Leftovers

They Did The Work, You Benefit

One of the reasons I enjoy reading books on Kindle is the ability to record notes and compare them to the notes recorded by everyone else. It's a great way to review and a great way to skim through some key chapters of a book. My book, Leading Out Retail, has been selling on Kindle now for just over two months and quite a few people have taken notes on their Kindle. I thought it'd be fun to jot down a few on the most popular. Here you go:

"They are not in the business of selling products that require services, instead they sell services that are made better when customers purchase their products."

I wrote that line with the idea that we should think about retail as a service-first industry, not a product first industry. If you were forced to sell 6 tune-up with every bike sale, how would the discussion change on the retail floor?

"The job isn't to sell a bike, the job as a leadout is to make sure the customer has the best bike for what they need to achieve."

Out of context that quote can be a bit confusing. In context, bike sales are no longer the end game in bike retail. The endgame is the customer's cycling experience which may or may not involve purchasing a bike from you.

"People do not buy from businesses that have what they need; people buy from businesses that believe what they believe."

I wish I said that, but that is a direct quote by Simon Sinek from his famous Ted Talk, Start With Why. I could explain it, but it wouldn't be doing it justice, instead I would encourage you to take the time to watch it yourself.

You can download a copy of Leading Out Retail on Kindle or iBooks. Or if you prefer a physical copy you can find it here.

If you found this article helpful, please consider sharing. Thanks, Donny

Superb Bicycle

Recently came across these photos of Superb Bicycle and I was very impressed by their merchandising, interior design, and branding. The shop is located on Beacon St. in Boston and also sells their goods online.

Images via Glam Shops

Best Practices: Video in Bike Retail

It's easy to get caught up in the Got-To-Win-The-Google-Search game and forget about the second largest search engine in the world, YouTube. YouTube is arguably more engaging than any other social platform and it allows people to make a personal connection far faster than Facebook, Twitter, etc. YouTube should be taken very seriously by all retailers and I strongly encourage building a strategy going forward on the channel. If you're skeptical, here are some absolutely crazy stats to prove how much of an impact YouTube is making:

Over a billion people have YouTube accounts.
4 billion YouTube videos are viewed each day.
100 hours of video is uploaded every minute.
40% of YouTube traffic comes from mobile.
14.4% of Americans use YouTube during work.
19.1 million monthly unique visitors for YouTube in the UK.
60 million YouTube users in China (where YouTube is blocked by the government)
50% of teens consider YouTube their favorite site.
70% of Millennials visit YouTube at least monthly.
58% of Generation X visit YouTube at least monthly.
40% of Baby boomers visit YouTube at least monthly.
YouTube is 20.5% of the US video advertising market.
Average sales order value for visitors referred by YouTube is $27.63.

All these stats came from here.

I've gone ahead and compiled some of my favorite bike shop videos to give you some ideas of what people are already doing. Check them out:

PEDAL by Gears Bike Shop

Gears Bike Shop did an amazing job in this video. It's calm, it's understated, it's clean. It never tries to sell you, rather it tries to convey an experience.

SPRING 2013 by Bicycle Gallery

Bicycle Gallery's video is here to sell you, but it's not Crazy Eddie on a car lot sales. It's showing you how the local shop is preparing for the coming season and dropping all sorts of ideas on how you can be a part of it. I especially love the final bit where they say what camera they used and how that camera was on sale at the store. Also, the music is perfect.

LESSONS IN LAYEROLOGY by Big Poppi Bicycle Company

Humor, humor, humor. Nothing wrong with having a bit of fun.

OUR COMPANY CULTURE by Big Poppi Bicycle Company

Going to give Big Poppi double props here. With this video they are teaching people about their culture. To quote Simon Sinek, "People don't buy from you because they need what you have, they buy because they believe what you believe." This video does that wonderfully. If you believe in fun, teamwork, and inclusive environments then you'll love Big Poppi... who just happens to sell and repair bicycles.

THE ART'S CYCLERY TRAILER by Art's Cyclery

Along the same lines the Art's Cyclery Trailer is showing us why they exist- to ride, race, teach, rip, soar, etc. It's short, it's clean, and it make me want to ride.

