Guru Review: Reinventing The Wheel

The first person you see in two American Express OPEN Forum commercials released early last year ( Small Business Owner Anthem  and 
April 19, 2011

The first person you see in two American Express OPEN Forum commercials released early last year (Small Business Owner Anthem and Lots of Questions) is Chris Zane, hard at work in his now-famous Zane's Cycles bicycle shop in Branford, Connecticut.

 

Zane has now published his first book, entitled Reinventing The Wheel: The Science of Creating Lifetime Customers, and I devoured it. It's a fantastic primer on how to think far beyond a small retail box, grow a commonplace idea into a nationwide phenomenon and truly reinvent the wheel by creating customers for life. (Disclosure: I'm an avid cyclist and cycling passionista.)

 

It's been two decades since Carl Sewell wrote Customers for Life, which many point to as the start of the customer revolution. It's one thing, though, to create lifetime customers when you're selling Cadillacs, as Sewell does. It's quite another to talk about customers for life when the retail item is a bicycle.

 

Zane started his bicycle business at age 12, fixing bikes in his neighborhood and raking in a few hundred dollars a week. On his father's suggestion, he filed for a tax identification number in order get wholesale parts cheaper. Four years later, at age 16, he arranged a loan with his grandfather to buy a neighborhood bike shop. Reinventing The Wheel charts Zane's journey in turning a teenage dream into a multi-million dollar business.

 

Today, Zane's Cycles has annual revenues in excess of $15 million, ships over 40,000 bikes nationwide and is growing at an annual rate of nearly 24 percent. There's a lot to be learned from Zane about customer relationships: he's had the pleasure of selling bikes to to the children and grandchildren of his original customers.

 

Big idea:

 

"If you can shift your thinking away from merely selling and into building trust instead, even if it costs you a few bucks in profit," writes Zane, "you'll begin to see opportunities you never imagined once you understand what it means to 'wow' that customer by giving them more than they expected."

 

Key takeaways:

 

I've been to dozens of bike shops, and none of them offer what Zane's does: lifetime service guarantee; a custom coffee bar where riders can share war stories over a cup of cappuccino on the house; full refunds with no questions asked (regardless of the bike's age); free flat tire fixing service; and a trade-in program for children's bikes that have been outgrown.

 

The result is lifetime customers, with each customer valued at $12,500 to the store, $5000 of which is profit. Here's a sampling of Zane's methods for building those relationship:

 

  • Personal service. In this virtual age, when so many transactions happen without a human being involved at all, the key is to find an emotional connection between your customer and a live salesperson, who takes the time to listen to the customer's concerns and needs.
  • No nickel-and-diming. Zane's doesn't charge for any part that costs a dollar or less. "It shows we aren't interested in wringing every last penny from our customers," writes Zane.
  • Walk the talk. A customer came in with a 6-year-old bike, demanding a full refund. Zane's happily honored the unconditional return policy, despite the obvious wear and tear and use of the bike. The customer ended up applying the refund to a much more costly bike, which leads to the next point...
  • Trade in, trade up. Zane's kid's bike program, which allows parents to return an outgrown bike and apply the full amount to a new one, ends up in few returns but a lot of repeat purchases for larger bikes. Customers tell Zane that the original bikes were of such high quality that they were worth handing down to younger siblings, relatives or friends. The end result is a double sale: the old one and the new larger one.
  • Trust. Zane's hands over its bikes to anyone who wants a test drive, without requiring a driver's license or any collateral, as a way of saying "we trust you." (Trust me when I tell you this is unheard of!) Average lost bikes per year: only six.
  • Know your niche. Once his bike business was going well, Zane assumed he could sell anything. He decided that outdoor gear like tents, sleeping bags, camping equipment were a good fit. Over the course of three months he lost $100,000 and nearly drove himself out business. Zane came to understand the value of truly understanding the customer.
  • Connect with community. Zane's sponsors rides and community events, provides children's helmets at cost (emblazoned with a Zane's sticker, of course) via the local PTAs, routinely hands out free bike locks at the Yale University campus when school begins in the fall and funds scholarships for local high school students by collecting money in bubble gum machines installed around town.
  • Lead by example. Zane's is powered by solar panels and a wind turbine, and rather than ending it there, Zane provides a real-time internet feed—accessible in schools—which shows how generated power is put to use. If students want a firsthand look, Zane's offers tours for school children to see an environmentally sustainable building at work.

Best for:

 

Anyone who owns and/or operates a small business. "My goal in writing this book," says Zane, "is to show you that no matter what kind of business you run, you should be in the relationship-building and experience-selling business, because that is how you will find the greatest success."

 

What people are saying:

 

“Chris Zane's bold—and practical—approach to cultivating lifetime customers holds valuable lessons for businesses large and small. Through a series of engaging stories, Chris shares his recipe for experiences that offer more than what customers expect. And he shows us how to build deep emotional bonds, even in the face of material price premiums. A fascinating read and an excellent testament to the power of customer centricity and unconditional service guarantees!” —Julie Moll, SVP, Global Brand Strategy and Research, Marriott International