Naked Wines: Voucher Marketing

How did you think about the vouchers and promotional activity, more broadly, and brand equity and your brand? The textbooks would say, the more you promote, the more you advertise, it’s going to reduce your brand equity. How do you think about that?

In a sense, we had no choice, at the beginning. To get momentum, we had to build a customer base, which meant we had to do whatever it took to get those people in. We do challenge ourselves to see if there is a better way. What we find, over time, is more and more people are just coming to Naked off their own volition, not waiting for a voucher. The textbooks would say that a strong promotional tactic like that is against your brand equity, but I think the reality is, if the core of your business has an authentic idea at the center of it, that’s the thing, in the end, that determines how people feel about your business. Whether they came in through a voucher, a recommendation, or whatever, becomes less relevant.

What was your biggest challenge retaining customers?

Delivering. The thing that drives people hyperbolic, is when the delivery goes wrong and it’s not in our hands. It is the experience that makes or breaks a customer relationship. If you think that our average customer relationship is seven years, four orders, per customer, per year, is 28 orders. You only need a 3% failure rate for every single customer to have a bad experience. We just had to be really on the ball. First of all, we had to find a decent delivery partner and working closely with them, for a good experience. But also, proactively tracking stuff, so that if the delivery went wrong, we don’t wait for the customer to phone us, to tell us that their wine isn’t here. We track it at every step of the way and the second that we know that a delivery made it to step 11, but not step 12 or 13 or 14, we don’t wait for the customer to phone. We immediately reorder and start the next shipment and tell the customer. Something has gone wrong with your delivery; we’re not 100% sure what, but we’ve reordered. It is on its way. By the time the customer confronts the fact that their wine isn’t turning up when they thought it was going to, it’s probably the next day and it’s already done for them.

Coincidentally, that also turns out to be cheaper. If you wait for a customer to tell you, they don’t tell you once, they tell you about five times. One of those will on Twitter, one will be on Facebook and all that kind of thing. So proactively monitoring and telling customers, sorting it out, before they tell you to sort it out, turns out to be good for your brand and good economics.

Were delivery issues the reason why most customers churned?

Yes. I think, the second biggest reason is financial. In January, all the bills will turn up and you’ll see a lot of people cancel. But it’s amazing how many of those people are back by April, once the shock of Christmas has worn off. One of the things we do is, when shit happens in people’s lives, like they get laid off or something like that, we try to be the one company that doesn’t go, oh, you lost your job, we’re cutting you off. Just treating people with respect. 90% of people who lose their job have got another job within a few months and they remember the fact that we the company that treated them with dignity.

It’s so funny how these things come back to basic human empathy or respect. So many of these large companies or conglomerates, the big wine players, it’s hard to have that relationship with the customer.