Christopher J. Zane, a nationally noted entrepreneur and speaker, has had his finger on the pulse of the retail bicycle industry for 29 years. He got a state tax ID number at age 12, purchased his first bike shop at 16, and before the age of 30 grew Zane's Cycles [6] into the largest bicycle shop in Connecticut. Today Zane’s, with only one retail location, in Branford, Connecticut, is one of the largest retail bicycle stores in the nation.

Zane credits his success to marketing strategies that include recognition of the lifetime value of the customer, cost-controlled customer service, image branding, and guerrilla marketing — all of which he covers in his recently published book, Reinventing the Wheel: The Science of Creating Lifetime Customers (BenBella Books).

Zane’s marketing techniques have been featured in college textbooks, in the bestselling Alpha Dogs by Donna Fenn (HarperCollins), and in national publications, such as Harvard Business Review, the New York Times, the Wall Street Journal, Inc. Magazine, and Fortune Magazine. He has also been a frequent guest on WCBS radio’s “The Wall Street Journal’s Small Business Report” with Joe Connolly.

On Monday, May 23, at BookExpo America [7], Zane will be the featured opening plenary speaker at ABA’s Day of Education [8], sponsored by the Ingram Content Group. The event begins at 8:30 a.m. and is open to all BEA badge holders.

Zane recently spoke to BTW about the customer experience, the recovering economy, and why half-off coupons are not the answer.

BTW: What do you think are some of the biggest challenges that independent businesses face today?

Chris Zane: It’s become obvious that the huge companies have figured out that if they can commoditize everything they sell, they can successfully capture the market. The one thing that they can’t commoditize is the relationship or the customer experience that independent businesses deliver. We’ve seen this tug-of-war with electronics businesses, shoe retailers, and certainly booksellers, and in an environment that allows an innovative focus on customer experience, the independents are winning.

BTW: How do you think these challenges can be met?

CZ: Empower your team to positively respond to the challenge. We should actually look to our frontline; they have an understanding of what it’s going to take to create an extraordinary experience. They know the customers; they know the flaws; and the good ones have a solution. Listen to your team and allow them to start implementing a few of the best ideas. As the program develops, monitor the results, and tweak it to best deliver the desired results to benefit both the customer and the business. As multiple programs begin to intertwine, you’ll start to see a culture shift within your organization that subsequently creates the desire to continually develop and improve programs to combat commoditization.

BTW: What, in your experience, are the best marketing tools for independent businesses?

CZ: First, let me say that the new “50 percent off” coupon sites are not the tool. No matter how you do the math, it’s a bad deal for the business. The increased traffic taxes your staff and diminishes the experience for your current, profit-generating customers. Also, the liability requiring the sale of merchandise at half your cost can empty your shelves and cause you to not be able to replenish your inventory. Sure there is the breakage (non-redeemed certificates), but that too creates a liability. Most states require that unclaimed certificate funds be handed over to the state as escheatment, so you don’t even get to dollar cost average the program. Let this newfangled tool put your competitors out of business. The tools you should focus on are the ones that deliver value to your customers. E-mail and web marketing of events that build a bond between you and the customer, sales and customer service training for you and your staff, and a PR campaign positioning you as a thought-leader in your desired concentration are tools that will build your brand in a positive and authoritative light rather than as just another discount coupon promoter.

BTW: Why is it important to consider the lifetime value of a customer?

CZ: Thinking about creating a lifetime relationship with your customer rather than a transactional one will have you looking at the business you’re in very differently. Determining a dollar value associated with collecting a lifetime of transactions will provide insight into how much you can invest to guarantee a lifetime relationship. At Zane’s Cycles, we’ve determined that, statistically, a customer is worth $12,500 in revenue or $5,650 in profit. Knowing this information reinforces our commitment to invest in customer experience and customer service initiatives that will guarantee the relationship and allow us to capitalize on every customer’s lifetime value. Think about how differently you’ll look at what seems like an unreasonable request based on the transactional profit vs. not satisfying the request and losing the lifetime opportunity. The lifetime value aura associated with each customer will change the way both you and your staff will interact with each customer and very soon you will feel the shift in your culture, as well as begin seeing your customers more often.

BTW: Have you seen a change in the way consumers perceive locally owned businesses?

CZ: There has definitely been a change in the way local businesses are perceived even though the community doesn’t consciously know why. Since the economy is starting to recover, and price is starting to become less important, customers have realized that their experience is different when dealing with a local business. For the past few years, everyone has put up with the lack of experience in order to save a few bucks, but now that money is starting to flow, customers are voting again with their wallets. A few years ago I heard the results of an interesting study: 30 percent of customers will always buy from the cheapest provider, 30 percent of customers will only buy from the provider with the best service, and the last 40 percent will shift back and forth between price and service depending on which message is stronger. Since the poor economy has been the strongest message, price has overpowered service. The tide is starting to shift, so let’s all get out and promote the message of making an investment, receiving value, and enjoying the process, rather than standing in a huge concrete building or waiting for a box to get tossed in our driveways.

BTW: What advice would you give someone interested in starting a business today?

CZ: My advice to startups, as well as anyone trying to better their organization, is to figure out what business they’re in. You would think that Zane’s Cycles is in the bicycle business, but we’re not. We’re in the experience business. I’m not selling tires, spokes, and steel. I’m selling recreation, weight loss, freedom, and fun. It just happens that for you to get that from me you need a bicycle. Figure out why your customers buy from you and not what your customers buy. Add to the experience that delivers more of why they buy, and your revenues will increase along with your profits. Finally, customer service starts when the customer experience fails. There are no issues to address if your customers are having a great time. Focus your efforts on creating a great organization rather than trying to convince your customers you’re becoming a great organization.