HoustonChronicle.com : September 2000

BIKE SHOP ON A ROLL, AND SERVICE IS WHY


It has probably happened to you. You are a customer of a company that treats you as if it could not care less about your needs, only its bureaucratic rules.

It happened to Christopher J. Zane, the operator of a bicycle store. He used a credit card to pay suppliers. The bank made a bookkeeping mistake. As a result, the balance in the checking account -- which was supposed to pay that credit card bill -- dropped too low.

The bank suspended his credit card for seven days, leading to big trouble with his supplier. Bank personnel acknowledged it was all their fault. But they refused to fix the matter.

Zane had been a customer of the bank for 10 years. Needless to say, he now has another bank.

Zane, who wrote about the incident in the Retailing Issues Letter jointly published by Texas A&M's Center for Retailing Studies and Arthur Andersen Consulting, has better ideas for how to treat customers.

Zane's Cycles, in New Haven, Conn., is one of the top 10 retail bike stores in the nation. Zane runs his shop -- named America's best bike retailer in 1998 and 1999 by North American Bicyclist magazine -- in a different manner. It's a way any business might emulate.

Warranties, price protection

-Zane gives lifetime service and parts warranty on all bicycles sold. He says the first year is when most problems occur, and then only on 20 percent of all bikes. That's already covered under the manufacturer's warranty. He finds he can persuade manufacturers to pick up the much smaller costs of nonwarranty work during the 10-year typical life of a bike. "If you credit me for a $20 out-of-warranty part, I will give you the $5,000 order for commodity parts I can purchase from one of 10 different salespeople."

-Offer 90-day price protection. Within that time, if a customer finds the same bike elsewhere for less, he'll refund the difference, plus 10 percent. That builds immediate sales. The cost is minimal, and usually the customer uses the refund to buy other merchandise, further cutting Zane's cost of the policy by 50 percent. And cheerfully refunding that difference builds lifetime customers.

-Give away the first dollar. Zane doesn't charge for any part less than a dollar. Need a master link for a chain that costs 25 cents? He gives it to you, building great goodwill. And it costs Zane only about $100 a year.

Really know your customers

-Know your customers. Sure, everyone says that. But Zane goes a step further. He captures all the data about his customers from the point of sale terminal -- cash registers to most of us. So when he gets a special deal for discounted merchandise from a manufacturer, he knows just who might be interested. For example, Zane sells bicycle clothing. If he gets a deal on Size 8 women's clothing, he knows whom to contact on his customer list.

-Treat the customer like a long-term resource. Zane says one customer came in and wanted to buy a "Trail-a-bike," a device that would allow him to connect his daughter's bike to his own. The customer mentioned that he had purchased a $350 bike trailer three years ago but never used it, because his daughter didn't like riding in it. Zane immediately took back the trailer, giving him credit for the original price. The profit on the new sale would make up for the loss on the trailer, which he sold used.

"Because I know my customers, I also know he has three daughters all under the age of 7. Since the initial trailer transaction, he has made four purchases."

-Give back to the community. He sells bikes and other merchandise at his cost to community groups for fund-raisers. For minimal labor costs, Zane gets great publicity. He also funds five $1,000 scholarship awards to a local high school, paid for by the sale of candy from vending machines he bought. "New bicycles are one of the top 10 items most desired by a student going away to college," Zane adds.

-Realize that employees make it happen. "I pay them well, thank them a lot ... and, most importantly, let them have fun."

Once a year, Zane closes his store and takes employees on a one-day trip. A sign tells customers if they are inconvenienced, just mention it and they get 10 percent off their next purchase.

"The result: No loss of employees and the greatest increase in morale and profit we have seen to date." And the customers, happy with the discount, never complain.

Comments? Telephone 713-220-2000 and touch code 1000. E-mail to jim.barlow@chron.com.