THE GRATEFUL DEAD: Customer Loyalty and Service Quality

By F. Barry Barnes

Published in Designing and Delivering Superior Customer Value, 1999, Weinstein, Art and William C. Johnson, Boca Raton, FL: St Lucie Press

What does it take to retain customers and create loyalty in them? This critical question faces all organizations today as customers have a multitude of choices for satisfying their needs and wants. Perhaps we can learn some valuable lessons not from a Fortune 500 company, nor a company with considerable public data. Perhaps instead we can learn something valuable from an unlikely organization in an unlikely industry, the legendary rock band, the Grateful Dead. This choice is made because of the volatility of the music industry, an industry where bands come and go on a daily basis, an industry where response to rapid change is a requirement and has been for many years. The Grateful Dead was also chosen because the author has been actively observing this band for more than 25 years and is well acquainted with its unique history and customer service.

Throughout their career starting in 1965, the Grateful Dead grew in popularity until 1995 when they disbanded after the death of lead guitarist, Jerry Garcia. They began playing in a pizza parlor in Palo Alto, California for $50 a night, and by 1973 they played to the largest crowd in U. S. history (estimated at 600,000) at Watkins Glen, New York. This is nearly twice as large as the crowd at Woodstock four years earlier. In 1991 total attendance at their concerts was 1.8 million with a 99.4 percent occupancy rate . Demand for tickets was always strong, and sales reached $52.5 million in 1994, the bandís last full year of touring.

While these numbers are impressive, they do not capture the remarkable fan loyalty that lies behind them. The bond between the Grateful Dead and the Deadheads (as their fans came to be known) was often a lifetime relationship. Some Deadheads even changed their lifestyles to better match the Sixties values of music, peace, and harmony. Many Deadheads moved to the San Francisco Bay Area where more concerts were played each year than anywhere else. Others planned vacations to match the bandís touring schedule. As many as 2,000 Deadheads ordered tickets for every concert during the summer tours of 20-25 shows . Over the years, a virtual community of friends developed among the Deadheads as they moved from concert to concert year after year and became a ìprofessional audience.î Many fans saw hundreds of Dead concerts over the years. Bill Walton, former basketball great and sportscaster, saw 600!

What could lead to this level of customer loyalty? What were the expectations of the Deadheads? How did the Dead match or exceed those expectations with the concert experience? Deadheads, like all consumers, have a set of expectations that determine their level of satisfaction with any product or service and the process of obtaining it. This set includes such things as the reliability or consistency of the product/service, its availability and accessibility, standards regarding tangible aspects of the product/service, concerns about the empathy and understanding shown regarding the process of obtaining the product/service, and responsiveness to customer needs and wants. How this set of expectations is met initially determines whether a customer is satisfied and retained, and over time it determines how loyal the customer will be for the long haul. If we examine each of these expectations held by Deadheads for the Grateful Dead, perhaps we can begin to understand the remarkable bond that developed between them.

Deadheads were looking for more than a canned performance that ìsounded just like the record.î They wanted live, improvisational music, music that required their attention in the ìhere and now,î music that was adventurous. The Dead were happy to oblige.

Their music was an amalgam of folk, bluegrass, blues, reggae, country, jazz and rock that had been born in the heart of the Sixties hippie revolution, yet continued to develop and grow through the years. No two concerts were ever the same, and the songs they played never followed a predictable sequence. Their active musical repertoire was 150 songs at any one time. Each song performance was different from every other performance due to the improvisational nature of their playing. In 1991 this author attended six concerts in seven nights and saw more than 100 different songs performed with only two songs being repeated. Thus, the live Grateful Dead concert experience could always be relied on to offer a unique product, one which continued to keep demand high and fans coming back for more.

Reliability for Deadheads was also concerned with the quality and consistency of the performances. When things went ìjust rightî at a Dead concert, there was a remarkable synergy between the band members as they played, and between the audience as well, that created a feeling of joy and ecstasy thatís difficult to describe. This was often referred to as the ìX factor.î The band was always seeking this special synergy or X-factor, and although they didnít always find it, Deadheads wanted to be there when they did. As concert promoter Bill Graham said, ìThe Grateful Dead arenít the best at what they do, theyíre the only ones who do what they do.î

Reliability of performances was also demonstrated by the attitude of the band members who were dedicated to playing as well as they possibly could at every performance. During an interview in 1988 band members said, ìWeíre just now starting to get good at this. Weíre just now where we wanted to be musically 20 years ago. Even an off-night it isnít too bad these days, but in the past it we could be really bad.î And rhythm guitarist and vocalist Bob Weir said, ìWe chase the music just as hard and as fast as we can.î Fans knew this was true and respected the continual effort by the band to excel in every concert.

