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hello i'm paul michaelman from harvard
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business digital and i'm delighted to be
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joined today by bill taylor bill writes
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the game changer blog for
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harvardbusiness.org bill welcome great
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to be here great bill the subject of our
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chat today is online shoe retailer
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zappos
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and among other things zappos is known
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for providing some rather extraordinary
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customer service and for engendering a
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really deep level of commitment and
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engagement from its customers so bill
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one of the tried and true principles of
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management is you can't have deeply
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engaged customers without deeply engaged
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employees
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and yet in your post on zappos you write
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about a rather unusual policy zappos has
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of actually trying to bribe its
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employees to quit can you connect the
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dots for us here well it's unusual but
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if you think about it it makes a lot of
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sense zappos
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they're growing fast they're up to 1 600
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people now just a huge employment growth
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rate and they're really committed
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to filling the company with employees
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who are are equally committed to
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engaging with their customers and it's
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one thing when you recruit and you
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evaluate and you interview and you try
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to
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educate people about what they're
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signing up for but they don't really
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know until they arrive so on the first
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the first day at zappos you begin a
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four-week
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deep immersion not just in how to talk
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to employee how to talk to customers but
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in terms of the company's culture its
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values it's incredibly high energy and
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about a week into it
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zappos stops the training and says to
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everybody in the room basically we'll
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pay you for the time you've been here
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and if you agree to quit today we'll
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give you a thousand dollar bonus no
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questions asked and the idea is to allow
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some number of people who are probably
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sitting in that room saying my goodness
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i kind of like it here but i had no idea
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what i've signed up for and i'm just not
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ready to step into the kind of intensity
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and energy that zappos expecting and it
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gives people a
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low stress
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uh low risk and actually kind of
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rewarding way to opt out at that point
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about 10 percent of the new recruits to
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the call centers take them up on that
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deal and zappos thinks that's money very
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well spent because they're really trying
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to fill the organization with the cream
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of the crop not that there's anything
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somehow wrong with people who choose to
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leave but it's simply not the right fit
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for them and so rather than
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not you know trying to get people not to
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admit that hey it turns out i this is
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more than i expected they give them the
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opportunity without a lot of guilt and
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actually with a little change in their
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pocket
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to opt out it's worked very well for
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them so it's really the first stage to
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developing the kind of engaged employees
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they need
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to be the breakthrough company that they
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are well it's actually kind of the
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second stage because they really think
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hard and very creatively about the
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interview process the job the zappos job
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application is kind of entertaining you
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begin with actually completing a
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crossword puzzle believe it or not and i
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don't think there's no great social
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science research behind it it's just a
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signal of people that this is not your
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run-of-the-mill company kind of deal
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they've got 10 very well-developed
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values they ask questions that are
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probing quite specifically into do the
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values of the people they're evaluating
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sync up with the values of the company
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itself and i think they do a very
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careful and very creative job of doing
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that but even with that
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you're gonna hire people you're gonna
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invite people in where the fit isn't
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quite right and that's where the
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thousand dollar bonus comes in and by
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the way it started at a hundred dollars
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then they raised it to 500 it's now a
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thousand and as the company continues to
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grow they're thinking of raising it
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again because they say you know we're
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willing to spend one of the things that
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happens as companies get bigger and
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bigger is that they tend to bland
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themselves out and the hunger to just
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get more warm bodies in there because we
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have so much work to do overcomes the
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commitment to having only the right kind
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of people and so one way to try to keep
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that quality up is to keep raising the
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size of the bonus okay
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so zabo's employees aren't just engaged
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they're deeply empowered and i think if
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i read between the lines of your post
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one of the reasons they've been able to
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grow so successfully is they push so
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much responsibility to the front lines
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of their workforce how do they do that
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well first of all i'd say they're not
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just in power they're borderline insane
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and i mean that only in the best sense
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of the word i was out there a few weeks
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ago to to sit down with the ceo tony
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shay and do a tour and they have 1500
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vendors and so the vendors are coming
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through all the shoe companies all the
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fashion companies so they're coming
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through all the time so they're very
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systematic even about giving a company
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tour and i i did the tour with the ceo
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but other people do the tours and they
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walk through the office with this giant
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flag which is the tour flag which lets
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you know that
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you're sitting in the various parts a
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tour is coming through and each
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department has its own crazy
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uh cheer you know shish boom ba or
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somebody rubs up with pom-poms or they
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do clapping it's it's really kind of a
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wild scene and again this is now with
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vendors and visitors and they're trying
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as a group of individual people to make
