12 Most Compelling Ways to Increase the Lifetime Value of Customers
How much is your customer worth if you could keep them for a lifetime?
In the book, “Reinventing the Wheel – the Science of Creating Lifetime Customers”, Chris Zane outlines the roadmap to reaching this lofty, yet elusive goal. A 30+ year veteran of the retail bicycle industry, Chris has built Zane’s Cycles of Branford, CT into one of the largest bicycle stores in the nation.
Everyone wants customers for life, but how many are willing to pay the price?
Do you know how much each customer is worth over their lifetime? Chris Zane does. He know that each customer of Zane’s has a $12,500 LTV (lifetime value). He sees the whole forest and not just the individual trees. Zane’s doesn’t sell stuff, they provide ‘experiences’ that build relationships. They never sell anything without sharing a story of why its valid for their customers.
Lagniappe – a little something extra
The etymology of Lagniappe stems from the Quechan ‘yapay’ which means ‘to give more’. Zane’s lives by this mantra, leveraging customer service as differentiator. They are committed to giving customers more than they expect. More importantly they then stand behind the sale by giving more service than others seem reasonable (especially competitors).
A Bowlful of Quarters
Zane’s is willing to spend $100 to service a customer. To illustrate the point Chris uses the metaphor of a bowlful of 400 quarters. During presentations he walks around with a bowl and encourages members of the audience to take quarters. Most take a few quarters, but no one ever takes the whole bowl. According to Chris:
“The point is that when you as a customer are presented with more than what seems reasonable, like a bowl of 400 quarters, you will self-regulate….By providing more service than what folks consider reasonable we can build trust and loyalty and remind them how hard we’re working on their behalf.”
Here are the 12 most compelling ways that Zane’s offers ‘little extras’ to maximize lifetime value:
1. Lifetime Service Guarantee
All parts and service are covered for life. Translation = buy your bike from Zane’s and tune-ups are free.
2. Flat Tire Insurance
Pay a minimal one time fee at purchase and Zane’s will fix your flats (tubes and labor) for life.
3. Free Trade-In Program for Kids
Buy a bike for your child at Zane’s. When they outgrow it, simply bring it back to trade-up. Zane’s gives you a credit for the price of the former bike towards a new one.
4. Gift Certificates in Water Bottles
Buy a gift certificate and Zane’s will throw in a complimentary branded water bottle that holds the certificate.
5. The One Dollar Rule
Zane’s doesn’t charge for any parts that cost them one dollar or less. Need a master link for your chain, its on the house. In fact they typically will throw in an extra master link for lagniappe.
6. 90 Day Price Guarantee
Find your bike cheaper somewhere else, they will match the difference plus an additional 10%. No forms to fill out and no credit card processing, Zane’s hands over cash to keep it simple.
7. Giving Back
Zane’s gives back to the community whether its a helmut purchasing program for inner city kids, sponsoring local teams or creating a college scholarship program.
8. Coffee Bar
Zane’s has a nice espresso bar in the store encouraging customers to sit down, relax and enjoy a cup of gourmet coffee.
9. Set of Small Tools
Zane’s provides a complimentary toolkit when shipping bikes to premium recipients.
Zane’s has a camera in the repair shop which gives customers the ability to Skype the team.
11. Personal Notes
Each person who buys a bike receives a handwritten ‘thank you’ note.
12. Test Rides
Want to test a bike at Zane’s? You’re free to take it out for a ride. No credit card or drivers license required. Each year they lose a handful of bikes, but the small cost is insignificant compared to the trust gained and hassle avoided.