Do You Believe Customers are an Asset…Or a Cost Center?

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?
Written by Jeanne Bliss under on November 18, 2011 4 Comments

4 comments to " Do You Believe Customers are an Asset…Or a Cost Center? "

  • Reply
    Jeff Frank
    November 19, 2011 AT 9:11AM

    It is really amazing how this simple philosophy can work so well — and not just for bicycle companies.

    Jeanne, you know my story, but this is for your readers who do not.

    Furniture retailers have traditionally protected themselves against their customers with warranties and return policies that severely limit their liability in all cases except where there is clear and convincing proof that the product was damaged before being received by the customer.

    If “special orders” are involved customers are generally not allowed to cancel for any reason without a substantial penalty. When returns are authorized customers are usually charged “return shipping” and/or “re-stocking” charges.

    When Simplicity Sofas, a manufacturer of upholstered furniture designed for small spaces opened its e-commerce website in Nov. 2007, three weeks before the official start of the recession, it became the first furniture company to offer a Total Satisfaction Warranty and Return Policy. This short and simple policy stated:

    “If you are not happy with our furniture for any reason whatsoever you may return it to us for a full refund including all shipping charges for a period of one year after purchase.”

    The warranty and return policy has no limitations, exceptions or exclusions. The company then followed up by instituting another furniture industry first. Every one of its customers is contacted within 24 hours of receiving their furniture and is asked how they like the furniture and whether there are any problems that need to be taken care of immediately.

    The result was that during the following recessionary years, while small furniture businesses were among the hardest-hit segments of the U.S. economy, with hundreds going out of business — Simplicity Sofas grew from $0 to annual sales of $1 million.

    • Reply
      jeanne
      June 25, 2012 AT 10:37AM

      Jeff
      Your company, Simplicity Sofas is one of our emerging service leaders which everyone should watch to see how it’s done. So pleased to call you a “beloved company!”

      Jeanne

  • Reply
    denise lee yohn
    November 19, 2011 AT 3:09PM

    zales cycles shows trust is a sequence — if you want people to trust you, trust them first. — denise lee yohn

  • Reply
    Christopher Rollyson
    September 23, 2015 AT 6:16PM

    @jeanne, thanks for a fantastic! case study and @jeff, thank you for adding yours. I have served firms on experiential social media, which interacts online with people to increase trust. I analyze 1000s of threads and interact with 1000s of people each year, and I have learned that people as a group are good and trustworthy. Most clients fear people, but the portion of outliers is consistently small, regardless of industry. It’s exciting that trusting customers (and employees) is a huge opportunity. Here’s a post you might like, How Trusting Customers Leads to Higher Profits [https://www.linkedin.com/pulse/20141111073436-4994141-the-leap-how-trusting-customers-leads-to-higher-profits]

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