Last week’s Economist featured a story about Tony Hsieh, the CEO of Zappos, and the quirky Zappos empire which appears to be weathering the recession with style. While the exact reasons for its success are beyond the scope of this article and this post, there are some interesting elements to the Zappos story. First: Zappos mission is unparalleled customer service. Second: Zappos prides itself on being unconventional. Third: Zappos employs some basic economic principles in nontraditional ways.
Zappos.com is an internet retail site most widely known for selling a wide variety of shoes, but has expanded to include accessories and bags. You may ask, “Why is customer service important if all people have to do is surf the internet and enter their credit card information to make a purchase?” Beacuse customer service is always important–and Tony Hsieh knows that. Interestingly, customer service is one of the first things businesses are encouraged to focus on during a recession (See this MSNBC article).
Known for its unconventional and maybe at times quixotic office culture–Zappos strives to “‘create fun and a little weirdness.’” (See the rest of their Core Values.) “Zapponians” (the affectionate term for Zappos employees) even publish an annual Culture Book, explaining what Zappos culture means to them. The Culture Book provides qualitative, subjective information about the Zappos company–and, it is written by Zappos employees. A recent post in the Zappos blog advertises that the next Zappos Culture Book will feature submissions from customers as well. What is the value added of this publication? It gives employees (and now customers) a voice, adds value to their input, increases transparency, and provides a positive and fun qualitative analysis of how the company is operating.
Zappos’ zany office culture extends into its hiring practices. A hiring policy mentioned in The Economist article that I found particularly interesting was:
[I]n their first weeks with the company, new employees are offered $2,000 to quit—a significant sum for call-centre trainees who start on $11 per hour.
That is a significant sum! But, more interestingly, is employing basic economic principles in nontraditional ways and means two things: (1) In offering the money, Zappos really doesn’t want people working there who don’t want to be. And, (2) in forgoing the money, new hires (at least call-center trainees) demonstrate that they would rather work for free for over a month (at $11 per hour and 40 hour weeks, monthly salary before taxes is $1,760) than give up their job at Zappos. This begins to outline a quantifiable reservation price for employment at Zappos and serves as a nice psychological reminder to employees that they are financially invested in their career at the company.
Is this off-the-wall approach successful? It sounds like it:
Last year it [Zappos.com] rang up a record $1 billion in sales even as other retailers were struggling.
Also, Tony Hsieh twitters! As of right this second he has 519,390 followers, and uses this social media tool to educate others about his company’s unusual practices, increase corporate transparency, and give his employees a voice. Follow him here.
Very interesting post. Looking forward to learning more innnovative business strategies.
[...] nonprofit (thinking of charity:water’sgeo-tagged project photos) and corporate (thinking of Zappos for example) [...]