Luke Jecks is Former CEO of Naked Wines International – an online wine business that operates in the US, the UK and Australia. He was also the founder of the Australian business. The company connects wine lovers with boutique wineries and uses a subscription model where “angels” – consumers who pay a monthly subscription to help fund the winery’s next vintage – are able to order their favorite wines and pay for them from their subscriptions. It is a customer-funded wine business.
Luke, what was your thinking behind the development of Naked Wines?
The most important thing in the wine industry is that the only way an online business could work would be if we could have consumers that were “sticky” to the business. If we could get loyalty in perpetuity we would not have to be a business that is constantly out there chasing new sales. Instead what we could do is invest in loyalty in the consumer and if we did that we would have a sustainable business.”
So we needed a model that did not trap consumers but made them want to stay. So the questions we had to answer were: How do you reinvent the wine club and its benefits with a subscription that had no cancellation fees, had no minimum period of membership, you could walk away at any time, and any money you put into the subscription you got back?”
In many markets around the world there is such a large variety of wine offerings from many countries that it seems it has almost become a commodity driven by price. In Australia, for example, the distribution of wine is dominated by two companies that together have 65%-70% market share. How can you disrupt a market like that?
In several markets around the world, like the one you describe, we found that a segment of wine consumers felt disenfranchised and want more than just the wine product itself. They need to see choice, a benefit, a feeling of being in control and where they feel they can connect with the values of the business. We also found that many of the boutique wine makers were being forced out of business by the large retail chains reducing their margins to the point of becoming non-viable. Yet they still loved wine making – so they too felt disenfranchised. So we saw the opportunity of connecting consumers with wine makers to help them fund the next vintage – and doing this using an online model.
What was the key to appealing to wine consumers?
We felt that to keep customers in the long term we needed to make them feel proud – because they mattered and were part of the key wine choices being made and understood their role in making the business a success and the winemakers successful. Also proud because they feel they are doing good through the stories behind the winemakers that can’t happen without them.
How did you develop a customer-centric culture?
For this to work we needed to develop a customer-centric vision, values and strategy that could align everyone in the business. I think you refer to this as strategic alignment around the customer.
To me you must have an “attract” model and not a “trap” model. It is a model where the customer plays a vital part in the success. So it is important for us to measure the customer lifetime value – that is how long they stay with us and how much they spend. That is much more important than today’s transaction. We believe that if we can get loyalty, we will get sales. We tested this by sending “high engagement” emails to half our consumers and “buy” emails to the other half. It turned out that the “engagement” emails created loyalty and those consumers bought more. We asked our consumers to rate their happiness with us. We found that people who rated us 5 stars (90%-100%) had much bigger lifetime value. So we set about investing to get 90%+ ratings by putting more people in the business, paying our staff more, investing in career programs for our staff and empowering them to empower our customers. The customer lifetime value concept was a key message for our employees that the ongoing customer relationship is much more important than a single transaction.
Can you give me an example of how you can see this customer culture in action at Naked Wines?
Yes, we have something we call a “giraffe” moment. This occurs when an employee “sticks their neck out” for a customer. One of the important consumer benefits is reliability of delivery timing of the wine because frequently this is ordered at the last moment for a party. We have many instances where our employees do whatever is necessary to get the wine to its destination in time – in some cases, when things have gone wrong, even delivering it themselves. Another example might be when a staff member has received high praise from a consumer for a particularly excellent job. These are celebrated by all staff as “giraffe” moments.
Another practice is that periodically we all meet to consider proposals by employees for improvement in our service or solutions for overcoming a problem being experienced by our customers. One proposal considered some time ago was how to make it easier for sight-impaired consumers to order the wine they loved. These types of activities fuel the passion of our employees and connect their own goals with the business’s objectives – to give a superior experience to our customers and retain them as long term advocates.
What has been the result?
From a start-up just a few years ago Naked Wines now has more than 100,000 “angels”. But more important than this number is the high level of loyalty. This has created a growing, profitable and sustainable business in three continents.
A truly customer obsessed business has loyal customers that buy from you because they want to – and stay with you because they see that you care and that they are important. It is a business, like Naked Wines, that has a clearly defined customer-centered strategy and invests in and empowers its people to fully engage with their customers to create great customer experiences. This translates into customer loyalty and advocacy that increases customer lifetime value. Sustainable profit and growth follow.
- The Customer Culture Imperative: Is Marketing Destined to Lead a Better World?
- Customer Culture: An Interview with Peter Cooke, President, Wright Medical International
- Customer Culture: An Interview with John Stanhope, Chairman of Australia Post
Dr. Linden Brown and his team at MarketCulture in Silicon Valley conducts research on the concept of customer-obsession with the world’s top organizations – Amazon, Google, Apple, Starbucks and many others. He is a renowned Professor who has taught at universities around the world including INSEAD (France), Cranfield (England) and the University of NSW (Australian Graduate School of Management). He has also conducted leadership and skills development programs at many of the world’s great corporations.