Against all odds Zappos has emerged as one of the most revered online retailers, almost solely thanks to its unusual approach to customers. Their CEO Tony Hsieh is crystal clear on their philosophy of customer service: every interaction is a branding opportunity. The message is that the sales and post-sales activities are of equal importance. His company puts their toll-free number in the upper left-hand corner of every page, above the logo, promising 24/7 response. And its repeated all over the site. They’re practically begging us to call them.

Of course, this flies in the face of conventional wisdom for an e-commerce company. After all, customer calls are one of the biggest enemies of ye olde profit margin. In fact, the standard call center thesis may well be “every interaction is a cost to be avoided.” Why would any smart businessperson actually encourage customers to get in touch?

But this is just the beginning for Zappos. Because really, lots of companies display a support number, even if they don’t advertise it like a clearance sale. It’s usually just an invitation to phone tree hell. At Zappos, if you call you’re in for a surprise…starting with zero wait time. More importantly, you’re going to have a warm, personal conversation with someone who knows the finer details of the giant catalog of products. Many customers who’ve been through it say the experience is unlike anything they’ve experienced outside of a family run boutique.

How do they do it? They start by banning all scripts, the building block of a more traditional call center. Because Zappos knows that if they forced their service reps to live by a script they implicitly distrust them to operate without one. Zappos service is anything but automated. As their tagline puts it, they are “Powered by Service.” This commitment means letting their front-line people use their good judgement and–gasp!–their genuine personalities to engage with customers. Phone staff can do and say whatever they need to in the process of delivering satisfaction, whether that means giving away free overnight shipping or reading site content out loud to sight impaired customers.

They elevate the role of customer service to something so valuable that every manager in the company must participate:

…Every new employee that we hire in our corporate office is required to go through 4 weeks of Customer Loyalty training (answering phones in our call center) before starting the actual job that he/she was actually hired for. To us, customer service isn’t just a department — it is the entire company.

Given the incredible leeway they extend to their staff, it’s no wonder that Zappos avoids all the traditional metrics for success. The most important of these metrics is time per call, a number that by the sheer fact of its collection would undermine the mandate to do “whatever it takes” to woo people at all stages of customerhood. Zappos management opts instead for trust, occasionally listening in on calls, but generally focused on the broader measurement of satisfaction (98% positive according to BizRate) and return business.

The result is that Zappos is creating some of the most passionate customers of any online retailer. These customers are incredibly vocal, and the company’s projected 2007 annual sales of $800 million can be credited largely to the word-of-mouth their amazing service inspires. This earns them a seat of honor in our Hall of Fame.

Zappos reminds us that companies that embrace customer interactions create evangelists for their cause. It’s not that reaching this coveted place where engagement and passionate fervor meet is so hard or expensive–it may in fact be the cheaper and easier path in the long run. But as we’ve seen, it does require relinquishing control to the chaos of real human interactions. That is revolution for most companies.

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NEW RULE #1: No scripts for customer service
NEW RULE #2: Eliminate average call length as a measure of success