Leftovers

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

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.

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

or

$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.

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.

Book Summary: Reinventing the Wheel by Chris Zane

It’s not too often you see a book about the business of bike retail. Zane’s Cycles is located in Branford, CT. Here is a short video where Founder/President Chris Zane describes his business, and here is where you can buy the book. 

SUMMARY

Chris claims a 23% annual increase in revenue over the year before is his company’s average growth.

Nothing was focused on how to execute a sale, instead everything was focused on a higher level on how to get the customer in the store and keep them coming back for life.

The book worked like bike-shop specific bookends on any day-to-day work. Before you can execute a sale or service effectively, company visions like this need to be in place.

While the sales strategies Chris presents aren’t new (in fact he tells us where many of his ideas came from) they are new to the cycling industry. While marketing to gay/lesbian communities is obvious for millions of other companies, I wonder how many bike shops look into expanding their market there?

He mentions several times his plan to grow his one store location to 100 stores nationally. Too bad he never details how he plans to do it. Will be exciting to watch as he does.
 

THREE KEY IDEAS DISCUSSED

1. Zane’s average lifetime value of a customer is $12,500

This give Zane’s roughly $5000 profit if they earn maximum customer loyalty

The lifetime value allows them to understand the cost of acquiring and earning a customer

Arguing over a $100 return is not worth losing the customer and their lifetime value of $12,500

If a business does not understand their customer’s lifetime value, they do not know where to begin pricing strategies in service or marketing.

2. Zane’s has a 3-leg stool to their business. Products, service, and price.

Products:

Strong relationships with strong vendors and suppliers

Vendors need to be willing to go the extra mile in warranty and delivery

Vendors are not partners. Zane’s is their customer and they expect their vendors to treat them as well as they would treat their own customers.

Service:

Satisfaction guarantee. If a customer is not happy with any product they bought, at any time, they can return it for a full cash refund. The author tells a story of a full cash refund he gave a customer who brought in a bike that was 6 years old. The customer then bought a bike 3x the value and has been a loyal customer since. Proving the value of the lifetime customer.

Lifetime free repairs. All repairs that come from general use of the bike are free for life. This focuses his staff to assemble bikes in a manner that demands very little return and strong product education to his customers. The cost of free service is a no-brainer to Chris when compared to the lifetime value of the customer.

Kid’s trade-up program. If a parent buys their kid a bike they can return it for full value towards the purchase of the next size up. While it sounds crazy, this has been a profit center for the shop. The idea that a trade-up program is in place makes the sale easy. Only a portion are traded in and those are donated which earns the shop free marketing and new customers.

Lifetime flat repair program. For $20 you can buy free flat repair for the life of your bike. They sell 4000 of these programs a year and perform free flat fixes about 50 times a year. 4000 x $20 / 50 = $1600 earned for every free flat fix they do. People who ride a lot and are more likely to get flats don’t buy in to the program- they need to know how to fix a flat themselves.

Price:

90-day price guarantee. They match any price and then some.

Because the services Zane’s offers seems too good to be true, they match any price their customers can find on a bike up to 90 days after the purchase

When a customer does ask for a price match they give them an additional percentage on top to be sure Zane’s had the cheapest price. 

This discount is acceptable in light of the customer’s lifetime value.
 

3. Where to put your efforts in marketing

Zane believes that 30% of customers are price conscience buyers, 30% of customers are experience conscience buyers and the remaining 40% can be persuaded to go either way. If you attempt to market to 100% of your customers you will gain approximately 50%. If you market just price or experience you will gain approximately 70%.

Experienced focused buyers spend more, so market your services and the shopping experience. Not the super deals on price. 

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