HOW WE ROLL by Mike's Bikes

The video from Mike's Bikes doesn't stop at telling us why they exist, they go on to say how they do it (locations, training, community-based) and what they do (bike sales, fit, repair). It might not be a video I watch twice, but it's definitely a video I will watch. Especially if I landed on this video when I hit their website.

Some honorable mentions:

Bicycle Gallery, Ride A Specialized

718 Cyclery, Inverted Bike Shop

North Shore Bike Shop, Commercial

Do you know of any great videos from bike retailers? If so, share them in the comments.

Hope you found this post helpful. If so, please consider sharing it. Thanks- Donny.

Want more? Take a look at Leading Out Retail. This book is a creative look at bicycle retail and teaches retailers simple strategies on how to increase profit through service, what the most important question to ask every customer is, and how to manage the dreaded Timmy Factor.

My Checklist for Checking In A Bike

Recently, I had someone ask me what I look for when checking in a bicycle for repair. A list so nothing would be missed and the opportunity to up-sell would arise. So, here it is, the master list of information I like to look through when taking a bike in.

THINGS TO ASK THE CUSTOMER:

Name?
Phone?
Email?
Best way to contact? Phone? Email? Text? Tweet?
Address?
When do you need the bike back?
Which of our menu items would you feel suits you best?
Any odd sounds? Clinks? Clanks? Rubbing?
Anything feel weird or uncomfortable?
Any pain in your body when riding?
Where have you ridden it since your last service?
How many miles since your last service (estimate)?
Do you have an event coming up?
What is most important to you: speed or comfort?

ITEMS TO CHECK ON THE BIKE:

F. Tire: tread wear, cracking
F. Rim: trueness, pad burn, cracking, swelling
F. Spokes: loose or snapped
F. Hub: lateral play, stickiness, QR loose
F. Rotor: wear, warped
F. Caliper: pad wear, cable fray
Fork: compression/rebound not responsive
HT: cracks at TT and DT junction
Headset: fore/aft play with fork
Stem: not straight, bolts loose/uneven
Handlebar: not center, odd rotation
Computer: Not working
F. Light: Not working
Bar tape/grips: wear
Shifters/brake levers: squishy, loose, difficult to move
DT: bottle cage loose, broken
BB: cracks at DT, CS, and ST junction
Crankset: lateral play, loose bolts
Chainring: loose/missing bolts, worn teeth
Chain: stretch, how many miles?
Pedals: sticky, rusted, bolts stripped
F. Derailleur: Not shifting properly, cable fray
ST: bottle cage loose, linkage sticky, cracks at TT/SS junction
Seatpost: over max height, scratched, not dropping
Saddle: sagging, rails loose, material wear
SS: Shock compression/rebound not responsive
R. Light: Not working
R. Caliper: pad wear, cable fray
R. Rotor: wear, warped
R. Hub: lateral play, stickiness, QR loose
R. Spokes: loose or snapped
R. Cassette: play, worn teeth
R. Derailleur: Not shifting properly, worn pulleys, cable fray
R. Rim: trueness, pad burn, cracking, swelling
R. Tire: tread wear, cracking

Best Bike Shop Business Cards

I'm always pleased when I see bike retailers rethinking the ordinary. For example, Broke Bike Alley in Fernie, BC, Canada has a couple of great new takes on the business card. Both of these cards achieve my two rules of great marketing:

1. Make a personal connection
2. Be very, very helpful.

The first business card doubles as a multi-tool, the second is a tire patch.

The Science of Service Menus

A question I challenge many bike retailers to answer is how to get their star services to produce as much revenue as possible while at the same time giving customers more options to buy and a customized service.

The most successful answer I’ve seen executed is to offer four tune-up services instead of one. A menu of one means the customer has no choices. The customer has no way to buy more and the technician has no clear way to upsell the package. Having four tune-up services will appeal to the price conscious shopper, the lost shopper, and the price-is-no-object shopper. Here is an example of a four tier tune-up menu.

Tune-up Menu:

Level 1 Service: $230
Level 2 Service: $100
Level 3 Service: $70
Level 4 Service: $30

First I will explain the psychology of the pricing structure and then I will present ideas for what can be included in each service.

