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CUSTOMER SERVICE

Making Life Easier for His Customers
 

Chris Zane isn't in the business of selling bikes but creating experiences that will make his customers feel good about the product they walk away with.

"No matter what kind of business you run, you should be in the relationship-building and experience-selling business because that's where you find the greatest success". -Chris Zane

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Chris Zane is in the experience business. Whether it's selling bikes in his Connecticut store or filling orders for corporate rewards programs, Zane knows a successful business is about more than just selling stuff. He tells people to picture a 7-year-old riding on a two-wheeler for the first time. It's not just a bicycle to her; it's the "first real freedom that kid has ever experienced away from the parental grip."

And that's what he's selling: Experiences.

More than a decade ago, he used that concept to launch a business filling orders for custom-fitted Trek bikes geared for corporate rewards programs. He has sold his bikes to credit card companies for their rewards programs and corporations who offer them as employee incentives. Zane's Cycles builds the bikes to specification, and all the recipients have to do is attach the front wheel, using the included instructions. The end goal: Creating experiences that will make customers feel good about the reward product—and not irritated that they have to spend hours putting something together.

Zane, 46, got his start at age 12 fixing bikes in his parents' East Haven, Connecticut, garage. At 16, he convinced his parents to let him take over the lease of a bike shop going out of business, borrowing $23,000 from his grandfather—at 15 percent interest. His mother tended the store while he was at school in the mornings. In his first year, he racked up $56,000 in sales.

Early on, he decided he wouldn't nickel-and-dime customers and stopped charging for any add-on that would cost less than a dollar. He installed a mahogany coffee bar in his shop and gives away free drinks. "We're looking at the lifetime value of the customer," Zane said. "Why ostracize someone over one or two things that might cost us money when understanding the lifetime value gives us the ability to justify it?"

Zane recalls a customer who wrote him saying that he was completely let down by his experience at Zane's because no one helped him on an initial visit, and the bike he had purchased was too large for him. Zane passed the note on to his store manager, telling him to take care of it. The manager invited the customer to come back into the store where they refit the bike at no charge, and threw in a few extras, like a toe clip and handlebar light, for free. Why not just chalk up the unhappy customer to a casualty of doing business? Because, Zane says, a happy customer will shop at his store for years to come—and tell his friends about it.

Not that every policy he's tried has paid off. The store once offered a service where if a bike needed repairs, they would pick up and drop off the bike to the customer's home. But it meant that some of their best customers weren't coming into the store and seeing new products that were coming out. "We didn't have a way to entice them to make an additional investment in their sport," Zane said. So he continued the pickup and delivery service for those who had bought a bike under that window, but decided it was a losing proposition for the long haul and discontinued the service for new customers.

Over the last few years, Zane has expanded the business to include items like gaming systems and racing strollers. Consistently expanding has allowed him to keep his average annual growth rate at 23.5 percent for the last 30 years. He expects to close this year with $21 million in sales. He's come this far with the help of store policies that would make big box stores blush: Lifetime service guarantees, 90-day price protection, and a trade-in program for children's bikes where parents get 100 percent of the purchase price applied to their child's next bike.

Zane's corporate client business has grown so much that his Branford, Connecticut-based store now accounts for only about a quarter of his revenue. But he's got plans in the works to expand even more, opening 100 stores over the next decade.

 

Video Transcript

00:07 Chris Zane: The only difference between us and our competition is the service that we offer. My name is Chris Zane, and I am the owner and founder of Zane's Cycles. It's a bicycle retail business and a business to business supplier of bicycles for incentives in Branford, Connecticut and started in 1981. I started the business when I was a junior in high school. Starting a business so young, I didn't need to rely on the income in order to survive. You know, I was living at home and eating my parents' food, so I was able to grow the business intrinsically and take the profits and roll them back into the business. And you know I made lots of mistakes and learned from the mistakes.

00:44 Zane: One of our early mistakes were that I thought I was in the bike business and I had all the about the tires and the spokes and the rubber and, you know, all the things that happen in a bike. And over time, you know, you come to realize that you're really not selling a specific product. You're selling a solution to a problem and made it so that we could recognize the value of the relationship with the customer and not just the bicycle stuff that we were selling. When you change your thought process and go to thinking about the relationship with the customer and the service that you're providing the customer then, all of a sudden, transactional liabilities go away. If I don't make money on one individual transaction, but the customer is satisfied and the customer is happy, then he'll come back over, over and over again. How many different transactions will I have with a customer? I get them on their first bike. I get their second bike. I get them when they graduate from high school and then maybe graduated from college. You know, they get married, they have a mid-life crisis bike, their retirement bike. If you add up all those transactions, and granted, there might be 40 years from the time, you know, or 50 years from the time, we start till we finish. That customer is gonna be worth $12,500 to me in revenue if you take the average of each transaction.

01:53 Zane: And that subsequently turns into about $5,600 in profit. So, I am building a relationship with the customer that's long term because in order for me to capture $5,600 in profit I need to look at that first-time customer like a $5,600 profitable customer and not the $2 I might make on a tube because he just hop in by the store to get a flat replaced. And so we started with the fact that we were gonna solve problems for customers or we're gonna create this great environment where they wanted to be. And, you know, the rest is kind of been consistent growth for the next 23 years.

02:27 Zane: Being an entrepreneur uses a different skill set. We're willing to take risks, and I've had a lot of opportunity to talk to new business people or, you know, less experienced business people and there is always a question like, "Well, you know, what should I do? What's the thing that I need to do that, you know, the silver bullet." And I said to them, you know, "Then just take a step down. Then take the next step and then take the next step. Just put things into place that are customer focused that are lifetime relationship focused and then you can tweak them and then you can move it, and you can, you know, move the dial. I'm able to do whatever I need to do in order to grow the company, in order to move the company to the next level. And part of that is being comfortable with the fact that I have to constantly take risks and whatever the outcome is I'm confident enough to be able to manage through those problems or successes and be able to figure out what the step needs to be. And that's really the entrepreneurial spirit that most of the guys that are in employment that I know that entrepreneurs have is they're not risk averse.

 

Frequently asked to speak about business strategies, Zane recently published a book, Reinventing the Wheel: The Science of Creating Lifetime Customers. "No matter what kind of business you run, you should be in the relationship-building and experience-selling business because that's where you find the greatest success," he writes.

Chris Zane - Zane's Cycles

Chris Zane is the founder and owner of Zane's Cycles in Branford, Conn.

IMAGE: Courtesy Company
Last updated: May 9, 2011




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