From the source: John Winning, the Winning Group
A few years later, he launched Appliances Online as a pure play retailer in 2005.
He is now the CEO of the Winning Group, which also includes other brands such as Winning Appliances, Home Clearance and Handy Crew. The Winning Group now employs more than 500 staff.
At the Retailer Awards this year, Appliances Online picked up the top gong for Best Online Customer Experience of the Year.
How has 2017 gone for you guys so far?
We’re going really, really well. We’ve opened new store, we’ve had the best like-for-likes at Winning Appliances. We’re excited about the soft opening of our Fortitude Valley store, it will be officially opened in June. We have officially opened our Canberra store in Kingston – it’s our biggest showroom we’ve opened. We call it the flashest showroom in Fortitude Valley – it’s not small by any means and it’s our second biggest showroom, but it’s a really glass and class, phenomenal experience that we think people from Brisbane will really enjoy.
We have two commercial businesses – Winning Appliances Commercial, on the back of strong building sector growth over the last couple of years, and Appliances Online Commercial, which deals predominantly with real estate agents, property managers insurance companies rental businesses and retail managers. There’s a new manager in that business called James Malone who’s hit the ground running and the team’s going great. It’s six years old – it’s still in its infancy but it’s had big growth numbers and we’re really happy with the success of that.
Appliances Online is onwards and upwards. We’re happy with the way we’re trading. We opened up warehouses and began offering free delivery to most of Tasmania at the end of last year. In the middle of last year, we began offering free delivery in Darwin and the surrounding suburbs.
We also opened a distribution centre in Townsville and we’re working to push free delivery to Far North Queensland, which will be the a last piece of the delivery puzzle, then almost all 95 per cent of Australia will have free delivery with full bells and whistles – free connection, take away old packaging.
IRW: Appliances Online has some very impressive delivery offers for customers. What’s it like managing all those logistics?
JW: We offer 14-day free returns – you can cook in an oven you’ve bought from us and still return it for free two weeks later if you’re not happy with the quality. There’s some stuff we do which is absolutely world-first. We want the customer to be happy and we appreciate it’s not about having a great experience on the website and having a great delivery experience, then getting a product and realising it’s not what you want. If you visit any of the major retailers, you can still walk in there, look at an oven, get sold by the salesperson, get it home and not like it.
On our site, we take you through all the ins and outs of the oven, but how can we as an online business get an advantage over a traditional store?
There are free returns – it’s not anything traditional retailers in our space offer. When someone is buying an oven or a washer, they just don’t know what it will be like until they’ve used it. You can’t just walk into a store and try the oven, try the cooktop or try the washing machine.
So if someone isn’t happy with the product he or she buys, we don’t make them live with it for the next 10 years. We say, ‘Yes we’ll change it’.
IRW: You’ve owned your own delivery from the beginning. How’s that going and what are some of the challenges of that?
JW: We’ve been slowly working towards 100 per cent of delivery done with our own trucks in [all of Australia]. We’re currently at 98 per cent of all large bulky items, with all our full-time contractors trained by us and in our system that we control. We are now working on trying to move some of the small appliance stuff and do that as a premium service with our own trucks.
We started doing 100 per cent of Sydney, and then it was a five or six year effort to open warehouses in Sydney, Melbourne, Brisbane, Perth and Adelaide. In the last five years, we’ve been trying to reach the regional areas with our own trucks.
We’re not a retailer, we’re a logistics business that happens to sell appliances. That’s the truth of it – half our staff is in warehousing and logistics, so it is the biggest part of our business. With Appliances Online, customers don’t see anyone except for our delivery driver – that is the only face that he or she sees.
It’s really tough, but it’s those challenges that make [delivery] hard. If it was easy, everyone would be doing it and we wouldn’t have a competitive advantage.
Where do you see yourselves in the competitive landscape?
JW: We see ourselves having somewhere between five to 10 per cent market share overall.
There are still lots of people walking in our stores, 50 per cent of them are walking in and not buying off us. I’m not going to worry about what the other competitors are doing, I’m thinking, ‘How do I convert that 50 per cent?’ If I look at our website, there’s over 90 per cent of the people that visit our website who aren’t buying off us. So how do I convert them?
