Zappos: Healthy Exit On Steroids

Hat tip to Nick Ehrmann of Blue Engine for this great nugget. Nick saw my post on "healthy exit" -- the idea that you should WANT to help some of your people leave any training program, because it's win-win if they're having second thoughts -- and pointed me to Zappos CEO Tony Hsieh. Zappos is an online shoe company.

Tavis Smiley interviewed Hsieh on PBS:

Tavis: To your point about the hiring process, which is fascinating - you talk about this in the book - you have a process where during the - I'll let you explain it, but during your training program you can get up to $2,000 if you quit during the training program. I've never heard of a job that pays you to quit. Tell me how this process works. It's pretty fascinating.

Hsieh: So everyone that's hired in our offices in Las Vegas, it doesn't matter what position, you go through the exact same training as our call center reps. It's a four-week program and two of those weeks you're actually taking calls from customers.

So at the end of the first week - it actually started out at $100 a few years ago and it's now actually up to $3,000, where you just say we'll pay you for all the time you've spent training, plus a bonus of $3,000 to quit and leave the company right now.

The reason we do that is because in Vegas there's plenty of other call centers. Starting pay is $11 an hour, and we don't want employees that are there just for a paycheck. We want employees that really believe in the long-term vision of the company and really feel like this is a culture they want to be a part of, where the company's core values match their own personal values.

Cool, right?

But there's more. The proposed Charles Sposato Graduate School of Education is named after a wonderful schoolteacher. Charlie emphasized relationship-building -- frequently through phone calls home to parents -- as a key to teaching kids who've arrived to school way behind grade level (and whose parents generally had never particularly involved in their kids' schooling).

Now read this.

Tavis: I'm not going to try that with my guys. (Laughter) I'm looking around the room, thinking, "If I just offer these guys some money to quit, the camera might be dead right about now, I don't know."

To your point about working in these call centers, something else that you guys do differently than most companies - you don't have people working off of a script.

Hsieh: Right.

Tavis: I can always tell when I get a cold call, or when I call in to a call center; I think I'm calling downtown, I'm calling Taiwan somewhere.

I can always tell when somebody's talking to me off of a script, in part because of what I do for a living, I guess. But what's the difference and why not have people operate off of a script like everybody does these days?

Hsieh: Well, it's funny, because there's so much talk, especially in the advertising world, about consumers being bombarded with thousands of marketing messages every day, and people are spending money on the Super Bowl.

For us, we think the telephone is one of the best branding devices out there. So rather than view it as an expense center, we're trying to minimize and maximize the efficiency of scripts and looking at how long phone calls are. We don't measure call times. Our longest phone call was almost six hours long, actually, (laughter) and we're happy to talk to customers and yeah, we really just want to develop a personal, emotional connection with each and every customer.

It's not about trying to maximize a sale; it's about building that lifelong relationship. So if someone calls in and is looking for, say, a pair of shoes we happen to be out of stock on in their size, everyone's trying to look on at least three other websites and they find it there, direct the customer to that other website.

Obviously we lose that sale, but we're trying to build our brand to be about the very best service.

Tavis: As I mentioned at the top and you mention now, most of us have come to know Zappos because of the shoe connection, so to speak. But there's a wonderful story that you tell about - the pizza story.

Hsieh: Oh, yeah, the pizza story.

Tavis: I don't want to color the story but it's a great story, so tell the pizza story.

Hsieh: Well, yeah, this was in Santa Monica, California a few years ago. I was at a sales conference for Sketchers, which is one of our brands, and after a long night of - we were busy during the day and then at night we went bar-hopping and then went back to the hotel room.

There was a group of five or six of us, tried to order a pizza from the hotel room and they weren't serving hot food at the time. So in our slightly inebriated state (laughter) we basically said, "Oh, call Zappos, call Zappos. We're all about the best service."

And yeah, we thought it was funny; the Sketchers person wasn't quite as amused. (Laughter) But basically she took us up on our dare and put it on speakerphone, called Zappos and basically tried to order a pizza, and the rep said, "You know we sell - you called Zappos, right? We sell shoes, clothes, but not pizza." (Laughter)

Tavis: Not pizzas, yeah.

Hsieh: Yeah. Then she said, "Yeah, but I'm super hungry," and the rest of us were in the background trying not to laugh, and then the rep put us on hold and came back two minutes later listing the five closest places that were still open in the Santa Monica area and delivering pizza.

So I can't believe you just made me tell that story on air, because now everyone - I don't want everyone -

Tavis: Zappos does not do pizza, y'all.

Hsieh: Yeah, so don't order a pizza, yeah.

A relationship with each and every customer. Change that last word to "student" -- that's Charlie.