i3 | November 17, 2020

Crutchfield Corporation's Founder and CEO Bill Crutchfield

Cindy Loffler Stevens

The idea for Crutchfield Corp. was born in 1974 as Bill Crutchfield was restoring his classic Porsche 356 coupe and could not find an aftermarket car stereo for it. A business concept evolved from this humble beginning with the company offering informative consumer electronics catalogs to its shoppers and growing into the first vendor-authorized audio/video retailer on the internet. For 46 years, the company has specialized in a full range of consumer electronics products with special emphasis on equipment for cars and homes. 

 As Founder and CEO, Bill Crutchfield has always had a strong focus on providing exceptional customer service winning the company multiple awards along the way. Crutchfield Corp. is the only internet retailer of any type to have won BizRate Insight's Platinum Award for 20 consecutive years. The company was recently ranked #1 out of 37 in the consumer electronics category of Newsweek’s Best Online Shops 2021.

A strategic businessman, he launched Crutchfield.com in 1995 but not everyone believed in his vision initially. Crutchfield says, “Twenty-five years ago, I told a group of business leaders that we were going to be selling products over the internet and they said, ‘who in the world would order anything over a computer?’ And these were very sophisticated people.” He adds, “So, who knows what is going to happen in the next 25 years?”

The Charlottesville, Virginia, facilities include its dog-friendly headquarters, two distribution centers, a new, state-of-the-art contact center and a concept retail store. Also, in Virginia, the company has a satellite call center in Wise County, a research lab in Christiansburg and a traditional retail store in Harrisonburg. Its Charlottesville store uses patented technologies to offer virtualized listening experiences for hundreds of speakers, and contains interactive fixtures offering access to photos, customer reviews and technical information for every product. Crutchfield Corp. developed the Outfit My Car tool that uses specific in-house measurements of thousands of vehicles to confirm proper fit for aftermarket speakers and car stereos. The company website also features over 3,500 detailed articles and videos to share information, reviews and how-to advice for shoppers. Crutchfield's Connect ID feature allows its in-house advisors to co-shop the site with customers via phone or chat. The privately held company has grown to over 700 employees.

In 1999, Bill Crutchfield was named Ernst & Young’s Master Entrepreneur of the Year for Virginia; in 2007, he was inducted into CTA’s Hall of Fame; in 2011, Virginia Business magazine listed him as one of Virginia’s 25 most notable entrepreneurs over the past 25 years; and, in 2016, he was honored by the Anti-Defamation League. Bill Crutchfield has owned several different airplanes and has been designated a Wright Brothers

Master Pilot by the Federal Aviation Administration for 50-plus years of safe flying. During a recent conversation, i3 had the opportunity to learn more about this innovative retail business.

What is Crutchfield’s unique shopping proposition?

I founded my business in my mother’s basement in 1974 with only $1,000. Our unique shopping proposition is providing our shoppers with a wealth of written and video content supported by the professional assistance from our highly trained sales, customer service and technical support advisors. Furthermore, we ensure that each of our operational functions is managed to the highest degree of excellence with a laser-like focus on customer centricity. 

What roles do research and AI play in enhancing your website?

Crutchfield’s website went up in September 1995. That was only one month after Amazon’s. At that time, we did not know of Amazon’s existence. From our beginning in 1974, we have always invested heavily in research. This ranges from collecting an enormous amount of information on each product offered, developing sophisticated digital marketing tools, inventing and building our robust vehicle selector and creating our patented virtual listening technology. Developing the vehicle selector required us to collect data on the makes, models and years of roughly 30,000 car and truck permutations. Also, we have a research lab managed by two PhD acoustics engineers which developed the software for our Charlottesville store’s virtual listening rooms and the website’s Speaker Compare app. We are developing AI and ML tools to improve the efficiency of certain operational functions and to enable our website to perform more like a human sales advisor.

Your company is known for superior customer service. Can you talk about your employee training program? 

We have been recognized by virtually every rating service as providing the best customer service in the consumer electronics industry, most recently Newsweek. We have a very strong organizational culture which drives our behavior towards our customers, employees and business partners. We also have extensive training. Our sales advisor training program is four months in length of which 400 hours is spent in formal classroom training. 

Can you talk about some of your retail innovations?

We have been pioneering all along. For our third catalog, I invented the magalog—a hybrid between a catalog and a magazine. Prior to that all catalogs were strictly products, basic features and price. I introduced the concept of having articles and soft content and that became the world’s first magalog in April 1975. Other companies like Patagonia and Lands’ End have used that format. We are an information company and we always have been. In the old days —we provided information through our catalogs and our sales advisors. Now we distribute information with ancillary printed content but mostly through our website. Our expert sales advisors take questions by phone, chat or email. We are so fortunate that we launched when we did because we had a real head start in this business. We have very smart people on our ecommerce team that implement all of the state-of-the-art best practices. 

How have you led in sustainability including biodegradable packaging?

