Why all the fuss over Zappos.com? By now you have probably heard countless legendary stories about a company started 10 years ago out of a living room. The goal was to get people to buy shoes online.
Only a few months ago Zappos sold for over $900 million! All this was done during one of the worst economic recession in decades. Their business was built using world-class customer service — not just relative to an e-commerce retailer– but world-class customer service by anyone’s standards.
Consider this: They sell shoes online, a concept no one ever thought would take off due to the unpredictable and inconsistent size of different brands and styles. But they do sell a lot of shoes online — over 1 billion. Last year their sales were up 20%, and they’ve been profitable since 2006.
They have a cult-like employee base of over 1,300 associates referred to as Zapponians, yet they pay salaries often below market rate. The average hourly worker makes just over $23,000 a year.
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).
Zappos is built around one single concept – Deliver “WOW” through service and everyone is brainwashed to execute that. A Zappos customer enjoys free shipping, free returns, and a retailer that always under promises and over delivers. Zappos promises you will receive your order in 2-3 days and regularly sends your shipment next-day air. They also have toll-free customer support answered by a human being 24/7, a personal buying service, and free socks.
What made Zappos act like a hospitality company that happened to sell shoes online? Survival! Early on, the company could not afford to spend money on marketing, so the sales strategy was quite simple: Make customers so happy and pleasantly surprised that they buy again and tell their friends. As a result of their success, these staple amenities that exceeded traditional service experiences elsewhere are still part of the Zappos experience today.
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?
Authors and sources: Zappos.com, John R. DiJulius, Bill Taylor