Zane's cycles: Empowering employees to deliver 'extraordinary customer service'

Chris Zane goes to work every day with a smile on his face, buoyed by his philosophy that "most of the population are good and sound and trustworthy people." Sound naïve? Perhaps. But Zane apparently knows what he's talking about. His bicycle store, Zane's Cycles, grossed $10 million in 2006, and has enjoyed an average annual growth rate of 23 percent since opening in 1980. Speaking to several hundred customer-service managers gathered for the 18th Annual Compete Through Service Symposium, Zane credited his success to giving "extraordinary customer service with the help of an empowered team of employees." The symposium is sponsored by the Center for Services Leadership at the W. P. Carey School of Business.

Multi-millionaire Chris Zane goes to work every day with a smile on his face, buoyed by his philosophy that "most of the population are good and sound and trustworthy people." Sound naïve? Perhaps. But Zane apparently knows what he's talking about. His bicycle store, Zane's Cycles, grossed $10 million in 2006, and has enjoyed an average annual growth rate of 23 percent since opening in 1980.

He told several hundred customer-service managers gathered for the 18th Annual Compete Through Service Symposium that any business that adopts his strategies could see a turn-around in profits. The symposium is sponsored by the Center for Services Leadership at the W. P. Carey School of Business.

Zane credits his success to giving "extraordinary customer service with the help of an empowered team of employees." Treat employees well and they will take good care of your customers; treat consumers fairly and they will return over and over, even becoming lifelong customers, he insists. "The whole thing is about having a good time. Being positive. People have to be happy at work," he adds.

The heart of "extraordinary" customer service

The 42-year-old entrepreneur is dead serious about "extraordinary" customer service. Zane's Cycles customers get a free lifetime service warranty on every bike they buy, along with free lifetime repair parts. For $20, they can buy flat-tire insurance, to avoid being dinged $11.65 every time a tube goes flat. Kid's bikes can be traded back in for 100 percent credit on a bigger model. There's free Snapple in the fridge and a complimentary coffee bar snuggled into the back of the store.

But the magnanimous policies are basically just the framework for relationship-building, Zane said. First, each flat-tire repair or free tune-up brings the customer physically back into the store. While he or she is enjoying juice or coffee, a Zane's employee uses the moment to talk cycling, which often leads to a leisurely stroll through the store's aisles.

More often than not, the customer ends up buying new bike shorts or a better water bottle holder, or sees a bike that will work for a child's birthday gift two months ahead. If a customer needs a low-cost item such as ball bearings that cost around a buck, Zane's employees are trained to say, "Here, take it. We'll catch you next time." The customer feels special, and the resulting good will is worth much more than the cost of the $1 part, Zane explained.

Each transaction further cements a brand loyalty that is the envy of retailers nationwide. That loyalty is behind the store's continued steady growth, and why Zane's Cycles, located in Branford, Connecticut, is one of the top three retail bicycle stores in the U.S. Extraordinary customer-service policies must be built on a key piece of information — the financial value of that business's average customer, according to Zane. He figures the lifelong value of a typical Zane's Cycles customer is $12,500.

That number is based on a customer who first wanders into the store as a young person, then stays loyal, upgrading bikes over time and adding bikes for a spouse or children. He's also figured out how to keep customers from spending a dollar with competing retailers — by pleasing them. Why go to another bike store or repair shop when you've got free maintenance and parts at Zane's? Throw in a bike-savvy, help-oriented staff and a free cup of joe and you've got 'em, he said.

"It's a mindset"

So why don't more retailers follow his lead, or the example of similarly minded companies such as Southwest Airlines, Nordstrom's or Ritz Carlton? Zane has pondered the question and come up with an answer: fear of the unfamiliar. "Companies that don't implement extraordinary customer service are driven by the fear of being taken advantage of; they don't trust their customers and can't tolerate the mental discomfort of worrying" about getting ripped off, he explained.

"It's all a mindset," he added. That's not to say that Zane's Cycles doesn't ever get taken advantage of, though. For instance, on average, five bikes a year disappear while being taken on a test ride by a new customer. It angers the employee who waited on the thief, and more than once, staffers have suggested starting a new policy — holding the customer's driver's license or keys while he or she takes the test ride. But Zane won't hear of it.

"OK, so five bikes a year get stolen on test rides. But another 3,995 bikes do get returned after test rides, and they appreciate the fact that we trusted them, that we didn't treat them like potential thieves," he explained. "It's easy to get wrapped up in the negatives. And, of course, everyone hates being taken advantage of, and retailers have to take basic measures to protect themselves."

For Zane's Cycles, that means installing and religiously using an alarm security system, and prosecuting "to the fullest extent of the law" anyone caught shoplifting. Zane said he's not above making a big, public deal of the prosecution, too, in hopes that it will dissuade other dishonest people from coming in the door. But even Zane sometimes goes too far with the customer-pleasing initiatives, losing money despite his best efforts.

One example was the store's delivery repair service. A store employee would pick up a broken bike, then return the repaired, tuned-up and cleaned bike to its owner at home or at work. Customers loved the new policy. But problems soon surfaced on the store's side of the deal. First, customers sometimes weren't home when they said they'd be available, so the store's truck and driver made a fruitless trip.

Second, the repair person missed the convenience of having the bike owner present to answer questions. Third, each delivery eliminated two relationship-building/shopping opportunities in the store. Delivery service turned out to be a money pit, and was soon axed. Detractors say providing extraordinary customer service equates to giving away profits in hopes of making more down the road. Zane disagrees.

For example, drastic price discounts are not part of his store's approach to sales. A bike's price is, well, its price, pure and simple. When a customer asks for a discount, Zane's employees are trained to "explain that 'we are as passionate about pricing as we are about servicing our bikes for free. We will collect the price on the ticket, but we'll also give you your money's worth. If you buy this helmet, it will cost this amount, but if there's ever a crack in it, we'll replace it,'" he said.

Note, this approach only works because Zane is picky about the lines the store carries; only the best quality bikes and accessories are chosen, as he's on the hook to repair or replace them. His bikes have metal, not plastic ball bearings, for example; bikes sold at a discount in a big-box store are usually also cut-rate quality when compared to Zane's.

Bottom Line:

• Extraordinary customer service starts with the hiring process. Zane has a diverse staff of people, some more extroverted or knowledgeable than others, but each is "the sort of person that you feel comfortable with." That's one of his hiring requirements — he asks himself, "Is this intrinsically a nice person?"
• Confident people are must-hires, because self-confidence is "a strong barometer of how people will interact with other staff and customers," he explained. "They are secure. They will be able to sell with my policies. Insecure people have a chip on their shoulder and are afraid to step out of their comfort zone."