Our customers see this as another way in which Crutchfield is a responsible corporate citizen. But we have been ahead of the game on sustainability and environment issues since almost the beginning. I started the design work in 1977 on our first building at this site. It was the first passive energy efficient building in central Virginia. It is mostly underground to keep it cooler in the summer and warmer in the winter. Since then, as we have built new buildings, they have all been designed for energy efficiency.

What challenges did your company face with COVID-19? 

Like virtually all online retailers, Crutchfield experienced a huge surge of orders when the lockdowns began. The number of contacts to our customer service, technical support and product advisors quickly overwhelmed our ability to provide Crutchfield’s exceedingly high level of service. Additionally, added stress was placed on our distribution center employees due to our strict COVID-19 protocols. In response, I directed our marketing department to temporarily stop our digital advertising to reduce order demand. We also took actions to make our website and contact center operate more efficiently. Since then, we have been managing the business based on service levels and not on potential profitability. As a result, we have literally left an enormous amount of net operating income “on the table” this year. To me, this short-term sacrifice is an investment in the long-term sustainability of our outstanding franchise. 

Are you experiencing any supply chain issues as a result?

Yes, but this is to be expected considering the enormous disruption to supply chains throughout the world and considering the time that it takes for them to fully recover. Fortunately, our ability to inventory large quantities of merchandise has somewhat mitigated this problem.

Do you think businesses will start to operate normally again soon? 

I don’t think that businesses will operate normally until we have a proven vaccine. Until people are confident that the vaccine is working, life might get better but it’s not going to get back to normal. We also have the concern on whether there will be a second wave of the virus this winter combined with the seasonal flu. It will probably be next summer before we start seeing normalcy and we won’t be totally back to normal I suspect until 2022.

How is technology changing the retail experience? 

 We are in an era where technology is changing virtually everything in life. Retail is no exception. Retailers who don’t appreciate this paradigm shift will suffer.  

What are your thoughts on brick-and-mortar stores?

I believe that brick-and-mortar stores will always be critical to retail. However, this channel needs to be reinvented for the post-pandemic world.

What are your thoughts on brick-and-mortar stores? 

I believe that brick-and-mortar stores will always be critical to retail. However, this channel needs to be reinvented for the post-pandemic world.

Do you see electric or self-driving vehicles as a business opportunity?

Not in the short run. I am waiting for more EV OEMs to enter the market to see how Crutchfield can take advantage of any potential opportunities.

How are you preparing for the holiday season? 

We have a tremendous amount of merchandise on order. We are increasing our workforce by 25% and we have reengineered our two distribution centers to double our package throughput. 

What are the biggest policy issues for the industry? 

Manufacturers need to find ways to become less dependent on traditional supply chains. They will also need to ensure that their products are supported by high quality, 21st century specialty retailers. Brick-and-mortar retailers need to find ways to respond to the dramatic shift to online sales. Online retailers will need to find ways to ensure that this surge in sales does not compromise their service quality. And all of us need to respond to the realities of political polarization. We will need to be nimble enough to respond to dramatic swings in public policy.

Do you have advice for entrepreneurs? 

My most important advice is that they establish a strong set of core values around which all their company’s actions are based. My “Job #1” is managing the organizational culture defined by our core values. Decision making based on good data and careful analysis is critically important. However, there are times when it is necessary to follow one’s gut instincts. Many of my most consequential decisions have been counter intuitive. It is interesting to note that formal business education has grown exponentially over the past 40years. It typically teaches the science of business management. It is also interesting to note that business formation is at the lowest level in 40 years. This dichotomy may result from my belief that too little is taught about the art of business management. Companies led by leaders who understand both the art and science of business are the most successful. 

Entrepreneurs need to be very frugal. A heavy dependence of investor and bank financing can come at a large cost. Crutchfield’s sales should exceed$400 million in 2020. We have accomplished this growth without taking a penny from outside investors. Furthermore, we have not had bank debt for decades. Achieving this took tremendous financial discipline over many, many years. However, it allows me to make decisions which are in the very best long-term interest of our customers, employees and vendor partners.

What technology areas do you find exciting? 

Personally, I am very interested in consumer electronic health products. With the aging population, the sophistication of smartphones and different technologies coming together, I think consumer health products will become bigger. My father was a doctor and I am on the board of the University of Virginia Health System so medicine is an area that I am very interested in. 

What issues concern you? 

I worry about the deficit. It concerns me that we are going so far into debt as a country but on the other hand, if interest rates remain low as the Federal Reserve indicates they will, it’s not as bigof an issue. I am certainly concerned about the political polarization in this country. I am concerned that we have media that feed this polarization. We have unconventional news outlets —some so conservative they make Fox News look liberal and some so liberal they make MSNBC look conservative. My biggest concern is how people are getting honest information. I am afraid that so much distorted information is being electronically communicated.

How do you prepare for “unknown” events? 

I am very optimistic about the future. Americans are very resilient people. We always emerge from troubled times stronger. However, we must bravely adapt to what will surely be a new world. I prepare for “unknown” events by ensuring that my company remains financially strong and staffed with very bright people who embrace our core values. And I am always anticipating the unexpected. That may come from my 58 years of flying airplanes. 

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