The Crutchfield story: the 1990s

n Chapter 2, I discussed how the 1980s were a major time of growth, confusion, and evolution for Crutchfield. We ended the decade stronger and better positioned than ever.

The decade of the 1990s turned out to be transformative. In 1989 we realized that managing and disseminating our vast trove of information was becoming unsustainable. We made two important decisions. The first one involved computerizing our data — a logical, intuitive choice — and the second one involved making our vehicle data available to the public, which was a controversial move at the time.

Before we started to computerize our massive amount of technical information, our frontline agents (sales and technical support advisors) had to rely on data contained in paper documents filed often randomly in their desk drawers. This rudimentary information system was terribly inefficient for the advisors and did not provide a consistent quality experience for our shoppers.

Some of our Sales Advisors did a better job than others at organizing their information. As a result, some of our shoppers might not have received the most comprehensive information needed to make their best purchasing decisions. We needed to standardize our systems to provide consistent and accurate information to our shoppers. Computerizing this process was the obvious solution.

Rising to the challenges of the computer age

Since 1977, we had invested in small business computer systems. Although they were state of the art at the time, the technology of these systems was primitive compared to what exists today. Prior to the mid-1980s, we had a limited number of “synchronous” terminals. They were expensive, large terminals connected to the “mainframe” with heavy cables containing dozens of conductors. This precluded our ability to provide each of our frontline advisors with their own individual terminal.

Fortunately, in the 1980s, a new breed of “asynchronous” terminals evolved. They were far less expensive, smaller, and used much smaller, more flexible cable than the older synchronous terminals. Since our current computer would not support these terminals, we started the process of evolving to more modern and flexible systems.

By the late 1980s, our mainframe had powerful processors, robust magnetic disc storage, a reel-to-reel tape reader/writer, and the ability to communicate with many asynchronous terminals. We were then able to provide each of our frontline people with an individual terminal.

Data processing in the late '80s/early '90s involved huge mainframe computers that were accessed by data terminals.

For us, this new system was so impressive that we named it “Albert” as an homage to Albert Einstein. Even though the computer was impressive for its time, Albert had fewer processing and storage capabilities than one of today’s smartphones.

In 1989, we started the arduous process of entering all the technical information that we had accumulated over the years. We finished the next year, in 1990.

Helping customers find the right fit

We launched this innovative service in our Winter/Spring 1990 catalog. This is what we said about it in that catalog: “Tell Albert what kind of car you have, and he’ll tell you precisely which receivers fit your dash, where you can install speakers, and what sizes fit best. Albert will also recommend the Crutchfield Custom Installation Kit and wiring harnesses that will make the job easier. And Albert even knows which antenna is right for your car.”

Obviously, Albert had to be prompted by our Sales Advisors while on the phone with our shoppers. Today, shoppers can access this information directly through the Vehicle Selector app on our website. Poor Albert. He was replaced by generations of more powerful computers. Now we have hundreds of computer servers housed in our two datacenters.

Crutchfield personal computers

Speaking of computers, the sales of personal computers were impressive. However, they were not profitable. As an attempt to improve their profitability, we decided to develop our own brand of computers. In our Fall 1990/Winter 1991 Personal Office catalog, we launched a full line of Crutchfield personal computers. We continued to offer a wide variety of computer accessories, software, fax machines, copiers, and telephones.

Crutchfield personal computers were custom-built by our technicians based on our customers’ individual needs. They could include specific processors (the standard 286 CPUs or the newly released 386 CPUs), video cards, modems, hard drives, monitors, etc. After a year, we offered them in black to further differentiate our brand from the others which were only available in the standard off white/light beige color.

Crutchfield branded computers were launched in our Fall 1990/Winter 1991 Personal Office catalog.

Unfortunately, we had not learned our lesson from 1984 when we discontinued selling other brands of computers. We found that it was impossible to provide Crutchfield’s high level of support when selling products with very low profit margins.

After a few years, we discontinued our personal office business and absorbed the staff into other areas of our company without having a layoff. As mentioned previously, I am enormously proud that Crutchfield has not had an employee layoff throughout our 50-year history.

An important public service

We started publishing an enormous amount of car fit information in our Summer 1990 catalog by devoting eight catalog pages to an “Installation Guide.” It included thousands of datapoints. Some of our people believed that this information was proprietary and should not be publicly disclosed.

However, I thought that it was an important public service. Even if people did not buy their car stereo products from Crutchfield, using our guide would ensure that they bought components which would better fit their vehicles. That would provide them with superior user and installation experiences.

