It's been like this from the beginning. Steinberg says he always intended to have a store that would cater to people who take driving seriously, but he had no interest in owning a typical speed shop, with tires strewn about and pictures of healthy young ladies clad in next to nothing on the walls. Partly that was a matter of personal taste: spending time in a speed shop was not his idea of fun. But he also realized early on that he could use the environment of his shop to differentiate it from competitors. Indeed, he has done just that. The mere fact that women -- and today 40% of his customers are female -- feel comfortable visiting Direct Tire sets it apart.
But the ambience of the store is just one component of a much broader strategy. Simply put, Steinberg's goal is to turn everyone who enters his store into a repeat customer. Virtually everything that happens at Direct Tire is done with that objective in mind.
Now, it is not very difficult to fathom Steinberg's logic here or his motives. Anyone who's ever run a lemonade stand knows that loyal customers are the best kind. To some extent, their value is quantifiable. You don't have to be Albert Einstein to figure out that -- if your average sale is $100 -- a onetime customer represents $100 in revenues for your company, whereas someone who comes back 100 times represents $10,000.
The trick, of course, is to generate the kind of loyalty that keeps customers coming back. This is, in fact, the whole purpose -- and the true meaning -- of customer service. It goes well beyond smile schools, where employees learn to deal with aggrieved customers and to say please and thank you a lot. "Those warm, fuzzy things are certainly part of providing good service, but if customer service were a cake, they'd just be the icing," says Dallas car dealer Carl Sewell, who's been selling through service since 1972. "The real cake would be the systems that allow you to do the job right the first time."
Customers think about service in similar terms, says Leonard L. Berry, professor of retailing and marketing studies at Texas A&M. He has recently completed an exhaustive study of consumer expectations. His conclusion: customers want companies to do what they say they are going to do -- to keep the service promise.
This is something Steinberg has understood all along, and he has built his business accordingly. And, by viewing customer service in this light, Steinberg has found he's able to identify and measure exactly what he's spending on it and what Direct Tire is getting in return. In the process, he often winds up including costs that, on the surface, don't seem to be related to customer service at all.
Consider recruitment. Steinberg knows that -- to keep his service promise -- he needs the best mechanics and alignment specialists around. He doesn't even bother to advertise for them. "Want ads tend to attract people who are unemployed," he says. "I want people who already have a job." To find them, Steinberg does something virtually unheard of in his industry. He uses a headhunter.
His requirements are precise. He tells the recruiter he wants people with a minimum of two to three years' experience, so they know what they're doing, and he expects them to be certified in their specialty. "They can't have had five jobs in the last five years. I want people who are reliable. Ideally, they'll be married with a couple of kids. People with responsibilities are more dependable. And they have to be able to get along with both customers and their fellow employees."
It's not easy to find candidates who meet every condition on the checklist, but then again the headhunters are fairly compensated for their efforts. They earn a commission equal to 10% to 15% of the employee's first-year salary for placing a candidate. In most cases, that salary is substantially higher than it was at the employee's last job. As a rule, Steinberg pays his 27 employees 15% to 25% over scale. Since labor amounts to 28% of sales, Steinberg could cut expenses at least $168,000 just by paying the industry standard. He could also save the money he spends on headhunters' commissions -- about $4,000 per year -- by taking the usual approach to hiring. But he is committed to having reliable, well-qualified technicians, and that commitment costs him more than $172,000 per year.
Steinberg considers the money well spent. For one thing, good people make fewer mistakes, and mistakes cost money. For another, good people are more self-reliant, so he needs fewer supervisors. Beyond that he credits his approach with helping him build a reputation for doing the job right the first time. And besides, he notes, who would you rather have dealing with your customers? Someone who's smart and who understands what he's doing or someone who isn't? From that perspective, the $172,000 represents an investment in customer service, and Steinberg regards it as such.
He has a similar attitude toward equipment. Recently, for example, he bought a $24,000 machine that helps mechanics pinpoint a car's brake problems. Before, they would do a 10-minute visual inspection that could only spot worn brake pads and shoes. The new machine does that, plus it identifies alignment and hydraulic problems and prints out the diagnosis within 90 seconds. Steinberg says he wants the best equipment available. Not only does it allow him to improve the level of service Direct Tire offers, but it helps him attract the best technicians. His customers benefit both ways.
This approach even extends to inventory. Sitting in his office, Steinberg proudly shows off his customized software package that can tell him immediately what's in stock. That $48,000 system is another way of providing good service, he explains. On the one hand, it spares customers from having to wait while someone runs to the warehouse to check for a particular item. On the other, Direct Tire's salespeople use it to print receipts, speeding the checkout process.
