Monthly Archives: November 2014

The power of loyalty

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I logged into my Amazon Prime account tonight to order a few Xmas presents.

Amazon Prime is a major bonus for Amazon and great for customers too. I noticed in 2014 that I had ordered from Amazon 120 times!!

That is 11 months, so over 11 orders per month from Amazon. I could count on a single hand the number of orders online from other vendors.

We discussed the power of loyalty for Fine Coffee Club on Friday and one of the things we decided to implement is a VIP club. Inspired (as in copied) from Zappos, we plan to offer an upgrade to First Class delivery for customers who spend more than a couple of hundred pounds, its a small touch but great for us and also great for the customer.

I am just too lazy to try and shop around – even on the Amazon Marketplace – quick delivery is so important to me.

Claire will not order from an apparel site if they don’t offer Free Returns – so it isn’t just me!

Net Promoter Score

At Fine Coffee Club we have integrated NPS (Net Promoter Score) into the system and after 28 days you automatically get a NPS survey request.

It is broken down into a few areas:

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It is pretty simple and although not using the classic 10 point score it covers website, delivery, capsules and coffee. The comment box is followed up by our customer services team on a daily basis to ensure that the loop is closed on comments. Positive or negative comments are individually dealt with and marked as dealt with within the system.

It really has allowed us to focus on the issues within the business and stopped us spending time on the wrong issues. There is a lot of opinion about delivery, website etc but the NPS score clearly identifies the issues based on what customers think (putting customers at the centre of the feedback loop)

I have some great stats that really allow the team to make some major decisions – all from customer feedback.

Ignore it at your peril!

FMCG and e-commerce

It seems more and more evident to me that one of the last areas of traditional e-commerce to go mainstream is Grocery.

Most FMCG (Fast Moving Consumer Goods) brands are hugely dependent on the retailer (Multiple or otherwise) to drive volume in terms of sales. Anyone launching a consumer product first thinks about selling it to Tesco, then once this doesn’t work thinks about selling to independents (usually with an excuse about not wanting to work with Tesco!).

Apart from Diet Chef there are some great examples of brands that have grown online and are potentially looking to drive into retail as a secondary activity. Selling online has it’s advantages but also makes things hard. Delivery and distribution costs are pretty fixed no matter if you are sending 1KG or 30KG, costs of warehousing, staffing and IT are the same.

Many existing FMCG brands play at selling online. They think it will be the solution to the problems they encounter with retailers, it isn’t. On many occasions it causes massive conflict. A retailer is in control of the price that they sell the product to consumers at, you cannot specify exact retail prices – just suggest them. If you start to sell online at a lower price than the retailer they complain, if you sell at a higher price – the consumer heads for the retailer.

The advantage of selling online is not about improving margin but having a direct dialogue with the consumer lets you understand problems with your products on a daily basis. This feedback is invaluable to any FMCG brand and most spend thousands of pounds a year to get this level of insight.

There are a number of companies popping up using the Internet to sell directly to consumer but I have some simple rules and guidance that I follow to make it work.

I will cover some of the pitfalls of FMCG brands selling online in the next few blog posts.

Sticking at it..

Lots of startup businesses give up at the first sign of problems. This is a great pity, as running a business is really an endurance race rather than a sprint.

Unfortunately most business stories we read about skip over the years of effort, planning, experience and knowledge that go into most startups. Founders are often looking for short cuts for growth or get rich quick schemes.

I know from personal experience is that although it takes much longer to get to a comfortable business state when a journalist speaks to me I skip conveniently over the years of hard work and obstacles that you need to overcome.

The excitement of starting up is usually dulled by the focus, knocks and diversions that happen in everyday business.

The simplest way to get over this is not to set unrealistic timescales – something that entrepreneurs really struggle with – they are all optimists.

When will it get easier when running a business – the answer is really never!

But we don’t do it for an easy life, if we did we would be working in a nice comfortable cozy job, clocking off at 5.30 and not taking the worries and issues home with us everyday.

It sounds attractive, but I would much rather forge my own destiny.

Tesla Q3 stock update

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Tesla announced there Q3 2014 results on the 5th November 2014.

It was a mixed set of results but I listened to the Q&A with Elon Musk and Deepak Abuja the CFO. It was an interesting call.

We seem to be heading for some significant growth over 2013 with a slight fly in the ointment over the reconfiguration of the Tesla Factory for the production of the Model X. For prospective owners of the Model S or X the range of features available (for example colours and models) has been streamlined to reduce the manufacturing options which is a very smart move.

As a customer, I think that options are great, but there can be too many choices, especially around models and colours. I personally regret not going all out for the P85+ rather than the P85, but that is the benefit of hindsight.

I think Tesla doesn’t believe that demand is the problem, so why offer so many choices. Typically choice is something that you use to get the last 10-15% of customers rather than the 90%.

As a shareholder I am fairly confident that they are in a good place to achieve the growth they suggest. The margin they make as an automaker is much higher than the peer group and the high price point does say they don’t need to sell too many cars. In fact they reduced guidance from 35,000 cars this year to 33,000. This isn’t a seismic shift but a blip due to the issues of complexity of supply chain and reconfiguring the line (around 2-3 days production capacity lost in a project that was certainly more than 2-3 days to complete).

The stock is up around 50% this year, I expect the market to open up this morning and I am keeping hold for the long term and might even buy a little more.

As a customer, shareholder and watcher I couldn’t be more impressed with Tesla as a company.