Customer service is both an old and a relatively new concept. It’s old in the sense that, for most of our history, people did their shopping at local stores where loyalty was built on personal relationships. That situation changed only in the years after World War II, when retailing went regional and national, with a corresponding loss of personal connection. In addition, manufacturing in America—the only major economy to survive the war intact—grew powerful but also sluggish and sloppy due to a lack of competition. Japan, when it was rebuilding from the war, decided to be second to none in manufacturing. Japanese companies hired experts, including the American consultant William Edwards Deming, who taught the importance of statistical quality control and “zero-defect” manufacturing—resulting in products and services that made customers very happy. By the 1980s, Ford recognized its own problems with quality control and customer satisfaction. It recruited Deming to institute what became known as Total Quality Management, or TQM, a management program dedicated to creating high-quality products, serving customers, and ensuring their loyalty.
The business world’s intense focus on customer service, then, dates only as far back as the 1980s. Today the companies most celebrated for fulfilling this legacy include Southwest Airlines, Lexus, and Zappos, which display deep respect for their customers by offering the highest quality products and services. The Dead, though, were way ahead of the game. They insisted on the highest quality practices for manufacturing records, the best sound systems, and the most attentive customer service in their mail-order business. Jerry Garcia once articulated a key difference between the Grateful Dead and the Rolling Stones. “Their attitude is different,” Garcia said. “There’s antagonism there. It’s one of the classic rock ’n’ roll attitudes, it’s the punk attitude. I dig it, but it’s not what we do. We’re friendly. For me, I can’t see relating to the audience any other way. We exist by their grace. It’s very hard for me to do anything but like them. They’re nice people.” The Dead were nice people; their fans were nice people. The simple principle of kindness was central to the Dead. In “Uncle John’s Band,” Garcia asks a question that sums up the Dead worldview: “What I want to know is, are you kind?”
The band’s dedication to customer service grew from their ethical code: they were committed to treating people well simply because that was the right thing to do. The band was kind to the fans. And the fans were kind to the band. Be kind: it may seem like a Sesame Street sort of lesson, but it actually requires a radical commitment, placing substantial demands on a company and sacrifices in short-term profitability. In the end, though, it pays off.
Grateful Dead Business Lesson 3: Be kind to your customers—by offering high-quality products and services and being responsive to their concerns—and they’ll be kind to you by becoming lifelong customers.
Despite the Dead’s popular image as zonked-out hippies, they were deeply committed to providing a high-quality experience for their fans. As early as 1967, when the band was playing shows in San Francisco, Garcia would tell his bandmates, “This isn’t an Acid Test anymore, boys and girls. They’re paying money to come and see us. We have to put on a show.” The Acid Tests had been “happenings,” where the Dead were just fellow participants, and could play as much or as little as they wanted. But now they had paying customers. Garcia “was very professional about it,” Rock Scully recalled. “Jerry was the guy who instructed the band that we were now getting into show business and the people were paying money to come and see us, so we had to be good.” During a tour in 1968, Lesh was feeling uncharacteristically uncomfortable onstage, as if the music were reaching beyond what he was capable of. At one point, he just stopped playing, bewildered. Between sets, Garcia confronted him. “He was so pissed, he just grabbed me and said, ‘You play, motherfucker,’ and sort of threw me down the stairs.” They were in show business now, and show business demanded that musicians actually put on a show.
While demanding stellar showmanship of themselves, the Dead stayed committed to keeping ticket prices at a reasonable level. “We have always tried to keep our ticket prices down mainly because we cannot imagine why anyone would want to pay eight dollars to watch somebody play music,” Weir said in the early seventies. “That is just a lot of money.” The Dead even took care of those who couldn’t afford tickets at all. For their fall 1971 East Coast tour, they arranged FM broadcasts to satisfy fans without tickets. By the late 1980s and early 1990s, when the band’s popularity forced them to play more stadium shows, they found new ways to be kind to fans and offer value. “The band in general, and Jerry in particular, were always very conscious of giving the kids their money’s worth,” according to John Scher, a band employee during that period. “That’s why they put huge opening acts on the bill with them—Bob Dylan; Tom Petty; Crosby, Stills and Nash; Sting; Traffic; Steve Miller.” Even with these high-earning, heavyweight second acts, ticket prices remained low. If other bands’ stadium shows were thirty dollars a ticket, the Dead set theirs at twenty-five dollars. For the same reason, the Dead were quick to adopt oversize video screens for their stadium shows. It was “a matter of conscience,” Garcia said, to make sure everyone could not only hear great sound but see the band as well.
These may seem like obvious choices, but many bands took a different path, charging exorbitant prices for tickets and making do with cheaper, less talented opening acts. The Dead, though, sacrificed short-term profitability in order to treat their fans well, and they ended up forming valuable customer relationships that ensured long-term profit. “They had an ethic about the person in the backseat, the far back,” staffer Alan Trist once said while discussing the band’s enormous investment in sound systems. Because the person in back had paid the same ticket price as the person in the front row, both deserved to hear the same thing—it was only fair. “I think that’s indicative of everything they did right there,” Trist said.
On the jacket of the 1971 live album Grateful Dead, the band printed a note to its fans:
Who are you? Where are you? How are you?
Send us your name and address and we’ll keep you informed.
Initially, 350 people responded. But then the letters kept flooding into the office, and the band expanded its efforts to keep in touch with fans. “We’d set up our own booth at concerts and give away postcards and sign people up for our mailing list,” said Steve Brown, a record company employee. There were ten thousand names on the mailing list in 1972, twenty-six thousand in 1973, forty thousand in 1974. And the list kept growing, until, by the early eighties, there were ninety thousand names on it.
Most bands would have used such a mailing list to create a traditional fan club: fans would pay an annual fee and, in return, get a slick newsletter and an opportunity to buy glossy photos and other band merchandise. The Dead, though, didn’t create a paid fan club. Instead, they wrote a newsletter that was sent out for free. Garcia and Hunter would produce four- and eight-page missives filled with a tour schedule, news about the band, and a bizarre collection of drawings by Garcia, poems, and offbeat philosophizing. The lack of dues or subscription fees meant the band swallowed the costs—about $15,000 to mail out each issue. The Dead didn’t want their communications with their fans to be just another revenue stream. They undertook a venture that was riskier and more forward-looking, with the goal of building deeper relationships with their fans. In the late 1970s, for instance, there was a “Deadheads Only” tour of smaller venues, with tickets available only to fans on the mailing list.
Most important was the sense of connection the mailing list offered to fans—the feeling that their views really mattered. The mailing list was more than just a way for the Dead to communicate with the fans. The Dead wanted to make sure their fans were happy. But how could they know for sure? Communication between rock bands and fans tends to be a one-way street, with the band making noise and the fans listening. But the Dead wanted something different—not a hierarchy but a collaboration. So they asked for their fans to talk to them, and the fans were happy to oblige. The go-between for fans and the band was an employee named Eileen Law, who began overseeing the list in 1972 and who became “the spiritual mother of all Dead Heads.” Law opened all the mail that fans sent to the band—and that often meant fifty or more letters a day. “I read every letter that comes,” Law said. If the letter was addressed to a specific band member, she made sure it got to him.
Fans sent in their original poems and artwork, in the interest of artistic exchange. They wrote long, articulate letters testifying to what the band meant to them. And they expressed concern and kindness: when Garcia was hospitalized with throat problems in the late seventies, he received thousands of get-well cards. Often those writing in to buy tickets received not only tickets but also handwritten notes from the staff.
Eileen Law’s mailbox also served as a sort of national suggestion/complaint box for Dead fans. And unlike most similar boxes, this one actually had some effects. The Grateful Dead Anthology, a songbook of fifty tunes, was in a sense edited by fans: “The songs we chose to include were the ones most requested by the letters,” Trist said. “Eileen kept track, and that’s what we did.” Complaints, too, prompted action. “Please change your repertoire. It’s become rather boring in the last few years hearing the same songs all the time,” one fan wrote. So many fans wrote in to complain that they didn’t like one particular song—“Keep Your Day Job”—that the Dead dropped it from their repertoire.
Other fans suggested what venues to avoid in particular cities—“the band really pays attention to those,” Law said. “Specific complaints about producers or a hall’s acoustics or maybe just general comments about the direction of the band, I pass those on, too, and they [the band members] really do listen,” Law said. Alan Trist, who assisted with the fan communication, agreed. “It’s the feedback, the letters, that makes this work,” he said. “We spread them out on a table and use them as the basis for many of the decisions we make—halls, producers—and send relevant complaints to producers.” In other words, if particular shows didn’t go well—bad acoustics, overly aggressive security, overpriced parking—the fans would let the Dead know, and the Dead would let the venue know, and things would change. Responsiveness like that let Dead fans know that the Dead cared about them, and respected their opinions. This—along with great music, of course—was the foundation of fan loyalty.
The Dead had to work hard to create and maintain this mailing list in a time when communication—by phone and letter—was slow and complicated. These days the Internet and wireless communication make it easier than ever before for businesses to know what their customers are thinking. And customers aren’t shy about expressing their feelings, both directly to the companies and through media such as Twitter, Facebook, Yelp, and Amazon reviews. Too many companies, however, don’t know what to do with this wealth of information. Customers know that occasionally they’ll experience a disappointing product or service, whether it’s a faulty cell phone or a concert venue with bad sound. If the business makes it right—by apologizing and replacing the phone, or deciding not to play that venue again—the customer generally will be satisfied, and according to marketing research, perhaps even more committed than ever before. If you respond to that complaint with begrudging customer service, however, you’ve lost a customer for good.
Customers know mistakes will happen, but they demand to be listened to. The Dead went out of their way to find a way to collect fan feedback in an era when it was difficult. Even better, they put that feedback to work to improve the fan experience.
How did the Dead turn that loyalty into profits? Through record sales, concert ticket sales, and, more surprisingly, merchandising. By the 1990s the Dead had built one of the most sophisticated and profitable merchandising operations in the music business. The Dead and merchandise are a natural fit. Buying branded merchandise is a statement of identity and a physical manifestation of loyalty. Deadheads, so thoroughly devoted to their band, were some of the most avid consumers among rock fans. They wanted to show their colors and mark themselves as members of the tribe.
The Dead “started the trend of marketing band paraphernalia,” according to Garcia biographer Blair Jackson. Two primary factors helped the Dead achieve this status. First, the Marin County artists Alton Kelley and Stanley “Mouse” Miller had created a number of iconic images—including the skeleton crowned with roses—for the Dead’s album covers. Those images functioned as band logos, and they worked beautifully on T-shirts. The second factor in the Dead’s merchandising success was the mailing list, that database of names and addresses for the band’s most committed fans. As it turned out, the band’s newsletter, which had been created to keep the band in touch with fans, also worked for direct marketing. One of the first Dead newsletters advertised band T-shirts for sale through a shop called Kumquat Mae, identified as “the Dead’s old ladies’ store.” That shop was co-owned by Susila Kreutzmann, wife of the Dead drummer; she also sold Dead T-shirts at Bill Graham’s concert venue, Winterland Ballroom, in the early 1970s. When Graham noticed how fast the shirts were selling, he took over the operation and turned it into Winterland Products, which pioneered rock merchandising and was a giant in the field for decades. In earlier years, T-shirts weren’t a standard part of the rock ’n’ roll tour, but Graham’s new business signed contracts with the Dead and other bands to design and manufacture tour T-shirts. At each stop on the tour, the band would sell the shirts, with proceeds split among Winterland, the band, and the concert venue. From this simple concept a mighty industry was born.
The Dead rode the wave. Although through the years the band had deals with industry giants such as Winterland and Brockum Merchandising, in the early 1990s they decided to “insource” merchandising. As with the decisions on record company and ticket sales, the move was motivated by a desire to serve customers better and to produce more revenue. And it worked beautifully. Peter McQuaid, who earlier had helped found a company to manage fan clubs for rock bands, became director of Grateful Dead Merchandising. Before long, merchandise sales at concerts had doubled to an average of two dollars per concertgoer.
