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Zane’s Cycles: Service as a Strategic Differentiator For Zane’s…
Zane’s Cycles: Service as a Strategic Differentiator
For Zane’s Cycles in Branford, Connecticut, service has been the company’s key to success and what truly differentiates it from competing bike stores.1 Chris Zane, its forty-something chief executive officer (CEO), has owned the business since he was 16 years old, when he convinced his grandfather to loan him $20,000 to buy the store from its original owner. As a young man he built the business on basic principles such as “unparalleled service,” “one-to-one marketing,” “customer relationships,” and “employee respect and empowerment.” Since then, the business has grown to more than $10 million in annual sales (including retail and corporate sales), and Zane’s has eliminated all but a small handful of the original 16 competitors. Moreover, the company has developed highly successful ways to compete with the likes of Walmart and has built a whole new business providing bicycles to corporations for incentive gifts to their employees. So how does Zane’s compete? What are some of the things that Chris Zane has done to provide exemplary, out-of-the-box serviceservice that has driven his competitors out of business? Here are a few examples of the company’s exemplary service strategies:
Lifetime free service. Zane’s provides “lifetime free service” on the bikes it sells, because it is in the service business, not just the bike business. Of course, lifetime free service (free service for as long as the customer owns the bike) is also a good way to get customers to return to the shop, providing an opportunity to build a lasting relationship.
Lifetime parts warranty. Following the lifetime free service strategy, Zane’s soon realized that it should also offer a lifetime warranty on parts as well. He is able to handle this by having a small number of vendor partners and holding them accountable for their products.
90-day price protection. To quell possible rumors and beliefs that Zane’s is high priced (to cover the lifetime guarantees), the company instituted a 90-day price protection guarantee, so that customers can go back within 90 days to receive a cash rebate, plus 10 percent, if they find the same bike elsewhere for less money. Because Zane’s is truly in the relationship business, few customers shop the competitors or meticulously compare prices, so the plan results in very few refunds. And, when they do give a refund, the customer frequently spends the cash right on the spot, in the store!
Flat insurance. For those first-time bike purchasers or less experienced bikers, the idea of a flat tire seems daunting. So Zane’s offers “flat insurance” for a nominal annual fee. Although few tires are ever fixed under the policy, those bikers that do go back to the store to use their flat insurance are treated like royalty. Everything stops, the bike is taken to the back, where the tire is changed and the bike is cleaned upall in record time with much fanfare. Again, the customer (and anyone else in the store) is treated to an unexpected, delightful experience, and relationships are strengthened, all at little cost to Zane’sespecially given the amount of the flat insurance that is sold and never used!
Less than $1 giveaways. Another way that Zane’s delights customers is by giving away small but essential parts that cost less than $1. He figures these giveaways result in additional purchases (at the same time or on another visit) far beyond the few cents it costs to provide them.
Kids’ play area. The kids’ play area in Zane’s is a popular place for youngsters to play and remain entertained while their parents shop. Some are even able to purchase the infamous “Christmas Bike” right under the noses of their preoccupied children!
Coffee and Snapple bar, with free coffee. To provide a social context and a place for folks to wait when the store is busy, Chris Zane built a mahogany coffee bar, modeled after a similar cozy coffee bar he had seen in a bike shop on a trip to Switzerland. Here, coffee and other drinks are offered, and customers can watch bike repairs going on through a huge glass window. And, because the cost of a cup of coffee is less than $1, of course, there is no charge!
Kids, bike upgrades. One of the most innovative service strategies at Zane’s is one that helps them compete head-on with Walmart. This is the trade-in policy that allows parents to buy a child’s bike and then trade it in for full price, credited toward a larger bike. Like many of their service plans, this one is retroactive. When they first started it, Zane’s sent postcards to everyone who had bought a small bicycle within the past few years, letting them know about the upgrade plan.
You might wonder how all of these seemingly “too good to be true” service offers can be provided without draining profits. The fact is that Zane’s is very profitable and financially successful. There is nothing “soft” about this strategy, and Chris Zane is as focused on hard-nosed, quantitative financial analytics as any other excellent CEO. What Zane has figured out, much to the chagrin of his competitors, is that great service can be the key to cementing customer loyalty and that customer loyalty, in the end, is what drives growth and profits. No wonder Zane’s was one of Fast Companymagazine’s “Local Heroes” in its Customer First Awards.
Quality bikes, excellent service quality, lots of little extras, and the unexpected attention of Zane’s team members all add up to customer satisfaction for customers of Zane’s Cycles. The same is true for other landmark service companies such as Lands’ End, IBM Global Services, Amazon.com, and Ritz-Carlton Hotels. In all of these companies, the quality of the core product and exemplary customer service result in high customer satisfaction ratings.
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