I feel horrible for them, but loved how they handled it. And stayed true to their "customer first" ways.
I encourage EVERYONE to read this then put on your manager/CEO hat. And when you read it you, and only you will TRULY know what your gut reaction is.
Your company just made a 1.6 million dollar mistake you have a ton of different options, would you pick "take it on the chin?".
When faced with EXTREME adversity, do you pick your customers first (as was done in this case) or do you pick the bottom line first (ahem Facebook). I for one hope (and believe) that their customers will stick with them b/c when "it" hit the fan Zappos stuck by them.
Agency types, consultants, workerbees, managers - take a good hard look at your company's client retention numbers and ask yourself, when was the last time your company screwed something up and did 100% what was right, not some compromise, you just took it on the chin, said sorry and kept at it?
Zappos could have easily tried some "oops, we're going to give you 50% off" or something like that. But they took the full BRUNT of the hit. Thats respectable.
People!!!! If your client retention numbers are in the crapper, you might want to think hard about why - maybe when it comes down to picking revenues or what's right for your client you pick revenues. And when it comes their turn to refer a partner they pick someone who cares about them OVER YOU!? Leaving you wondering where your next gig is coming from. NEVER waver on doing what is right for your clients, sometimes losing money on a client project when you screwed up is how you build lifelong trust.
In business there will undoubtedly be major screw ups, luckily I have had a chance to share some of them with at this last SXSW in the Panel "We F*cked up" with Greg Hoy, Kevin Hoffman, and Grey Storey of happycog and Tracey Halvorsen of FastSpot.
Here's my clip of the video on how I handle screw ups here at SEER form SXSW (I'm at 2 minutes 43 seconds in).
Here's the presentation: