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Fred Clements: Zane's reinvents the wheel

Published August 25, 2014
A blog by NBDA executive director Fred Clements.

Editor’s note: This blog post was written by Fred Clements, executive director of the National Bicycle Dealers Association. Clements’ previous blog posts can be read on bikedealerblog.wordpress.com.

Many successful bicycle retailers have interesting origin stories, but very few openly lay out their operating philosophies and strategies for the rest of the world to see.

An exception is Chris Zane, owner of Zane’s Cycles in Branford, Connecticut. His book Reinventing the Wheel traces his history in bicycle retail, getting his first tax ID number at age 12, buying his first bike shop at age 16, and building Zane’s Cycles into one of the largest bike shops in the country today.

The book is much more than a tale of one bicycle store owner’s history though. It presents great detail about his operating philosophies developed throughout the years. The prominence of these sometimes “out of the box” concepts has also allowed Zane to move into a speaking and writing career beyond the bicycle industry.

The core of Zane’s philosophy is building customers for life. He has calculated that the average value of a lifetime customer to his business is $12,500. He writes, “that means that my average customer will spend $12,500 on my products and services over his or her lifetime, $5,000 of which is profit. Of course the only chance I have of ever seeing that kind of return on the relationship is if that customer keeps coming back and back again. Better yet I want customers to come back with their kids their relatives and five friends.”

This big picture view has led him to look well beyond today’s transaction. It is the philosophical underpinning of the high-profile and sometimes controversial offerings from Zane’s Cycles, such as free lifetime service and liberal return policies that may frustrate his competitors. In fact, in the book Zane seems to delight in coming up with unexpected and unusual offerings that competitors either will not or cannot match.

Retailing, he writes, “is a game where you could change the rules on your competitors.” Changing the rules has led Zane’s into several unexpected directions, entering the world of corporate rewards programs, having a huge annual Big Wheel Sale, and any number of efforts to differentiate the business and create long-term customer relationships.

He writes, “We aren’t better than our competitors because we offer better stuff — everybody has access to cool toys like carbon fiber frames or aerodynamic wheels. We’re better than our competitors because we differentiate ourselves by offering more service than most customers consider reasonable. In other words our goal is simply to blow them away with our attention to detail as soon as we meet them.”

How does he do it? Here are some examples:

The Coffee Bar. Zane’s has a 14-foot coffee bar where free coffee and Snapple are served. It oversees the service department and is designed to create a welcoming and service-oriented atmosphere in the store. “Not only does the bar give our regular customers a place to come, hang out, and talk about cycling, it creates energy inside the shop that new customers walking through the door can tap into.”

Don’t Sweat the Small Stuff. Zane’s stopped charging for anything that costs them less than a dollar. Items such as ball bearings, master links and various nuts and bolts. “We do this because it lets our customers know we’re not out to milk them … that we’re willing to go the extra mile to make them feel special … we actually tracked the costs of our giveaways one year and, incredibly, it came to just about $86. That $86 allowed us to have about 450 one-on-one interactions with customers.”

Trade-in Program. When a child outgrows a bike purchased at Zane’s, the parents can bring it back and trade it in for a full credit toward the purchase of a new bike. While this would seem like a financial disaster for the store, Zane’s says that isn’t the case. Only 20% of the bikes are ever returned. Those that are result in another bike going out the door and relationships to be solidified. Sales of children’s bikes have gone up significantly. This is another example of the philosophy in action: he focuses on lifetime customers, not single transactions.

Lifetime Service. “Anyone who buys a bike from us can bring that bike back in for any needed tune-ups and repairs that result from everyday riding wear and tear for the entire life of the bike.” While this would seem to be a guaranteed trip to bankruptcy court for many stores, Zane’s has found that it works to differentiate the business and take customers from the competition. With a focus on quality builds, the number of requests for service is actually manageable. This is another example of changing the rules of the game, he notes.

Price Protection. Zane’s offers a 90-day price-protection guarantee. “Once we were willing to guarantee that the customer could come back anytime in the 90 days after they bought a bike if they found a lower price, our customers didn’t have to worry that we were somehow trying to deceive them,” Zane writes. “Interestingly we have never had a customer request price protection twice … We’ve found that by delivering on our promise and building an unquestionable trusting relationship in our customers’ minds, we become the only bike shop that they ever visit.”

Flat Tire Insurance. For a one-time fee, a customer receives an unlimited number of flat tire repairs. “Although I was expecting to repair hundreds of free flats each and every year, the data shows that we were only being asked to fix about 50 flats a year. What we learned is that our customers who do the most riding actually don’t buy the insurance … The people that buy the insurance, on the other hand, are casual or weekend riders or parents buying it for their kids.”

The book also includes discussions on community involvement, charity contributions, employee recruiting and training, corporate rewards fulfillment, customer feedback, database management, and other programs designed, as one section declares, to “drive your competitors nuts.”

He writes that his sometimes counter-intuitive approach has also been difficult for competitors to compete with because they “don’t see the $12,500 forest beyond those nickel-and-dime trees standing in front of them.”

While his methods may not work for everyone, Reinventing the Wheel is a thought-provoking read for any retailer battling to appeal to consumers in an increasingly challenging marketplace.

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