Luke Jekes, is the Former CEO of Naked Wines. He founded and led an online wine business that operates in the US, UK and Australia. Naked wines connects wine lovers and boutique wineries. They achieve this by using a subscription model. The consumers pay a monthly subscription to help fund the winery’s next vintage. They are then able to order their favourite wines. Their wines are paid for from their subscriptions. It’s a customer funded wine business.
I asked Luke how this came about.
He replied: “The most important thing in the wine industry is that the only way this 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?”
“We found that a segment of wine consumers need to see a choice, a benefit, a feeling of being in control and where they feel they can connect with the values of the business. 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”.
I asked Luke how this relates to customer-centricity. He said: “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.
I asked Luke what the result has been. He said:
“From a standing start 5 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.’
A customer obsessed business has loyal customers that buy from you because they want to. Who stay with you because they see that you care and that they are important. Businesses like Naked Wines create great customer experiences. They do this by investing in and empowering their people. This creates great customer experiences. This, in turn, translates into increasing customer lifetime value, sustainable profit and growth.
Dr Linden Brown is the author of The Customer Centric Imperative.
He will be speaking at the Smart Thinking Festival Parramatta. Limited tickets. Buy Now