More satisfied consumers would be good for our overall industry. For that reason, our manufacturers applauded this Crutchfield service. It surely promoted more industry-wide sales.

The first Crutchfield Installation Guide, from our Summer 1990 catalog.

1990 also turned out to be an important year regarding our physical expansion. We doubled our facilities’ footprints from 49,000 to 90,000 square feet. This construction included additions to our headquarters and distribution center buildings.

The creation of the Crutchfield MasterSheet®

In 1992, we further expanded our dissemination of proprietary information. We launched our MasterSheet initiative. Having researched thousands of vehicles over the years, we consolidated this information into vehicle-specific guides which explained the complete installation process from disassembly of the vehicle and removal of the original radio and speakers to putting it all back together again at the end.

We shipped these printed documents to our customers with their orders. Today, we send our MasterSheets by email so that customers get them right away, instead of waiting for their package.

One of the early Crutchfield MasterSheets.

Revamping our retail store

I previously mentioned that we opened a retail store in 1983 at our headquarters’ location. However, in 1993, we decided to move it for two reasons.

First, our headquarters is several miles north of Charlottesville’s urban ring. At the time, it was not near any shopping centers. Therefore, our store was regarded as a “destination location.” This means that people had to go out of their way to shop at it. We could make their shopping experience much more convenient if we moved the store into a shopping center within the urban area. Second, our business was growing so rapidly that we desperately needed more space for our growing call center and administrative departments.

I found an ideal 21,000-square-foot space in a major shopping center. The space could be modified to provide for car stereo installation bays. Since this store was to be a showcase for Crutchfield, I hired a leading store design firm in Dayton, Ohio, to design the store's interior and its many display fixtures.

The store opened in early 1994 to a significant amount of fanfare. To some visitors, it represented a new standard for a consumer electronics retail store. That should have been expected since one of our core values is “Maintain a total commitment to excellence.”

After that, we remodeled the old space at our headquarters' location into an enlarged call center and administrative office spaces that we desperately needed.

Our new store was BIG and contained many listening areas so customers could experience our products.

Entering the internet age

1995 was a truly pivotal year for Crutchfield. It was the year that we launched crutchfield.com. Before telling this story, let me give you a brief history of the internet.

Like most technologies, the internet evolved over many decades. In the late 1960s and early 1970s, much of this work was done by DARPA (the Defense Advanced Research Projects Agency of the U.S. Department of Defense) in collaboration with a handful of research universities in the U.S. and abroad. For many years, its only function was to share information between government agencies, libraries, and certain universities. The public did not have access to it.

In 1993, two important developments occurred. First was the introduction of Hypertext Markup Language (HTML). It allowed for the simultaneous transmission of images, video, and audio content between web browsers. Prior to HTML, only text could be transmitted over the internet. Second, Congress passed the National Information Infrastructure Act of 1993. Among other things, it opened the internet for businesses to sell products and services.

In the spring of 1995, our IT Director came into my office and suggested that we build a website. My response was, “What’s a website?” He patiently explained it to me. Being a believer in experimenting with innovative technologies, I authorized it.

One of my practices is to remain open to virtually any idea from our employees. Over my office door is a sign that reads “An Open Door Office.” Also, I follow the management practice of MBWA — “manage by walking around.” I enjoy wandering throughout our buildings and chatting with employees at every level. Some of our best initiatives have originated from their casual comments. However, this one came from a very senior employee. I am grateful that he approached me with it.

Since building a website and launching an online business would be an evolutionary project, we started small. Initially, it was designed to capture inquiries for our catalogs and direct people to our sales, customer service, and technical support toll-free phone lines.

After a fair amount of internal development and testing, we launched crutchfield.com in September of 1995. One month earlier, a startup company in Seattle launched its basic website that sold books. At that time, few knew the name of the company or of its founder. The company is Amazon, and its founder is Jeff Bezos.

Speaking of Jeff Bezos, several years after we launched our respective websites, Jeff came to Charlottesville to meet with me. We had a fun time swapping our respective start-up stories. I found him to be an extraordinarily bright, curious, and nice person. Naturally, I have enormous admiration for his incredible business success.

Adapting to the online marketplace

Like Amazon, Crutchfield was a true pioneer in this new world of retail. We, along with the small number of other retailers launching online businesses, had tremendous obstacles to overcome. For us, the first may have been understanding and developing the new and rapidly evolving technology. The second concerned our manufacturers. They had no idea how this new distribution channel should be managed. Furthermore, they feared that it could create a sales channel nightmare like the one that they experienced in the early 1980s.

As I explained in Chapter 2, there were unscrupulous mail order sellers who provided little or no support service for consumers. These “fly by night” operators blemished the manufacturers’ brands and tarnished the appeal of our industry’s products.