If you look at the major numbers, we’re close to being the third biggest player in the market for major domestic appliances. There’s almost a duopoly with JB Hi-Fi, Harvey Norman. Good Guys merger, but we’re not too worried about it. We think customers want choice, but there are a lot of ‘me too’ brands out there and it’s hard to differentiate between JB Hi-Fi, Bing Lee, Domayne and Better Electrical. They’ve all got four walls, they’re a pretty similar size, with pretty similarly experienced salespeople on the floor, similar brands, similar marketing strategies, similar delivery, similar in-store experience all the logos all look the same.
Basically, customers are just going to the store that’s closest to them. They’re all pretty competitive, they all start with the price, you negotiate them down, they’ll give you probably 10 to 20 per cent off, you do the deal and go home, satisfied.
But we want to be the place where you go home and you’re absolutely wowed by the experience. We don’t want to just satisfy our customers.
We’re probably close to the third largest retailer from a competitive point of view. But we think we have a whole bunch of competitive advantages – free removal and disconnection of old appliances, free unboxing, free removal of packaging, 24/7 customer support. You’ll have a service liaison after buying the product for the life of your goods, when that dies in or out of warranty, just make one call to us and we’ll get that fixed for you.
IRW: What are your opinions on Amazon coming to Australia? Do you see it as a threat to your business?
JH: I think a lot of our competitors are going to get really screwed by Amazon. If you look everywhere else they are in the world, they go very competitive on price. So if you’re a retailer that’s like everyone else and the only competitive advantage is how you negotiate on the shopfloor to or how you perceive your brand to be cheap in advertising by screaming, ‘Sale, three days interest-free!’, if that’s all you’ve got, you’re going to get screwed over by Amazon because they’ve got bigger pockets than you. They’ll come here aggressively, they’ll have a much lower cost of doing business and they don’t mind losing money because they’re making it in other areas.
If your only business is being in a sector – appliances, furniture, bathrooms or whatever – you’re going to find it really tough to compete unless you have a point of difference.
It’s like Uber. In Australia, Uber comes in and has no problem getting market share because people hate taxis. Before Uber existed, if you asked people what the taxi experience was like, they’d say, ‘I can never find one. When I call them, they never give me a time they’ll come to our house. The cab smells. The guy never knows where he’s going’. The cabs weren’t a great experience. So when a better experience came along, people were happy to just quickly ditch the taxis and go to Uber in Australia.
But if you look at London, there’s a very loyal customer base for cabs. Why? Because they run a really nice business. They know exactly where they’re going, there are lots of them so you can usually get on easily, the drivers are super friendly, they take you where you want to go in an efficient time and the cabs are clean.
Then Uber came to London. On paper, it probably has a small competitive advantage over London cabs. It’s probably on the payment.
In Australia, in every aspect, Uber is better than Australian cabs, so they quickly got market share here. But in London, Uber is struggling to get the market share they have everywhere else because the London cabs are running a good business and that good business built loyalty.
So when Uber came along, people thought, ‘You know what, maybe Uber is five to 10 per cent more convenient. But I’ve got a habit now and these guys have always looked after me and were always friendly, so I’m going to give them some loyalty.’
What has that meant? It’s meant that London taxis have had some breathing space. They’re still busy, they haven’t lost all their revenue and they’re re-investing heavily in tech to allow for automatic payments and tracking the cab to your location, so they’re going to quickly close the competitive gap to Uber.
If you don’t have a loyal customer base, you’re not going to be given the leeway to close the gap. They’ll just jump ship straight way because they don’t like dealing with you. You’re just a necessary evil.
We’ve spent 14 years building up a loyal customer base, just by looking after our customers and when Amazon comes, I don’t believe they’ll have a competitive advantage over us. If anything, if they’re willing to lose money, they’ll have a price advantage, but it’s a small advantage over us and we’ll have a bunch against them.
But for a company that only competes on price and their differentiation is that they’re perceived to be cheaper and will negotiate harder on the shopfloor, you’re going to get really disrupted by Amazon. I don’t think we have that problem.
IRW: I know you still pick up the phone and handle customers sometimes. Do you think it’s important you stay close to the grassroots?
JW: In my opinion, there are really only three important people that I can say matter to the business – shareholders, staff and customers. To me, shareholders care about financials – the financials will tell the shareholders how the business is going.