Finally, reliability was demonstrated by the constancy of the musicians in the band. When the band was formed in 1965, the founding members were Jerry Garcia, lead guitar and vocals; Bob Weir, rhythm guitar and vocals; Ron ìPigpenî McKernan, keyboards and vocals; Phil Lesh, bass and vocals; and Billy Kreutzman, drums. A second drummer, Mickey Hart, was added in 1968. During their 30-year career, the personnel of the band stayed remarkably constant. Only on keyboards did they have any turnover in personnel. In 1995 during their last concert tour, five of the musicians had been playing together for 27 years, a remarkable achievement for any organization, and a further guarantee of consistency and reliability of performance.

Because their music was so varied and each performance unique, many Deadheads were not content to simply see the Dead perform once every few years and then fill in the time between listening to their records. They wanted the live experience and the possibility of the X-factor, and they wanted lots of it! The Grateful Dead again obliged them. For 30 years the Dead played an average of 77 concerts a year, more than 2,300 in all. This is completely unlike other successful rock bands that tour only every few years to support a new album. Moreover, concerts were typically two and a half to three hour long but could even run four hours. On a few occasions, they played all night long and breakfast was served to the audience at dawn!

Recognizing their fans were spread across the country and around the world, the Dead concert schedule typically included three tours across North America every year. They also toured Europe several times and even played at the Great Pyramid in Egypt. With this kind of availability, itís easy to see why fans could see so many shows.

In order to continue to satisfy customers, tangible aspects of any product or service must improve over time. This is another aspect of customer satisfaction where the Dead excelled. Their aim was to create the best possible sound at every concert, to reproduce their music as faithfully as possible, and to minimize ìlistener fatigueî produced by noise and distortion in concert sound systems. As a result, the Dead always had the most technologically advanced sound system in the world. In 1968, they helped establish a research and development group, Alembic, which constantly pushed the sonic envelope, and created many innovations now used in all concert sound systems. In the early 1970s, the Dead pioneered the first stereo concert sound system, the ìWall of Soundî, which used no stage monitors. The Wall of Sound weighed 38 tons, took as many as 40 employees to maintain, and required four tractor-trailers to transport. It was so cumbersome and expensive to maintain ($100,000 per month) that the band took their only extended break and did not tour in 1975. In 1991 the Dead pioneered the first fully digital concert sound system. The result of their efforts was the best concert sound in the world and the establishment of new industry standards. Deadheads quickly came to expect this high level of sound quality from all concerts but were often disappointed at concerts of other bands.

Another tangible aspect to the Grateful Dead concert experience was the lighting. The Dead were never concerned with creating a show or spectacle in their performances. There were no costumes, smoke, explosions or giant props that might distract from the music. But with their roots in the Psychedelic Sixties, light shows were always a part of their concerts. The lighting effects were always subtle and sensitive to the music but could ìcreate landscapes that are as naturalistic and intense as the [musical] jams, passing over the stage like bright sun, lightning, or starlight.î

Another unique characteristic of the tangibles associated with the Dead was their tickets. When they began selling tickets via mail order (see ìResponsivenessî below) the Dead began to add artwork to the tickets. Each concert bore a different Grateful Dead symbol ranging from roses to dancing bears to skeletons. Each ticket thus became a piece of memorabilia for the fans. New Yearís Eve concerts with the Grateful Dead became an annual party in San Francisco hosted by concert promoter Bill Graham for Deadheads. The tickets for the New Yearís Eve shows evolved over the years into spectacular pieces of art (see Exhibit 1).

A unique situation with their fans arose very early in the career of the Grateful Dead. Due to the improvisational nature of their music and the quest for the X-factor, fans began to clandestinely record their performances and then share them with friends. Although the band recorded their songs on record albums, the studio always failed to capture the dynamics of their live performances. The band recognized this, and for many years turned a blind eye to the covert taping. Finally, in 1984, the Dead officially recognized the ìtaping communityî and set aside a ìtaping sectionî at each concert with the stipulation that ìAudio taping is for non-commercial home use only.î As lead guitarist Jerry Garcia said, ìWhen weíre finished with the music, they can have it.î The sanctioned (and unsanctioned) recording of their performances has led to tapes being available for nearly every one of their concerts and made them the most recorded band in history. It is not uncommon for fans to have tape collections of hundreds of their concerts. A huge community of tape traders has arisen through the years, which trades the tapes with no money involved. This embodies the values of the Grateful Dead and the San Francisco psychedelic scene of the Sixties, as they gave away their music despite a recording career that included only one top ten hit single. Their customer-friendly taping policy is a clear indication of their empathy toward Deadheads and has been adopted by a growing number of bands in the 1990s.

The Dead also established a Trouble line, which gave Deadheads a real person to talk to about problems with tickets, venue security or any problem related to the band. This understanding by the Grateful Dead organization of the trials of getting tickets and traveling to see the band showed a remarkable degree of empathy and was another element that strengthened the bond between Deadhead and the Dead.