I addressed that issue by creating an internet version of my 1984 Mail Order Dealer Agreement. This Internet Dealer Agreement provided the manufacturers with the same protections regarding sales over the internet as my previous agreement provided for mail order catalog sales. The agreement would ensure their end consumers would receive all the needed before- and after-sales support.

Although we overcame many of these early obstacles, we did not want to get too aggressive with our rollout of products on our new website. So, we started with one product, the Sony DSS (Digital Satellite System). It included both a receiver and an antenna for receiving the newly launched DIRECTV service.

The Sony Digital Satellite System was the first product to ever be featured on Crutchfield's website.

The product was perfect for our crude website. One benefit of a website is its ability to provide a tremendous amount of information economically. Once a website is built, adding more content is relatively inexpensive. However, adding more content to a four-color printed catalog can be very expensive.

When this amazing new DSS technology was launched, DIRECTV did not have its own installation services. Although some of Sony’s dealers and independent repair shops did, DSS was still primarily a do-it-yourself product.

With each purchase, we included our DSS Starter Kit, which included a 24-page booklet along with a simple compass and our Satellite Elevation Angle Indicator. We posted some of the booklet’s content on the website along with additional information regarding Sony’s DSS products and the wide variety of programing available on DIRECTV.

We also offered this starter kit for $4.95 without a system purchase. However, if the customer later bought a system, we would credit the price of the starter kit against the purchase price of the system.

For us, the most monumental aspect was that we provided a link for ordering these DSS products and our DSS Starter Kit online. To our knowledge, this was the first time that a consumer electronics product was sold over the internet. Both Sony and Crutchfield made history.

We sold many of these Sony DSS products through our catalog. However, we sold a much smaller number through our new website. That was understandable. In late 1995 and early 1996, few people had personal computers and fewer had web browsers installed on them. And an even smaller number were comfortable shopping over the internet. Buying through catalogs was infinitely more popular.

This early version of the Crutchfield website was a solid example of its time.

The low volume of internet activity allowed us to painlessly develop the software necessary for the website to interface with our payment and fulfillment systems. These were just some of the “teething pains” we encountered in those early days of online retail. Fortunately, we have always had some extraordinarily talented people in our IT, copywriting, and web design departments.

Support by Crutchfield

Once we proved the viability of selling our products over the internet, some of our other manufacturers became interested in this new distribution channel. They joined Sony in permitting us to sell their products through our website.

However, some manufacturers realized that offering sales support and fulfillment services to individual consumers was beyond their core competencies. Their strengths were in developing, manufacturing, and distributing products in bulk to retailers and distributors.

To address this concern, I devised a program called “Support by Crutchfield.” In 1996, we launched it with Sony. While they developed their own websites, we provided backend support. Crutchfield took the sales, customer service, and technical support calls, shipped the merchandise, and handled the returns.

Supporting our partners

This logo was displayed on Sony's webpages. People shopping on Sony's website were sent to us when they wanted to place an order. They received our one-on-one service and support and their Sony products shipped from our warehouse.

By 1997, we expanded the Support by Crutchfield program by providing this service for some of our other manufacturers. We are still operating a version of this service today for some smaller manufacturers.

Navigating the Wild West of internet retail

As our reputation for being a leader in this new world of online retailing grew, I began receiving contacts from potential suitors. 1997 was the beginning of what would become the “dotcom bubble.” Investment banks wanted to take Crutchfield public.

At that time, some startup internet retailers with untested business models and no history of profitability were going public with market capitalizations in the billions of dollars. On paper I could have become a billionaire. That is, until the bubble popped, and the markets crashed.

I also had many calls from private equity firms who wanted to buy Crutchfield. Again, I took a long-term view. I thought that the price that my company would bring during this mania was unrealistically high. A financial buyer would have to put an enormous amount of debt on the company to finance the acquisition. The service on this debt could cripple the business over time.

Also, private equity buyers tend to focus on maximizing sales and earnings since they typically only retain their portfolio companies for three to five years. Then they sell them to other financial buyers or take them public for what they hope will be a big profit. To be fair, very bright and fine people typically manage these firms. However, their business models are driven by what their investors expect.

On the other hand, my focus has always been on managing Crutchfield to provide long-term value for our customers, employees, and business partners, often at the expense of increasing short-term incremental sales and earnings.

Building a great company is far more important to me than creating enormous personal wealth. These vastly different management philosophies might have led to serious problems if I had sold the company and remained its CEO.

