I often find that the simplest metrics will tell me more about a bike retailer’s business than any profit and loss statement. Total sales and margins can provide an estimate of the overall health of a business, individual sales will tell me who the top performers are, and measuring turns will show which products are moving. Conversion rate will show the proportion of customers that purchase. However, none of these metrics will tell me if the retailer is doing right by their customer. Most people believe that the only way to do this is by conducting customer review surveys or by measuring impressions on social channels. However, I can get a clear understand of how a bike retail business treats their customers simply by looking at some simple metrics.
I will preface that these metrics are based on some foundational assumptions, and where the true data geeks in the world may scoff at this, I have still found these metrics to be helpful and telling.
The Floor Pump Metric. The number of new bikes sold compared to the number of floor pumps sold. There is a collection of bike models that are almost always sold to people who are buying their first bike in a very long time. Some of the bikes in this category are kids bikes, adult bikes under $1000, flat bar road bikes, base model mountain bikes, and comfort or hybrid bikes. For these new bike buyers chances are very good they need some basic instruction on the maintenance and operation of the bike. They will have to be taught how to shift, how to lube their chain, and how to inflate their tires. If the person working on the retail floor didn't take the time to show them how to use a floor pump to inflate their tires, then chances are really good that 3-5 days later this person will be riding on tires that are near flat. Control will be compromised and they will be susceptible to a pinch flat.
How many of these bikes were sold? Compare that to the number of floor pumps sold. If there a discrepancy it is likely the customers were set up for a horrible cycling experience.
Tune Ups To Bike Sales. How many bikes sold in a year compared to the number of bikes return for a tune-up in the next year. Many will agree that a bicycle should have at least one tune up every year. This tune-up will help keep the bike shifting and braking properly plus will give the technician the chance to replace a tire before it becomes too worn to ride safely. If we can agree that a bike should have a minimum of one tune up a year then comparing bike sales to tune up sales will be a sign of how often people who buy from the store and return for service.
If a retailer sold one thousand bikes in 2011, we should see one thousand tune ups in 2012. Ideally more because they’re capturing some new market from competitors. If they sold another thousand bike in 2012, then they should see 2000 tune ups in 2013. Since a tune up is a recurring service it is easy to see how a bike retailer that has been open for 5-10 years should be doing far more services than the number of bikes they are selling.
In 2012 I tested this assumption with 25 retailers in the US and asked them to give me the number of bikes they sold and the number of services that they would classify to have needed annual service. The result was a dismal 4/10. For every bike sold they were seeing only 40% of them return for a tune-up.
Thanks for taking the time to read this far. If you found value in this piece would you please consider sharing it on social? Thanks again. Donny