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an impression on you and to make zappos
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be a memorable company to experience
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whether you're buying something for them
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selling something to them or just coming
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to see the company in terms of
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empowerment i mean basically the biggest
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form of empowerment certainly the
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customer service side is no scripts no
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time limits you are basically authorized
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to do what it takes to make the company
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make the customer happy satisfied so
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there are lots of
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legendary stories about zappos employees
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who go way beyond the call of duty to
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meet the needs of their customers can
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you tell us one of those stories well
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one it became a real internet sensation
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about a year ago when a fairly prominent
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blogger who was a zappos customer
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bought
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a bunch of shoes for her mother who it
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turns out was terminally ill
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and so she bought
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10 12 pair something like that and the
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zappos zappos return policy is at that
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point you had 15 you free delivery you
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have 15 days to figure out do i really
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want the shoes and if not you've got to
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return them free return as well so the
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15 days had passed and she hadn't
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returned the shoes and so she got a
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pretty standard email from somebody it's
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apple saying hey it's been 15 days is
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there anything wrong or are you planning
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to return the shoes and she after a long
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day at the hospital with her mother she
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sent an email back saying oh my i'm
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sorry my mother is terminally ill i'm
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gonna you know try my best and by the
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way part of the deal is you've got to go
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to a ups store to actually return the
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shoes so zappos emailed back at me and
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said oh my goodness we had no idea we'll
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send a ups truck to your house to pick
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up the shoes we would never expect you
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to go anywhere so they did that the next
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day she returned the shoes then the day
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after that she got a knock on her door
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and his ups driver with a beautiful
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bouquet of flowers from zappos saying
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we're so sorry to hear about your your
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mother you know we just want you to know
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that we at zappos are thinking of you
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and she was as you might expect pretty
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overwhelmed by this she went to her blog
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she wrote a post called iheart zappos
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told the story and oh my goodness it
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just was viral
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beyond belief to the point where you
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know over the week or so after that
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happened if you you know googled zappos
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one of the absolute top pitch you would
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get is the story of this woman and her
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thing and
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again brilliant pr you know good viral
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market it was nothing like that it was
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just human beings
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acting humanly with the people who are
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doing business with with zappos and you
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know their theory is if you encourage
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people to do that it's going to cost you
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a few bucks but the benefits you get
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over the long term are really quite
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tremendous you know by the way also it
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becomes the kind of place that people
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want to work i mean it's not very
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glamorous job answering phones eight
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hours a day from customers it's not the
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most exciting work in the world so if
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you can give people more of a sense of
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fun and meaning and connection i think
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it pays big big dividends as you recruit
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employees not just as you recruit
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customers so that's one i think great
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takeaway for any manager uh who is
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watching this or listening to us today
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make things fun it'll transfer to the
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customer experience this is a pretty
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crazy company though they're in las
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vegas they're an online company they've
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got a ceo who blogs they all twitter
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are there other things from this culture
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that the rest of us who work in more
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mundane organizations can apply well i
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think the first big insight is
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they're not a technology company even
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though they sell they'll do a billion
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dollars of sales this year of the
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internet they do understand that
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fundamentally they are a customer
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service company so zappos was actually
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started in san francisco but they moved
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it to las vegas because they felt the
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culture of san francisco is way too
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focused on technology per se as opposed
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to customer service per se in las vegas
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with folks from the uh hospitality
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industry of mystically as well as a big
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call center
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operation so everybody who walks in the
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door understands from day one we we we
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sell shoes today
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we sell handbags now in fashion they're
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gonna be selling consumer electronics
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they are building a customer service
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platform and everybody understands that
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job one there is to connect with the
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customers to the point where if you're
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hired as a very senior executive or a
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very nerdy computer programmer you take
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a short class the short form of the four
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week customer service rating and you
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spend a week everybody spends a week
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working in the warehouse in kentucky
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shipping out the product because they
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don't want you to then become a
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marketing person or an operations person
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and forget what they so that's that's
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inside number one number two is a
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culture a customer service culture is
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only as strong as the employees who own
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it so zappos every year puts out a 300
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page
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employee manual culture book written by
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the employees themselves and it's just
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it's you can actually buy it on the site
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they sell it to other people who explain
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the company and and so the sense of the
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employees really own the culture
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whatever form that culture may take is
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another important takeaway
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bill taylor thank you very much great
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thanks it was fun
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to read more about zappos and other
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innovative companies you can visit
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bill's blog the game changer at
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blogs.harvardbusiness.org
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you