One decision by the band intended to be empathetic to Deadheads led to extremely challenging situations for the Dead as the following of fans grew. When there were fewer fans before 1985, the band allowed Deadheads to sell food and T-shirts in the parking lots before and after shows. Fans freely used Grateful Dead logos and icons without paying royalties. An unintended consequence was growing numbers of people who would come to the concerts with no intention of seeing the show but just to hang out in the parking lot vending area. This created logistical nightmares for the band and local officials who had to manage and police the crowds. A second unintended consequence was the loss of tens of thousands of dollars in merchandise sales and licensing fees to the band. Members of the Dead organization worked closely with local officials to minimize problems with the crowds and urged fans not to come to concerts without tickets. And in 1992, they began to carefully protect their trademarks and logos and began an ambitious licensing program often enlisting vendors from the parking lot scene.

As the Deadís popularity increased over the years, it became more and more of a challenge for Deadheads to obtain tickets. This was especially true if you wanted to see a concert in a city other than your own. In response to the concern expressed by many traveling Deadheads regarding purchasing tickets, the Dead set up a telephone Hotline and established Grateful Dead Ticket Sales (GDTS) in 1983. The Hotline was a recording of information about upcoming concert tours, special events, and band member information. This allowed Deadheads to easily determine when and where the Dead would be playing next and how to obtain tickets. GDTS quickly became responsible for selling up to 50 percent of the tickets for each venue directly to Deadheads via mail order, usually a month or more before they went on sale at the local venue. The Hotline and GDTS combined to allow Deadheads to find out when the band was playing and then easily order tickets in advance, a very responsive move by the band.

The Dead was responsive to fans in many other ways too. Many Deadheads believe that the music itself and even the X-factor were elements of responsiveness to the fans at concerts. Sometimes the music itself was clearly changed in response to Deadhead requests. One particular song, Keep Your Day Job, just wasnít well liked by fans, and after four years it was dropped from the repertoire in 1986 at the request of Deadheads !

The Grateful Dead continue to be responsive to their fans even today, three years after they disbanded. They continue to release recordings at the unprecedented rate of three or four albums every year. The bandís live performances from their 30-year career continue to be in great demand, and one on-going series of recordings is Dickís Picks. For this series, Grateful Dead tape archivist, Dick Latvala seeks considerable input from Deadheads, then chooses three or four concerts from the tape vaults to release each year. The Dickís Picks series is sold only through mail order from Grateful Dead Merchandising. Sales estimates for these albums range from 50,000-100,000 copies each demonstrating an on-going desire by the fans to continue listen to the music.

Today more than ever, retaining customers and gaining their loyalty is the key to business survival and profitability as we begin the new millennium. We often look to large organizations like Microsoft, Ford, or Southwest Airlines when we seek models for loyal, satisfied customers. But one organization that at its peak employed less than 100 full time employees had a level of retention and loyalty in its customers that is only dreamed of by most organizations. Deadheads, like all customers, weighed their experiences and compared them to their expectations. What they found for 30 years was a continually surprising level of reliability, availability, tangibles, empathy, and responsiveness in their dealings with the Grateful Dead. Jerry Garcia once said, ìIíd like to see what can be created from joy. î Having attended 193 Dead concerts over 20 years, this author believes Garciaís attitude toward the music and Deadheads was embodied in most aspects of the Deadhead experience. So look no further for a successful model of customer satisfaction, and remember that ìSometimes you get shown the light in the strangest of places when you look at it right. î

Case Questions
1. How would you rank order the importance of the five customer service characteristics exhibited by the Grateful Dead? Why?
2. Could any of the five customer service characteristics be used effectively by other organizations? How?
3. Now that the band has stopped touring, can the remaining Grateful Dead organization continue to retain the Deadheads and earn their loyalty? What steps will they have to take?

1. Adams, R. (1998). Deadheads: Community, spirituality, and friendship, manuscript in progress.
2. Adams, op cit.
3. Scully, R. (1996). Living with the Dead. Boston: Little Brown and Company; Troy, S. (1994). Captain Trips. NY: Thunderís Mouth Press.
4. Barnes, B. (1991, August). A conversation with Dead soundman Dan Healy, Unbroken Chain, 6, (3), 6-8, 17-18.
5. Shenk, D. and Silberman, S., (1994). Skeleton Key: A Dictionary for Deadheads, New York: Doubleday
6. Getz M. and Dwork, J. (1998). The Deadheadís Taping Compendium, Volume I, New York: Henry Holt and Company.
7. Hunter, R. (1990). A Box of Rain, NY: Viking; Scott, J. W. , Dolgushkin, M. & Nixon, S. (1992). Deadbase. Hanover, NY: Deadbase.
8. Greenfield, R., (1996). Darkstar, New York:
9. ìScarlet Begoniasî, (1972). Hunter/Garcia.