LEE VALLEY
Lee Valley is a family-owned business that has been serving users of woodworking and gardening tools since 1978. Our reputation is based on three principles:
- Customer satisfaction: Any product may be returned within 3 months* at no cost to the customer; we return every penny you paid us, plus, for shipments within North America, we will refund your return parcel post costs.
*30 days for Festool products.
- Integrity: Our product descriptions are truly what we think of the product; sometimes this means saying such things as: "...handle with hardwood scales complete with spots of wood filler. A tough, ugly tool that is perfect for the person whose usual solution is to use a larger hammer." We let you make good decisions by giving you accurate descriptions.
- We treat the customer like a friend. We do everything for you that we would do for a friend, including, where necessary, telling you if you are being unreasonable. Nobody is on commission here and there are no minimum sales targets built into anybody's job description. We have found them to be in conflict with good advice. Besides, most of you will spend as much money with us as you can afford so we want to give you good advice, to give you the best value and thereby guarantee ourselves a low rate of product returns. It is best for both of us if we get it right the first time around.
"You have got to remember where you came from to understand where you are and where you're going." -- Robin Lee, President
From humble beginnings to market leaders, here is a behind-the-scenes look at the history, philosophy and employees of Lee Valley Tools.
Rick Spence, Financial Post - Published: Monday, November 09, 2009
'Reaching into the ol' mailbag" is usually a desperation tactic for columnists running out of ideas. But when you get a letter from a living legend, the columnist is well advised to put his own prose on hold and let the titan talk.
My recent column on the power of referrals, especially when other forms of marketing aren't working, drew a thoughtful response from Leonard Lee, 71-year-old founder and chairman of Ottawa-based Lee Valley Tools. Mr. Lee is a former federal civil servant who started his tools-by-mail-order business in 1978 and built it into a $100-million retail giant.
Lee Valley's lovingly crafted tools -- a third of which are actually produced by the company's manufacturing arm -- are adored by serious gardeners and woodworkers. So when master craftsman Leonard Lee writes to tell you how to turn satisfied customers into a sales tool, you stand back and watch him work
An outspoken entrepreneur who has never shied from criticizing the federal government, Bay Street or other dysfunctional institutions, Mr. Lee's letter begins surprisingly diplomatically: "Although I'm not in the habit of sending messages to columnists, I decided to send one to you because I think you do not have the best approach to referrals," he writes.
"You are right they are important, but you have to think about how you motivate people to refer your business to others."
The problem is getting clients and friends to remember to recommend you to others. A few firms have "raving fans" who need no encouragement to refer friends and colleagues. But most businesses lumber along with merely satisfied customers, who don't actually think about us very often, and may need some sort of regular motivation to remember to recommend our services.
When Lee Valley studied this issue, it started from strength. "Our company grew based primarily on referrals from existing customers," Mr. Lee says. "The secret was in our guarantees, our quality and our level of service." When Lee Valley decided to leverage that strength, it took a much more disciplined approach to soliciting referrals than I recommended recently -- and a much more systematic than most companies ever adopt. Given his target market's passion for his custom-designed tools, Lee was willing to pay for referrals. But he was also smart enough not to pay directly.
"We explained it cost us approximately $5 to get a new customer by advertising, so we said we would give $5 to charity if they sent us a name and address for us to send a catalogue to, and if that person became a customer. We also explained we particularly wanted customers who were known to be woodworkers and/or gardeners. This would minimize wasted paper and postage and reduce our costs."
Offering to send the cheques to a third party was the key, Mr. Lee says. "This establishes a nebulous but real customer benefit, and forestalls someone sending us the Winnipeg telephone directory in hopes of earning a small fortune but at great waste to us .
"To date we have paid $215,000 to The Nature Conservancy of Canada and the United Way for such referrals. We got 43,000 new customers, and our mailings were much more efficient," he says.