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Service Seals the Deal for Loyal Customers
04/03/09
Chris Zane began his bicycle repair business in his parent's garage as a teenager. The business soon was too big for the garage and Zane stumbled upon a bicycle shop that was going out of business. The teen convinced his parents to allow him to take a loan from his grandfather to open his own store.
Zane's ability to work with people and provide a high level of customer service turned his hobby into a multimillion-dollar operation.
And it all started with a warranty.
Donna Fenn, author of Alpha Dogs: How Your Small Business Can Become a Leader of the Pack, said Zane took note of the six-month warranty most businesses were offering and decided to take a it a step further, offering a one-year warranty. His competitors blew him off and figured he'd go out of business in six months. It didn't work out that way, Fenn said.
Before long, the other retailers were forced to match Zane's warranty because they were losing business to him. Of course, Zane then upped his warranty to two years. When the others followed suit, Zane took it to the top level, offering a warranty for life.
He reasoned that many people will bring a bike back the first year for repairs, but that will fade as time goes on. The investment was much less than the reward he received through a loyal customer base. He also gave a 90-day price guarantee that promised if a customer found a better price in that time, he would match it and knock off an additional 10%. It assured his customers he was not only offering a good product, he was offering it at the best price available.
The company's web site offers a simple explanation from Zane about his business.
"In the business, where bicycles and accessories are pretty much the same, it's people and policy of company that make a difference," the web site reads. "We know that it's your satisfaction with us that keeps us in business. That is why we, without reservation, guarantee that if for any reason, at any time, you are not completely satisfied with any item you purchased from us, we will gladly repair, replace, or refund your money."
That approach created loyal customers. Zane later noticed, however, that as big-box stores began infiltrating his market, he was losing some of his customer base, mainly those purchasing children's bikes, which would be much cheaper at such stores, not factoring in quality.
Zane decided to offer an upgrade program at his shop. If a customer purchased a children's bicycle, they could later trade that bike in for money off their next purchase—essentially creating customers for life.
Fenn said Zane's approach was simple: "It's all about the experience."
You have to constantly raise the bar, Fenn added. If retailers calculate the real cost of service, focus on the experience instead of the transaction, train employees in the culture of service, and exceed customer expectations, any business will be a success.
Fenn illustrated just how far Zane is willing to go to make a customer happy, along with an example of his employees' commitment.
A woman wanted to purchase a bicycle for her husband and surprise him on Valentine's Day. The woman was going to take him out to dinner with a bunch of friends at a restaurant near Zane's shop. She asked an employee if he could set the bike up in the front window with balloons.
Everything was in place except for one thing: The employee forgot to set up the display. Needless to say, the woman was very upset. The employee, without direction, wrote Zane a check for $400 for the loss of a life customer.
Zane took over from there. He drove the bicycle to the customer's home, forgave the price, gave the couple a gift certificate for dinner, and bought lunch for all the friends who were to be present that day.
It may have cost Zane money up front but, Fenn said, imagine the customer service stories that were generated by not only the couple, but all their friends.
Another practice Zane employs at his store is not charging for anything that costs less than a dollar. It could be a nut, a link to a chain, or any number of small items, but Zane will give it to the customer free. In fact, sometimes he gives them two in case they lose the part again. The knowledge that they will likely return to his store for future, much more expensive needs, far outweighs the approximately $100 it costs him a year for the freebies.
"No one has a captive customer base anymore—not even a college bookstore," Fenn said. "What do you do at your store to make sure that customers keep coming back?"
Last week, Campus Marketplace took a look at Dorothy Lane Market, which went from a roadside stand to a $60 million business. Its secret to success was focusing on employees and not customers. Go to www.nacs.org/news/032709-alphadogs.asp, to read Alpha Dogs Need the Whole Team Pulling.
—Dan Pender
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