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May 29, 2008

Innovative Customer Service Organizations - Zappos Mini-Case Study

I used to work exclusively researching the customer service function of Fortune 500 companies but since moving to London, I'm moved into a new role more involved with product management.

For that reason, I do excited (as only a researcher can) when you read positive coverage in the mainstream news about customer service successes. We have experienced and read about the horror stories about customer service (long wait times, never speaking to an actual person, having to call back multiple times to resolve issues, etc.) so those rare stories about satisfied, happy customers that do reach the media really stick in my mind. The reason we don't hear more about happy customer service stories is because most often customer service does it's job and customers don't think twice about it; conversely, one bad experience with customer service and that's what you remember and tell your friends

Beyond the rarity of those positive customer service experiences in the media, however, is the even more unusual coverage of innovative practices or stores from the customer service world. When you read those stories in the press, you really get excited.

So with preface, I wanted to make sure Zappo's recent coverage was recognized. Zappos is an online shoe company that has made a name for itself with it's quirky, non-traditional approaches to customer service. And what's garnered them their most recent news coverage is their policy of paying newly hired staff to quit, if the employee doesn't feel that they're a good fit with the company.  As a researcher  of the customer service function for Fortune 500 companies, I'm not suggesting that what Zappos is doing is best practice or even the right policy for *most* companies.

But the idea, or insight underlying Zappo's policy is valuable and transferrable across industries and different sized companies: it's not company culture that Zappos is directly going after with this policy (although it's a nice side benefit), what this policy underscores is that retaining staff is more cost-efficient than the hiring and onboarding training of new staff.

In fact, in the medium and long run (6months and up to 3+ years), customer service will see a much larger return on investment (staff productivity in this case) from the retention of the *right* staff versus the hiring and re-hiring of staff who don't stay with the job for long enough-- that may seem obvious but less known to most people is that retaining those *right* people, even if they're not the all-stars, is more cost efficient than trying to hire the very best of the best who don't stay in the customer service position for as long (they're promoted or poached by competitors).

So for all of those reasons, watch the Harvard Business Review video below on paying non-*right* new hires to quit and better understand this mini-case from Zappos. Think about how you can apply the idea of retaining your solid performers versus hiring the all-stars in your particular business or organization.

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