Then the Dead looked beyond simply selling at concerts, transforming themselves into the “rock world’s answer to L.L.Bean.” The old newsletters were replaced by The Grateful Dead Almanac—part fan magazine, part catalog. The Almanac was sent out quarterly to 140,000 people, about half of whom could be considered active customers, who chose from among hundreds of items, including golf balls and baby clothes emblazoned with Dead logos. In the three years leading up to Garcia’s death and the band’s demise, sales of non-music merchandise rose at a rate of 25 percent a year. In 1994, the band’s last full year of touring, the Dead earned $35 million in sales from non-music merchandise. That figure rose to $45 million in 1995. Sales remained strong after the band broke up: in the late 1990s, Grateful Dead Productions was shipping a thousand packages a day. Even today at Dead.net, the band’s official Web site, you can buy a multitude of items, including Mother of Pearl Bolt Earrings, a Steal Your Face Messenger Bag, Dancing Skeleton Flip Flops, a Dancing Bear Wrist Sweatband, Warlocks Full Zip Jacket, and Jerry Garcia Silk Neckties.
A few old fans might have griped about the commercialization, but many more saw the merchandise—and treasured it—for what it was: a direct link between the band and its fans, a way for fans to express their devotion to the music that meant so much to them. The Dead weren’t so much exploiting their image as using it to do what they did best: fostering a sense of community. Along the way, they also made millions of dollars.
After Jerry Garcia’s death in 1995, many Deadheads expressed their emotions in part by buying gear, and the mail-order business worked around the clock to fulfill orders. In the week after Garcia’s August death, order calls came in at a rate of fifteen thousand a day. The first copy of the catalog after the tragedy included a note to fans: “Deadheads have expressed an overwhelming desire to have something… anything… some music, a memento, an amulet, a power object… to console them, to inspire them, to remind them of the good times. And it’s our privilege to be able to provide these things.”
The Dead produced good live shows and were responsive to fans, which generated fan loyalty. Loyal fans, in turn, wanted to fly the flag by wearing Grateful Dead gear. They bought this gear from Grateful Dead Merchandising, which, like the band itself, offered high-quality products, fair prices, and stellar customer service and responsiveness. The result, of course, was increased fan loyalty. You might call this the “virtuous cycle” of good customer service. In The Loyalty Effect, Frederick Reichheld pointed out that the average company loses half of its customers every five years. “Inventories of experienced customers” are a company’s “most valuable asset,” Reichheld said. “You cannot control a human inventory, which of course has a mind of its own, so you must earn its loyalty.” That the Dead did—in spades.
The business writer Glenn Rifkin has pegged the Dead as pioneers in nontraditional marketing, comparing the band to IAMS pet foods or Snap-on tools, which focused first on creating high-quality products and only later worked out how to turn those products into profits. The Dead pioneered database marketing, focused on going deep with committed fans rather than going broad by appealing to a mass audience. They built an enormous list of fan names and addresses, a project that, in the years before the rise of the personal computer, was not an easy—or an inexpensive—task. They used this database to market to a targeted group of customers, those who had already expressed an interest in the band. The Dead were not the Beatles; they were too weird for mass appeal. So rather than marketing broadly, they used their database to tie into the passionate support of their most devoted fans. What’s more, the Dead offered a simple value proposition: high-quality music at a reasonable price. And they maintained the quality and variety of their performances over decades, giving fans a reason to come back for more. And those dedicated customers were the band’s best marketers. Management guru Tom Peters has referred to customers as “appreciating assets,” meaning that happy customers share the joy and attract new customers.
“We did it for the people in the audience,” roadie Steve Parish explained. “We cared about that music and we put our whole heart and soul into making it as good as we could…” This commitment to stellar customer service resulted in huge profits, and it all stemmed from the Dead’s simple ethic of treating their fans with respect. Any business that starts with those principles is already a step ahead. So: Are you kind?