Retailers who are using this pricing structure have shown the most popular selling items on the menu will be Level 2 and Level 3. With the scale tipping just slightly toward the Level 3 Service. Level 1 takes roughly 10% of the orders and Level 4 takes only 5%. When compared to an $80 tune-up, we can break down the potential growth:

$80 x 100 sales = $8000

$230 x 10 sales = $2300
$100 x 40 sales = $4000
$70 x 45 sales = $3150
$30 x 5 sales = $150

The second scenario brings in $9600; a 20% growth. So why does this work?

First, Level 4 ($30) service will always be the worst seller. No one wants to purchase the worst option of anything. Level 4 Service is focused on serving the truly price conscious.

Level 1 ($230) will cater to those customers who have purchased high ticket items. If someone buys a $9000 bike they deserve the option to buy a more comparable service than someone who buys a $900 bike. Another way to think of it- when someone buys a Ferrari they understand that servicing the vehicle will cost more than the service on a Toyota. It is acceptable for many people that high ticket items equal high ticket service.

Level 2 and 3 ($100 and $70 respectively) are for customers who are not sure what they want. Notice the gap between these levels is the smallest price gap on the menu. The jump from Level 3 to Level 2 was $10 cheaper than the jump from Level 1 to Level 2. Since the majority of people buy in the middle, we want the middle to have options.

Below is a formula for creating a service menu using these pricing tactics. Start by taking the price of the most popular tune-up, usually between $50-$90 for US retailers, and replace that number with X in the formula below. From there multiply out each level and round out to the nearest 5 or 0.

Level 1: 3.25X
Level 2: 1.5X
Level 3: X
Level 4: 0.45X

Below is three example price structures using this formula.

In this example, if your most popular tune-up price is currently $70, your new menu would have a Level 1 service of $230.

Once the pricing structure is set, the next step is to define what is offered in each service. Here is a recommendation to start with.

Level 4 ($30)

Bike inspection
Bolt/torque check
Lube drivetrain
Inflate tires

In many ways Level 4 Service acts as a quote or estimate. The bike inspection is where the value of this purchase is. Many people who purchase this package will often walk away with an idea of what services need to be done the next time they return.

Level 3 ($70)

Everything in Level 4
Perfect braking
Perfect shifting
Wheel inspection and adjustment

The Level 3 Service is, as many bike retailers would define it, the standard tune-up. Notice that I stayed away from using technical terminology. Telling someone to purchase a “wheel true” can be confusing so I opted for “wheel inspection and adjustment”.

Level 2 ($100)

Everything in Level 3
Remove chain and cassette, clean with solvent
Complete wash, lust, and detailing

Since most people will be choosing between Level 2 and 3, the best carrot is kept in Level 2. Cleaning parts with solvent and offering a wash, lust, and detailing is a huge hook for people to make the jump. Many technicians have spent hours trying to get something to shift properly and when the customer saw the bike they were only excited by how clean it looked. A clean bike is something the customer can see, it makes sense to them. A perfect shifting bike is expected and can’t be enjoyed until after they leave the bike shop.

Level 1 ($230)

Everything in Level 2
New brake pads
New cables
New bar tape or grips
Remove brakes, crankset, and derailleurs- clean with solvent

In order to justify higher prices in the service area begin tying parts to the costs of service. New brake pads, cables, and bar tape or grips are key elements to making the bike work as if it were new off the floor. Someone buying in at this level expects a perfect machine in every way, and these are just the services that will achieve it. It is worth noting that the Level 1 buyer is also the buyer who is most susceptible to additional sales like a new saddle, new tires, or even a new wheelset. If a technician sees the opportunity, they should never be afraid to ask.

In The Way-Back Machine: Bike Retail in 1890s

Arguably the first person to ever combine bicycle sales with shrewd retail savvy was John Wanamaker. Wanamaker was a merchant who lived from 1838 to 1922. Along with being a retailer he was a religious leader, political figure, a pioneer in marketing, and considered by some to be the father of modern advertising. He was born and for most of his life lived in Philadelphia. He has been credited as the first person to ever take out a half and full page ad in a newspaper and the first retail merchant to hire a full time copywriter. While he sold nearly everything such as furniture, clothing, and tools he was also one of the largest bike retailers in the United States at the time.

An advertisement for bicycles from The Wanamaker Store in 1898. Retail experience and education of the sport were just as important to Wanamaker as price.

