Established businesses everywhere are under attack. The headlines are full of stories of business disruption. Entrepreneurs everywhere are building companies to unseat the entrenched firms.
While many think the answer is to invest in more technology, lobby government or follow their competitors actually the answer is right in front of them.
Our team in Sydney recently had the chance to sit down with Luke Jecks, the Global CEO of Naked Wines for his perspective. Listen to Luke talk about what he describes as the Kryptonite for disruptors, its a great lesson for anyone in business today:
So what’s the Kryptonite for disruptors? A Customer Culture or as Luke puts it:
“Love your customers”
If you spend time understanding and acting on your customers’ needs you will create loyalty that will keep you as immune as you can be to disruption.
So how did Naked Wines disrupt the wine industry?
Before Luke set up Naked Wines four years ago he was looking for an industry where customers felt disenfranchised. He found it in the Australian wine industry – a market dominated by two large retail chains owned by Coles and Woolworths that between them shared almost 70% of wine sales nationally. Not only did he find wine lovers who felt little connection with the vast array of brands but also boutique vineyards that were being squeezed out of the market by ever-narrowing margins and an inability to finance the next vintage.
Luke knew that if he could create a personal connection between winegrowers and consumers and a financial model that could provide more stability and certainty for wine growers he could build a new business.
He realized that he needed wine consumers as repeat customers and he came up with the idea of “angels’ – that is consumers as angel investors who would pay $40 per month and build up a credit in their account to be used to buy the boutique wines of their choice.
Four years after launch Naked Wines in Australia has more than 50,000 sustained angels, more than 35 boutique winery suppliers with an online communication and ordering system that connects them.
Annual Australian revenue of $30 million and more than $200 million globally is a testament to the fact that the whole Naked Wines team have a culture that enables them to “love” their customers.
Isn’t it time to create a customer culture in your business and build up your disruptor defenses?
Posted in Case Study, Customer Centric Culture, Customer Centric Leadership, Customer Culture and Profit Link, Customer Experience, Customer Insight, Customer Service, Disruption, Market Culture in Action, Uncategorized
Tagged customer culture, Customer-Centricity, Disruption, innovation, luke jecks, nakedwines
The insurance industry is facing a shake-up. The traditional model using specialist agents who communicate with their customers around the time insurance premiums are to be renewed and offer generalist solutions is being disrupted.
- Consumer needs and demands are changing. Independent online research sources enable consumers to buy online, compare alternative offers and enhance self-service choices. Insurers will need to offer more personalized products that take account of individual circumstances and provide more transparency in their pricing.
- Sites such as Friendsurance enable friends to pool their premiums and is an example of how social networks are bypassing traditional insurance companies. As these grow they will impact incumbents.
- Car manufacturers are looking to add value to their offerings and through technology will have the ability to offer tailored insurance based on a driver’s history rather than industry wide statistics. Just as they bundle in car servicing they have the ability to bundle in insurance as an overall car package.
- As more car sharing takes place and the number of low frequency drivers increases premiums can be restructured to cover “pay as you use”.
- Many new competitors will be pure play online companies as we now see with specialized travel insurance companies like 1Cover. There will be many specialized market niches for them to attack.
Incumbent insurance companies will need to build a cultural capability around customer and competitor foresight – a capability that is attuned to future customer needs and future competitive threats. This will require a cultural agility that enables them to innovate and act before customer changes and new competitor models break the floodgates and seriously erode their businesses and their future.
Is your company being disrupted or a disruptor?
You can read more about what you must do to build customer and competitor foresight in The Customer Culture Imperative.
In any large successful business today parts of the business are performing well while other parts are ailing. Multinationals like Ford Motor Company and Starbucks are performing well in some countries, but not in others. Samsung and Ikea have high market acceptance of some products, but not others. But, what’s important is to determine if your core business model is under threat. If it is, your very survival is at stake.
Consider what is happening to the traditional postal service corporations like the US Postal Service (USPS), Royal Mail (UK) and Australia Post. Virtually all national postal services originated from government owned and legislated monopolies when letters were the primary source of written communication. These organizations created thousands of bricks and mortar post offices and shops, a large transport infrastructure to deliver letters using thousands of postal staff. The digital revolution has changed all that – letter volumes are declining rapidly, with consequent ongoing and growing losses for incumbent mail services. The business models of traditional postal corporations are under attack from all sides.
Take Australia Post. Like many postal corporations it has developed a growing profitable parcel delivery service fuelled by online consumer purchasing. It is providing new services like its digital mailbox for business and consumers. But profits from these new lines of business are being eroded by losses in the traditional letter delivery business and from competition. Both Singapore Post and Japan Post have purchased courier companies to compete in the Australian parcels delivery market. Also Uber Rush is allowing people to order pickup and delivery of packages using the Uber app. Last year Volvo trialed a service called Roam Delivery that allows retailers to drop off merchandise inside your parked car. All of this adds up to intense competition for Australia Post. Much the same is happening to US Post and Royal Mail as well as other incumbent mail and postal services around the world.
How can organizations like Australia Post survive? They must develop and strengthen a customer-centric culture as the foundation of their organization and as a basis for long-term competitive advantage. This means that they must have strategic alignment with their markets and customers where an understanding of current and future customer needs and current and potential future competitors is factored into their strategies and supported by everyone in the business. This knowledge and mindset must become embedded in all of their businesses and throughout all functions in their organization to enable them to become more agile, competitive and innovative to create superior value for their customers. That in turn will help to drive ongoing growth and profitability.
The postal organizations around the world seem to be at different stages on the journey to customer centricity. New Zealand Post is probably one of the most competitive being one of the earliest to have its mail service deregulated in 1998. It is now two years into a 5-year transformation plan and is showing improvements in overall profitability. USPS lost US$5.5 billion in 2014 despite its growth in package services and has a lot of ground to make up. Australia post is profitable, but profits are declining from the impact of mail service losses and there is now a strong focus on developing a customer culture.
Is your business model under threat? You can measure where you are in terms of customer centricity and what stage of the journey you have reached by exploring the roadmap provided in the award winning book: The Customer Culture Imperative: A Leader’s Guide to Driving Superior performance.