Responsible business ownership

Now I want to be philosophical for a moment. I strongly believe that the companies that survive for extended periods of time are those which have senior executives who place their top priority on creating rich organizational cultures that promote excellence in everything their companies do.

Responsible financial performance is also necessary. However, when it becomes the overriding focus of management, the long-term sustainability of the company is too often endangered.

In Chapter 6 (the 2020s), I will explain how I sacrificed a potentially huge increase in sales and profits to save Crutchfield from destroying our legacy of providing outstanding services to our customers, and for providing a high quality of life for our employees. I find it particularly important to tell this story to the business students who attend my lectures.

Also in 1997, a large retailer wanted to buy my company for an astonishing amount of money. Again, had I taken advantage of this opportunity, I would have become extraordinarily wealthy. This retailer saw acquiring us as a very logical way to jumpstart its nascent online retail business. By starting early, we were on the leading edge of this online retail revolution. Buying us would have been a smart strategic move on its part.

However, the company had an organizational culture very different from ours. I feared that there would have been a culture clash which could have resulted in the destruction of the rich organizational culture which makes Crutchfield great. I was concerned about the sustainability of that potential buyer. Unfortunately, I was right. Eleven years later, the company filed for bankruptcy. Had I sold out to them, what little remained of Crutchfield would have disappeared.

Throughout this crazy “dotcom” period, I resisted many attempts to sell the company. Also, I feared that the “dotcom” bubble would pop, and the nation’s economy would suffer. I even wrote a newspaper op-ed in 1999 which warned of the irrationality of this “dotcom” mania. It was titled “The Nine Deadly Myths of Internet Retailing.” Although it ran in some area newspapers, a national newspaper rejected it.

After the “dotcom” crash occurred in 2000 and a recession followed, a reporter with that newspaper told me that not running my op-ed was one of their worst decisions. Even today, I remain vigilant to the risks of bubbles forming and popping since they too often lead to recessions.

Expanding to Southwest Virginia

In 1997, Virginia’s governor appointed me to the senior board of the University of Virginia, our state’s flagship university. Both UVA and Crutchfield are in Charlottesville. The university has only one branch college. It is in Wise, Virginia, located in the far southwest portion of our state. Being a five-to-six-hour drive from Charlottesville, the tiny college got little quality attention from the board which almost always meets in Charlottesville.

Since I am a pilot and have an airplane, the board chair appointed me to the committee that oversaw this small branch college. I could fly down there in one hour. After several trips to Wise, the college also appointed me to its local board.

Being a pilot and a business owner turned out to be quite useful over the decades. Here is Bill Crutchfield today, pre-flighting and flying his Beechcraft King Air.

I became attached to the area. It is in Appalachia, which is one of the poorest regions in the country. In the late 19th century, large timber companies exploited it. Later, large coal mining companies exploited it. The people grew up in company towns, shopped at company stores, and were often paid with company “scrip” (money equivalents).

Besides being isolated in mountains with poor transportation options, the people of the region became economically and culturally isolated from the growing prosperity of the nation. Compounding their economic problems was our country’s movement away from coal. Most of the mines closed and unemployment soared. The remaining coal mine operators have become responsible employers and citizens. Nevertheless, many people moved away. Those who remain are smart and have impressively strong work ethics.

Crutchfield’s second call center

Around this time, Crutchfield was growing at an impressive rate. We needed many more employees. Because Charlottesville had one of the lowest unemployment rates in the country in 1997, we had a tough time filling our needs with highly qualified people. The logical solution was to open a remote call center.

The Norfolk, Virginia, area seemed ideal. It had plenty of available office space, a robust fiber optics communications infrastructure, a full-service airport, workforce training, and attractive economic incentives. Most importantly, approximately 16,000 military personnel were released from service each year around that time. Besides Norfolk having the world’s largest naval base, the region has significant Air Force, Army, and Coast Guard installations. Being a veteran myself, I was especially excited about tapping into this pool of outstanding military veterans.

My thinking changed one night during a dinner at the UVA president’s home. The Chancellor (president) of our branch college was there. I asked if it would make any sense for us to open a satellite call center in Wise County. My thinking was that Norfolk really did not need Crutchfield. It had a vibrant economy. However, Crutchfield could make an enormous difference in the economically depressed region of Southwest Virginia. He agreed and within a few days I had a team of people from Wise County in my Charlottesville office.

One of our talented sales managers was a graduate of UVA in Charlottesville and was from that region. I brought him into the meeting. As it turned out, he knew at least one of the representatives. This meeting was followed by several visits to Wise County. Although my instincts told me that this was the right place to open our remote call center, the rational side of me realized that there were enormous challenges.

