Luke Jecks, the Former CEO of Naked Wines, founded and led an online wine business that operates in the US, the UK, and Australia. 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.
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 has been the result. He said:
“From a standing start 5 years ago Naked Wine 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 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 invests in and empowers its people to fully engage with their customers to create great customer experiences. This translates into increasing customer lifetime value. Sustainable profit and growth follow.
Hear more from Luke in this previous post – “What is the kryptonite for disruptors?”