If you want a lead indicator for the financials, look at the customers. So for me, if I want the financials to keep going well, I need to be across the customers. How do I make sure the customers are happy? We run Net Promoter Score. Every single person is given a survey, so they get an opportunity to tell us how their service was.
We have a whole team dedicated to reading that feedback and making sure that every single customer that was unhappy when they first got that survey ends up being happy. Then obviously there’s an escalation process and I get to talk to those customers. Outside just their response to a survey in typed words, I want to hear from their mouth, what went wrong. What did you expect? How did we not meet expectations? How did we let you down and how can we fix it for you and make you happy? That’s an important part.
If you want a lead indicator for how happy your customers are, how do you make sure your NPS score is high? Go up the chain to your team. If you have a happy team, they’ll happily serve your customers and your customers will happily get a great experience. Your shareholders will be happy because your numbers will be good because you’ll be making a good profit.
So for me, that’s the missing piece of the puzzle in my mind for most businesses. Most of them care about customer experience and are onto Net Promoter Score or a similar program to measure their customer satisfaction and hopefully they have a team dealing with it and constantly improving that.
Where I think that almost every business falls over is in their staff engagement. Best practice right now is sending out an annual engagement survey to your team – fill out this 15-30 minute survey then we’ll get a third company to review it. Then we’re going to make an annual change to everything we think we can improve to make you happy.
But people can be unhappy within a week if you change a manager or business process, and if you do that right after an engagement survey, that’s a staff member who’s unhappy and dealing with your customers for 12 months before you can fix anything or give them a voice.
We’re working internally on getting much better reporting tools to speak to our staff weekly and get constant updates on how they’re feeling at work, where we can make improvements, what’s going well and what’s not going so well. That’s the biggest gap for most businesses, and something I think will need to be addressed in the future.
IRW: What is some of the work you’ve been doing in the neuroscience space?
JW: It’s an ongoing work in progress. We have a research and development team, we have someone who heads up data and innovation, someone who heads up neurostrategy and we have a whole bunch of data scientists – we run a lot of experiments around data, personalisation and UX. All the pieces of the puzzle work really well together.
We are good at collecting a lot of data, because you have so many interactions and touchpoints with customers. At a glance, they might not mean anything, but when you put them together, you’ll see some trends you can enact on. We built an in-house tool called Boiler Room that will automatically filter and analyse the data and you can find some real quality insights in there.
In terms of strategy, we’re trying to take the data and not treat everyone as an equal. Traditional with big data, you’re a user, I’m a user, the next 10 people are users and we’re all treated equally, even though we act in different ways. That’s a hidden piece of the puzzle most people don’t understand.
But actually, we’re not all the same, we’re all human beings, but we act all differently. The best way we can dissect that is not by traditional segmentation that might say, ‘OK, take
a 61-year-old male who earns over $1 million a year and put him into a bucket.’ You could have Prince Charles and Ozzy Osbourne in the same bucket, but it doesn’t take a rocket scientist to know that even though they both earn the same amount of money and they’re male and 61, they’re going to have very different behaviours.
So we look at it completely differently. The best way to segment people is to find a system to work out someone’s personality profile. We try to work that out using the limbic system. Internally, we’ll put a customer in one of seven buckets if we’re able to work out their personality profile. The benefit to the customer is they’ll get a much better tailored experience.
For example, I’m the complete polar opposite to my dad in terms of personality profile. We’re similar in many ways, but we act completely differently. His profile is a traditionalist. I’m an adventurer – I love taking risks, I love new things, I am willing to try the latest and greatest gadget and I have a short attention span and very little loyalty.
My dad has extreme loyalty, hates change and is completely risk-averse. We want him to have an experience on Appliances Online that really suits him and gives him brands that he knows and trusts with really simple and easy-to-understand specifications and speaks in a language that he can understand.
For me, I want to know about the latest gadgets, show me the brands people aren’t using yet, I want to be a trendsetter. I don’t mind that I’m trying a product that doesn’t have 200 reviews – I’m happy to be the first person to try it and go for a Robot Vac or whatever it is.
IRW: What plans do you have next for The Winning Group?
JW: We’ve got two exciting new business that aren’t in retail. One is around logistics. We’re providing logistics and warehousing for third parties that we’re excited about. We’ve had a really good response and happy customers.
The other one’s not in logistics or retail, but watch this space. We’re very excited about it. It should be happening in the next six months.