How Zane’s Cycles grows because they know and respect the lifetime value of their customers.
Zane’s Cycles of Connecticut (with only one retail location) is one of the three largest bike shops in the United States. They sell $15 million each year in bicycles and bike supplies, with a relationship grounded in customer trust. For example, on any given day you might see a $6,000 bike go out the door for a test drive without any one of Zane’s folks asking to collect the customer’s identification or any type of collateral. “Do you want my license?” is often asked by the customer. The response is always, “Nope, just have a good ride.” Zane’s makes this decision because they want potential customers to know that in this world there’s a store that trusts them, and it’s Zane’s. Made as a decision to embrace customers, this decision also sends a strong message to Zane’s staff. “This is not about protecting ourselves,” owner Chris Zane says. “We’re in the people business, not the thing business. This decision helps our staff understand and act on that key difference.” It gives customers confidence and a lasting impression that they have found a place where they’ll want to do business.
Each Customer’s Lifetime Value is $12,500.
Zane’s Won’t Risk That. Zane’s Cycles decided to act on its belief that the majority of customers do what’s right. “We calculate the lifetime value of every customer at $12,500,” says President Chris Zane. “Why start out that customer relationship by questioning their integrity? We choose to believe our customers.” New Zane’s employees often suggest that they protect the business by taking customers’ keys or wallets when they test drive a bicycle. Chris Zane firmly says “no” to this suggestion. This is when employees and customers realize Zane’s is a service business, not a product business. And it sets the tone for how they interact with people. It frees them to do the right thing.
Trust Is Reciprocated: Zane’s Loses Only Five Bikes a Year.
Customers feel trusted by Zane’s. And that trust is returned to Zane’s. Of the 4,000 bikes they sell each year, only about 5 are stolen during test drives. For Zane’s it’s just not worth having the whole attitude of the company change because of the attitudes of five dishonest people. Zane’s believes customers are good. That attitude frees Zane’s to grow. They have achieved an average annual growth rate of 23 percent since opening in 1981. Why not take a page from Zane’s, and take a hard look at your policies? Change or eliminate any that exist to “protect” you from your customers.
Zane’s Cycles doesn’t take collateral from customers who test ride its bikes. Of the 4,000 sold each year, only 5 bikes are stolen. Zane’s calculates the lifetime value of a customer at $12,500. “Why start that relationship by questioning someone’s integrity?” asks Chris Zane.
- Do you know the value of your customers? Does everyone in your company?
- Does how you value customers guide decision making?
- Are you investing in customers or managing costs?
- How would you rate your intent and ability to understand the value of customers and invest in them?
- Do your decisions on how you value customers earn you “beloved” status today?
- Let’s take a hard look at your policies. What one thing can you change or eliminate that “nickels and dimes” your customers, especially your best customers?