Offering employees a bonus to quit may sound like madness; but it's a strategy that has paid substantial dividends for US online footwear retailer Zappos.
Just two weeks into their job, each new member of staff is offered a US $2,000 incentive to quit the company, if they wish to do so — on top of what they have earned so far.
Zappos believes that "The offer", as it has come to be known, ensures staff loyalty. Aaron Magness, Zappos' business development manager, explains: "Our goal is to ensure that the employee is here because they want to be here. The offer helps makes sure that's the case. Keeping employees on who are not engaged and passionate about who we are is much more expensive than offering them $2,000 if they'd like to quit."
It's a testament to Zappos' company culture that less than 1% of employees take up the offer. The company treats its staff well; employees can eat free food all day, take a break in nap rooms and play ping pong and video games. There are frequent company-sponsored events, and the firm even publishes a "culture book" of (unedited) comments by employees on what company culture means to them.
Zappos believes that cultivating staff loyalty feeds through to a high standard of customer service — something that the company has built its reputation around. In the early days of dotcom fashion retail, shoes were the one item that no-one thought would sell online, but Zappos has proved this wrong. "Our culture and focus on customer service is the most unique aspect of our business," says Magness. "There are a lot of online retailers, but we consider ourselves a service company that happens to sell clothes, shoes, handbags and a whole lot more."
Its business model revolves around a huge inventory (its warehouse holds more than four million items) plus free shipping and return shipping for customers — so a pair of shoes bought online that doesn't fit can be sent back quickly and easily without any hassle for the buyer. Customers are given a link to print out a prepaid return shipping label, and most repeat customers get upgrades to free overnight or second-day delivery. The days a week, to guarantee next-day delivery even for customers ordering at 11pm. Staff training is key; every new recruit, regardless of what department they werehired for, must spend four weeks working in customer loyalty, answering customer calls. Employees are told not to use scripts when speaking to customers and are trained not to keep calls short.
As a result, Zappos' business has flourished. Based in Las Vegas, the company was founded in 1999 by San Francisco marketer Nick Swinmurn, receiving a $1m venture capital injection a year later when its now chief executive Tony Hsieh joined the firm. This year, it aims to break the $1bn sales barrier, having recorded sales of $840m in 2007. The customer base totals 8.2 million people — according to the company, this means that almost 3% of the US population has bought from Zappos. And, on any given day, Zappos boasts that 75% of sales are from repeat customers.
"As long as we continue to focus on maintaining our company culture, we believe that most of the other stuff, like great customer service, will happen naturally on its own," says Magness. "Great customer service is not something we teach or can teach. The people we hire already have that mentality so, as long as we continue to hire based on culture fit, the service side will come naturally."