One of his more notable achievements was being the first major merchant to offer a return policy and establishing the common use of the price tag. Before Wanamaker, prices were constantly changing depending on a number of factors. If the product was in high demand, the price went up. If the store was busy, the price went up. If you were not a regular customer, the price went up. If you were only buying one instead of two, the price went up. If the store owner was having a rough day or just didn’t like you, the price went up. Many customers saw this as an unfair system while the retailers saw it as smart business. In the mind of the retailer, if demand or costs go up then price should go up as well.

Wanamaker had a vision that all shoppers get treated equally and fairly. To do this Wanamaker introduced the price tag. He believed that there should be one price, all the time, no matter who they were or how often they shopped there. This simple strategy won over customers by the thousands and further established Wanamaker as one of the nation’s best retailers.

Another Wanamaker ad from the 1890s, this one focused on price, quality, and selection.

While the price tag is still alive and healthy today, we have never let go of the idea of a marketplace where price tags don’t exist. Customers feel they deserve both a fair price and better pricing if they have demonstrated their willingness to dedicate themselves in some way to the IBR. Wanamaker’s price tag, as it turns out, is a facade. The bike industry has never let go of negotiable or moving pricing structures. Manufacturers offer better terms and pricing based on the volume and inventory purchased. Thousands of retailers will offer different pricing to their customers depending on their amount of purchase, frequency of purchase, or loyalty to the store. Peter Fader may have said it best, "Charging everyone the same thing and treating everyone the same way, as retailers do today, is 'Six Sigma' thinking which is great for producing widgets on a production line, but it makes no sense in a world where customers are inherently different.”

IBRs have built dozens of systems that allow us moveable price tag. Frequent buyer programs, club memberships, buy two get one free, discounted tune-ups in the winter, or buy a bike and get 10% off of accessories. All of these are strategies to relive the glory days of the early 1800s when price tags did not exist.

Some Numbers Comparing Running Retail to Bike Retail

As the bike industry is just beginning to move their catalog of goods online, practically the entire floor of a running store is filled with items that can be purchased from the manufacturer websites- and in many cases it can be found cheaper. In many ways, how a running store is operated today could be a blueprint for how bike retailers may have to operate in the future. So how do running stores stay afloat when everything they sell can be purchased from a phone?

When I ask IBR owners and managers this question, a popular response is that running stores can survive because there are more people running than cycling. They believe the customer base of runners is so much larger that they can work on massive volume. This thinking may be incorrect. Running participation in the US is nearly identical to cycling. In a 2013 study done by the National Sporting Goods Association the number of people participating in cycling or running activities was very similar, with 39.3 million people cycling and 40 million people running. The NSGA classifies participants as those who ride or run at least six times during a calendar year. The NSGA then takes the total number of participants and breaks it up into three categories: frequent, occasional, and infrequent.

Total participants (in millions):
39.3 cycling, 40.03 running

Frequent, more than 110 days per year:
5.35 cycling, 9.22 running

Occasional, 25-109 days per year:
18.55 cycling, 18.56 running

Infrequent, 6-24 days per year:
15.41 cycling, 12.23 running

While the number of runners and number of cyclists may be similar, there is one reason many bike retailers will call out when they are compared to a thriving running stores. There just are not as many running retailers as bike retailers and therefore the running stores command a larger portion of the market. In this instance, they are correct.

According to Leisure Trends Group there are more than 1038 specialty running stores in the US, compared to just over 4000 independent bike retailers. Though it should be noted that Leisure Trend’s numbers only reflect specialty stores, they do not include everyone who is selling running shoes. Those 1038 stores represent approximately 22% percent of all running shoes sold, the remaining 78% is split amongst online retailers, general sporting goods stores, and discount stores. In a similar fashion 74% of bicycles sold in the US are sold by department stores and discount stores.

Do you think bike retail and running retail are similar? Are they the same customer base? Do they have the same challenges ad opportunities?

Please remember to comment and share. Thanks- Donny

Check out my book. Leading Out Retail is a creative look at bicycle retail and teaches retailers simple strategies on how to increase profit through service, what the most important question to ask every customer is, and how to manage the dreaded Timmy Factor.

It's Crazy The Hours That Some Bike Retailers Keep

Should a retailer open their doors earlier or later? Open or closed on Sunday? Retailers are always testing their hours of operations but this may help end the trial and error.

