Small Dog electronics stays client-focused

(FORTUNE Small Business) -- When we first met Small Dog Electronics in Waitsfield, VT. (see "Hippie and Son"), the 26-person team at the Apple Inc. (AAPL, Fortune 500) reseller had just weathered an industry-wide shakeout. Knowing that satisfied employees contribute great customer service, CEO Don Mayer refused to cut wages or benefits.

Three years later, he's still running his company with the same philosophy, with the goal of doubling its size.

"The best way to get there is to create even more in-depth relationships with our customers," Mayer said in a recent interview.

To that end, he opened up new channels with two retail stores in Waitsfield and Burlington in 2004 and 2006, respectively. Before opening day, employees underwent extensive workshops on in-store customer service (which Mayer says cost less than 1 percent of his budget). The "clicks-to-bricks" approach worked: Small Dog's in-store sales now account for roughly half of the company's $25 million in revenues.

Helping spur those sales is Small Dog's unusually hands on approach. All retail employees include their personal contact information on every receipt. "In-store sales people are available to their customers well after the time of purchase," explains Allen Evans, assistant manager of the Burlington flagship.

Plans to open two new stores by next year are in motion. Because more than half of the company's sales now come from repeat customers, Small Dog has reduced its advertising expenses. Mayer makes sure that his employees know the products they sell well by requiring that they complete a series of Apple educational modules.

"We try to do customer service online and in newsletters, but it's never as effective as shaking someone's hand," Mayer explains.

Employees that max out their scores on the training module quizzes get taken out to the fanciest restaurant in town. This year alone, Mayer has dined with nearly half of his staff.

Mayer's employees seem to be as satisfied as the customers they serve. He still gives the same perks he did since the last time we spoke to him - among them profit-sharing, health insurance for pets, and on-the-clock skiing on days when business is slow.

"I had a dying dog and the company paid over 80 percent of its medical bill," says Tony Amenta, an online and phone sales manager going into his eighth year with the company. And while the free weekly massages are now only offered on a monthly basis ("for all employees, not just the management," notes service operations manager Matt Klein), everyone seems to be coping fine.

Editor's Note: This story was originally published Sept. 16, and is being republished in amended form to add additional information and viewpoints. No information has been altered or removed.