beyond what its expected from the company.
its good that Zappos doesn't only motivate employees to do the right job but also teaching them the value of perseverance and the committment to serve well the customers and also being involved in reaching the objective of the company.
and moreover Ms. Imelda Marcos is still alive.
- Posted by Mariafe M. Plaza
May 27, 2008 1:13 AM
This is probably the stupidest idea I have ever heard of. If you left and took the $1000, you'd spend some time finding a new gig, in which time you'd probably make more than $1000. So its not really a bribe if employees lose money.
Looks like another idiotic idea that they will teach in MBA school and will be presented as revolutionary. Stupidity is not revolutionary.
- Posted by Prasan Samtani
May 27, 2008 1:33 PM
So do they make money? Seems you have overlooked that. Great company? Is it hard to make people really happy by building a business that does not make money?
They lost money at 70M, broke even at 300M, broke even at 600M. Shouldn't they be making money?
Do you teach at the school of government or the school of business?
- Posted by brian
May 28, 2008 12:32 PM
Interesting and understandable.
I guess that some people may join on thetrenght that they no they are going to get a bribe/ bonus to quit!?
It would make great sense for a summer vacation 4 weeks of trainig 1 wek work all paid and a $1000 dollar bonus beore you goof of to college!?
Ian
www.ukaqua.com
- Posted by ian
May 29, 2008 8:06 AM
Interesting and understandable.
I guess that some people may join on thetrenght that they no they are going to get a bribe/ bonus to quit!?
It would make great sense for a summer vacation 4 weeks of trainig 1 wek work all paid and a $1000 dollar bonus beore you goof of to college!?
Ian
http://www.ukaqua.com/
- Posted by ian
May 29, 2008 9:04 AM
Wow, this is really quite something. I wish more banks and other companies were that progressive!
Very thought provoking.......
Tom
- Posted by Tom Vanderwell
May 29, 2008 2:14 PM
Hi,
Zappos motto is good i.e., to select people who wants to connect with it!Please watch out. People may take this as an advantage to get some perks within short period.Just change the strategy. But the motto is good. Thanks.
- Posted by BharathiThotaGajula
May 31, 2008 12:24 AM
Why Zappos Pays New Employees to Quit—And You Should Too
I simply am lost at the sight of one company that spends on advertisements on harpooning employees from the friends, schools, ex employers of yours, creating the HR , employing the new then pay them to go?
This is crazy. Why employ them in the first place? Is the HR bad? Could not vet the people before? Let us look at the employees’ side. What, I understand, is, we simply do not care who gets hurt as long as we cash our machines moving.
Let me understand the mind of the employer then we talk. At the moment I feel the one sided issue give all the right to the company to hire, peep into the employees and fire them as soon as they find they have found the new employees useless. What are the criteria?
I thank you
Firozali A. Mulla MBA PhD
P.O.Box 6044
Dar-Es-Salaam
Tanzania
East Africa
- Posted by Firozali A. Mulla MBA PhD
May 31, 2008 1:27 AM
I've worked for a VERY well-known large computer company for MANY years. Seems focus now is really on profit, with little else said about customer satisfaction other than looking at survey results. When I ask my boss 'what about our customers?', I never quite seem to get an answer. We do hire very smart young folks, however, their passion is not for the business, it's to make money with the least amount of effort. I've always worked long hard hours because I believe in my company's products and solutions, however, I'd say I'm now considered 'an old way thinker' because I'd rather make a customer happy than put extra money in my pocket. I can count on 1 hand over the past few years where customer service that I received was great...and I write to thank those companies to let them know how unique the experience was. So, the Zappos approach seems pretty good to me...innovative... getting passionate and committed employees from the start who are there to make 'their customers' happy. If U.S. companies don't start focusing on this NOW, we have no one to blame but ourselves.
- Posted by Joanne T
June 1, 2008 1:49 PM
This re-inforces the concept of Service-profit chain further, and put it into context. In other words Satisfied service providers extend the warmth (derived from the motivation provided by the employer) to the external customer.
Previously, employers focussed more on the 'Hygiene' factors in exclusion, and recruitment was based mainly on Technical Knowhow as opposed to passion for the customer.
The Zappos practice has validated the idea of the Service Profit chain.
Onyango Obiero
Corporate Relationship Manager
Gulf African Bank.
Nairobi Kenya.
- Posted by Onyango Obiero
June 3, 2008 11:09 AM
What a great idea!
Brilliant just, brilliant!!!
Because you never really know someone or a company until you have to experience it day after day.
Chiz
- Posted by artchiz
June 5, 2008 12:13 PM
A fine example of demonstrating that how customers are treated is a result of how employees are treated.
Zappos customer service is a model for everyone because apparently consumers have voted ... to the tune of $1billion worth, for a product they could get cheaper elsewhere.
- Posted by Jason
June 5, 2008 4:53 PM
This is definitely an interesting technique to weed out the weak of heart. I'm not sure I would employ it, but I am certainly not the size of the zappos company
- Posted by nascar
June 10, 2008 1:01 PM
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.
http://www.iccds.com/customerexperience360/
- Posted by Anna
June 10, 2008 2:28 PM
I have actually experienced Zappos excellent customer service. I called them from Australia as they needed to verify my AU issued credit card. I spoke to a guy there and it was like I was sitting right across from him. His voice was smiling through out the call and just like they promise, they sent the shoes overnight and my forwarding guys confirmed receipt first thing the following morning. It's not easy to find an online company that offers such great custoemr service even if their shoes are afew dollars more. I'm willing to pay that little extra for excellent service and great shoes.
- Posted by Stella
June 11, 2008 11:17 PM
I think thats a great idea. I mean if the employee would leave for that little - then clearly they aren't very loyal. You reap what you sow.
- Posted by matt
June 14, 2008 6:42 PM
As a former Zappos manager, starting out with the in San Francisco and moving to Las Vegas, I can testify to the progressive nature of Zappos, as described above. They are not bound to traditional wisdom about how things are to be done: they take a fresh, non-dogmatic, smart approach, that is often defiant of the way the so-called experts say it is supposed to be done, and then prove them wrong in practice. I love this about the company culture. They are raising the bar with how they treat people as a business--not just external customers, but internal ones, as well.
Unfortunately, other companies, while they give lip service to the values Zappos embraces, they don't put it in practice. I've yet to find another company that comes close to being sincere and genuine when it comes to putting the customer experience first, or even treating employees in the best way. Even when I've made the Zappos argument, it falls on deaf ears. Zappos is radical in this way, while other companies are conservative. Well, I know Zappos will keep blazing forward and leaving others behind, then. Good! Only those who are courageous enough to put into practice what they believe in, thus proving they really believe it, should be leaders in the customer service industry, which Zappos is without question. I just wonder how long it will take before other companies learn from them?
- Posted by Giovanni
June 15, 2008 8:46 PM
It's an excellent article about some excellent idea. Personally i went through several companies where people used to SIT for benefits and they had never shared any commitment with company goals. Moreover they hate people who would like to grow. Most of bosses prefer to keep "grounded" people instead someone who wants to learn and move along with company goals. For sure, companies must check who works for them. In addition I noticed, there are a lot of hypocritical people, who used to be the BEST "keepers". As an immigrant, I use to notice the "keepers" all the time.
- Posted by Alla Staroseletskaya
June 17, 2008 9:46 AM
Please send you stock name...I would like to buy your stock. I'm 75 years old and I'm looking for
stock for my grand-children ... and I want some too !
kevv@weblinkmo.com
- Posted by Kate Valenta
July 8, 2008 12:05 AM