Choosing hours of operations is based on a number of factors including the shopping preferences of customers, potential sales, and fixed costs of staying open. Managers also have to consider the willingness of their staff to work certain hours. Since cost of labor can range up to 20% of an IBR’s total revenue it is crucial that every hour a store is open, it is open for a reason. Either to manage customer purchases or provide a customer service which creates profit later.

To help bike retailers make a more informed decision, in May of 2012 I conducted a study that took a closer look at hours of operations for IBRs in the United States. I sampled hours from a hundred bike retailers from 17 cities in the continental United States and compared them to a hundred other sporting goods retailers in the same cities.

Cities sampled in hours of operation study: Los Angeles, San Francisco, Seattle, Salt Lake City, Tucson, Denver, Minneapolis, Des Moines, Kansas City, Oklahoma City, Austin, Chicago, Philadelphia, New York, Asheville, Atlanta, and Miami

Sporting goods retailers open earlier and close later than bike retailers in nearly all cases studied. The most common hours for a bike shop are 10-7 on weekdays, 10-6 on Saturday, and closed on Sunday. For sporting goods retailers the hours were longer in every instance: 10-9 on weekdays, 9-9 on Saturday, and 10-7 on Sunday. This begs the question, are sporting goods retailers providing a better service or taking potential customers from bike retailers?

With these results we learn that bike retailers are open 53 hours per week on average while sporting goods retailers are open 76 hours each week.

Opening earlier or closing later can prove fruitful though. Being the only bike retailer open in a city at 9pm might mean, over time, they will acquire new customers who would usually go to other stores but can’t. If an IBR has a ride that leaves from their store every Saturday at 7am, earlier hours on Saturday would allow them to provide pre-ride services and sell products needed for the ride. These small gestures of good will go a long way. Mellow Johnny’s in Austin, Texas opens their doors at 7am every day except Sunday when it opens at 8am. In a discussion with their manager I learned that business is generally slow in the morning. The customers that do stop by are generally dropping off their bike for repair before their workday begins and they are always grateful.

The study showed that Sunday was the most popular day for bike retailers to be closed with 32% locking the doors, compared to 11% of sporting goods retailers. If an IBR is choosing to close for moral or religious reasons, then by all means, I encourage them to do so. For other, smaller retailers closing down for one day a week may be helpful when attempting to save money. However, closing one day a week means being closed for 52 days a year, almost two months. Any retailer choosing to close one day each week will want to be absolutely sure they are making a smart financial decision.

According to the study the most effective, and possibly lucrative, hours of operation for bike retailers would be 11-8 on weekdays and 8-6 on the weekends. Of course this can vary from one location to another and whatever the hours of operation are retailers would be wise to prove the effectiveness by measuring traffic flow and sales.

Thank you for reading this far. If you found this content valuable, please share. Thanks - Donny

You can find more studies like this in my book! Leading Out Retail is a creative look at bicycle retail and teaches retailers simple strategies on how to increase profit through service, what the most important question to ask every customer is, and how to manage the dreaded Timmy Factor.

Why Tweeting Instagrams Does Not Work

Sending photos from Instagram to Twitter is incredibly easy, but that doesn't mean that you're now social on Twitter. At least, not as social as you could be.

Jered Gruber is a professional photographer who spends his life roaming from race to race with his wife Ashley in search of pictures, stories, and places to ride. I recently contacted Jered with a simple request, “Would you ever consider posting your photos directly to Twitter instead of linking them through Instagram?” After showing Jered this report he soon started posting his work directly to Twitter. Curious to know the change I grabbed the last four photos he did as direct-Tweet versus the last four photos he posted linked-through-Instagram (all eight photos were taken within two months and he had no significant change in the number of followers).

Here are the results:

It’s a small sample right now, but posting photos directly to Twitter netted Jered an average of 23.25 Retweets and 41.75 Likes. Compared to Instagram links with an average of 4 Retweets and 4.75 Likes. Nearly 6x the Retweets and 9x the likes.

Instagram links posted to Twitter are not as effective because they are not native to the platform. Meaning, you cannot view an IG photo on a Twitter feed without opening a new app or webpage. Whereas photos posted directly to Twitter are not only native and viewable on all devices, they are also the only photos that can appear in the feed as photos, rather than links.

You can check out Jered’s work here and connect with him on Twitter.

If you found this interesting, please consider commenting and sharing. Thanks- Donny