The area had no available office space. Since its economy was so depressed, developers were not investing in commercial property. There was no workforce training. The small airport had only basic instrument landing capabilities. There were no fiber optics lines in the area.

Furthermore, the phone company could not provide us with digital communication circuits (known as T1 lines) that were necessary to connect the phones in our remote call center to our computerized telephone switch in Charlottesville and to connect their computer terminals to our datacenter in Charlottesville.

Nevertheless, I took the challenge.

The local phone company loaned us a floor in its building in Norton. Although it is the largest city in Wise County, Norton has a population of less than 4,000 people. The space in the telephone company’s building had previously been occupied by telephone switchboard operators. The region was one of the last places in the AT&T system to get dial telephones.

Launching Crutchfield’s Southwest Virginia call center

We felt like real pioneers conquering all the issues related to opening a sophisticated call center. I discovered that we could get digital phone connectivity by routing service through three different phone companies in three different regions of the state. There were other obstacles. I had to fly our recruiters and trainers to Wise County from Charlottesville. “Crutchfield Air” was a frequent user of the small Wise County airport.

After these and many other hurdles were addressed, we opened our call center in 1998 with only 16 employees. After several moves to larger facilities, we now have around 160 employees at our Southwest Virginia call center. They have proven to be outstanding employees and several of the early employees now hold leadership positions across our organization.

There is a crucial factor which made this operation such a success. The Charlottesville sales manager who attended my initial meeting with representatives from Wise County agreed to move back to the region and serve as our manager. He is still there managing our growing operation and nobly representing our company by serving in local community activities.

Crutchfield's Southwest Virginia employees outside our call center in Norton, "where great people work."

A "profound impact"

I am enormously proud of what our company did for this depressed region. After we got the bugs out of our operation, I helped the economic development officials in the region recruit other call centers. Crutchfield’s success made us a significant role model for these prospective companies. It worked. We were successful in recruiting several other call center operations.

As a result of our collective work, Crutchfield and these other companies took the unemployment rate in Southwest Virginia from 23 percent down to around eight percent. Additionally, the jobs created by this influx of new call centers helped the quality of life in this region. Many of our jobs paid more than the area’s median income level. This infusion of money from outside the area helped stimulate the opening of small businesses like shops and restaurants. Also, it reduced the financial burden on government-provided social services.

As a footnote, in its 2024 legislative session, Virginia’s Senate and House of Delegates issued a Joint Resolution commemorating Crutchfield's 50th anniversary. One of the items cited in that Resolution, was “Bill Crutchfield set out to open a call center for Crutchfield Corporation in Norton, an initiative that would ultimately have a profound impact on the economic vitality of Southwest Virginia.”

Closing out the 1990s poised for future growth

By 1999, our sales had continued to grow rapidly. Much of it was attributable to our growing online business. By then we had built approximately 83,000 square feet of warehouse/distribution center space at our corporate campus. But we needed even more space.

We had the land to build on, but we did not have the time. It takes years in our county to gain the necessary permitting and then complete the construction. Fortunately, an opportunity existed. A large manufacturing plant located approximately five miles from our corporate campus had moved its operations to Mexico.

We initially rented 73,000 square feet in this abandoned building. We now occupy over 160,000 square feet of it. It was perfect for our use with one exception. The building was not air conditioned. July and August in Virginia can be extremely uncomfortable. My policy is that if I can work in an air-conditioned office, then all my employees should be provided with this benefit. So, we immediately added air conditioning to this large building.

Recognition of our success

Our innovations and success were noticed by business and industry experts throughout the 1990s.

In addition to receiving the state-level Ernst & Young "Entrepreneur of the Year" award in 1999, I was also honored as the Virginia finalist in the national competition. I attended a big event in California where I met many of the finalists representing other states. It was an amazing experience even though I lost out to Cabela’s, the national outdoors sporting goods store and online retailer. Its founders deserved the national award more than I did.

Bizrate Insights is a market research firm that provides the most comprehensive analysis of the customer experiences received from leading online retailers. In 1999, they established an award for the highest-rated online retailers, the "Platinum Circle of Excellence." Crutchfield received that award in 1999 and has continued to receive it for the past 24 consecutive years. This makes Crutchfield the only online retailer out of 3,500 surveyed to have consistently achieved this honor.

We are proud of our record for customer service and satisfaction.

Chapter 4 — the 2000s

This concludes the third chapter of The Crutchfield Story. In Chapter 4, I chronicle the decade of the 2000s. It was highlighted by Crutchfield’s continued growth and our successful navigation through the 2008 financial crisis.

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