I was recently speaking with Michael Houlihan, co-founder of Barefoot Wines. This is the story of how two people overcame remarkable odds and built a beloved brand that transformed the wine industry. It is hard to believe that such an iconic brand as Barefoot Wines began in a laundry room of a rented farmhouse in the Sonoma County hills. Even more surprising is that the people who started it were just an average business couple, Michael Houlihan and Bonnie Harvey. From the start, with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and strategic alliances, while pioneering Worthy Cause Marketing and performance-based compensation. They successfully sold the brand to E&J Gallo in 2005 and Barefoot is now the largest wine brand in the world. (ref The Drinks Business June 2014 London)
What were the challenges to starting a new company?
Everything! For example, we had no experience in the wine industry, and no capital. These challenges became opportunities. Lack of capital forced us to be resourceful. Our laundry room became our office. An old door became our desk! Because we lacked experience, we questioned everyone who touched our product, from clerks to buyers and from distributors to forklift drivers. We got real practical answers, not always available from the C-Suite. From buyers and clerks we learned what wine package was needed in the market, rather than what we wanted to produce. From bottling line managers we learned what labels work and which ones don’t and why. From a fork lift operator we got color specific cartons to reduce miss-deliveries. The list goes on and on, and we built Barefoot on the backs of these challenges, so they were actually gifts in disguise.
Our lack of capital also helped us stumble on a marketing method we called Worthy Cause Marketing. We didn’t have money for advertising so we partnered with small local nonprofits and worthy causes. Instead of money, we donated wine to their fundraisers, our time to their events, and our ability to take their cause to the marketplace. When we started to see our numbers climb in local territories, we continued to support non-profits in market after market to grow the brand nationally. It worked so well that even when we had the money for conventional advertising we continued with worthy cause marketing. It felt great to help causes we held dear like conservation, human rights, clean oceans and beaches. The members of the nonprofits now had a social reason to buy and spread the word about our brand.
Because we really didn’t know too much about the wine industry, we ended up revolutionizing it. When we started in 1986, wine was formal and exclusive. We made it fun and inclusive. The industry thought a wine with a foot on it would never sell. They though our slogan, “Get Barefoot and have a great time!” belonged on a beer, not a wine. Ironically it was the formerly exclusive beer drinkers who crossed over to this more fun, friendly and approachable message. Our initial fan base was folks who didn’t like wine. They thought it was too snobby. Barefoot also appealed to moms shopping for a Tuesday night wine.
What do people look for in the customer experience?
Customer experience is about meeting and exceeding expectations, it’s that simple. It’s also critical understand exactly who your customer is at every level between you and the ultimate consumer. What is their specific expectation, from you own people to your distributors, jobbers and middlemen, from your retailers to their clerks and from the general public to their communities? At Barefoot we took an expanded view of customer service that addressed every level in the channel by identifying and satisfying each one’s specific needs and expectations.
As we said, we asked questions to everyone who touched our product at every level, and this includes the consumer. But focusing solely on the consumer without regard for our other customers in the chain to get to her, would have resulted in the out-of-stocks, unstable pricing, and poor third party service that our end user did not expect. We found out quick enough that the general public customer experience was dependent on the distribution and retail customer experience. A great customer experience is what brand loyalty is all about. Consumers will always blame the brand for any distribution or retail problems. Our expanded view gave all our partners what they needed to provide the ultimate customer experience.
Barefoot was one of the first beverage alcohol products to list an 800 number on its products. Of course, every now and then we would receive an interesting call, but by and large we learned what customers wanted and what they liked and disliked. We saved a ton on focus groups and listened closely to this feedback and navigated accordingly. This not only helped us meet and exceed customer expectations, but helped us develop new products, and keep the aspects of our wines that were popular to build customer loyalty and longevity.
When we started getting complaints that our customers “couldn’t get a full measure” because the fill lines were inconsistent, we went to our production people who said to tell them it had to do with atmospheric pressure and temperature. They said without an air gap the corks would blow in hot weather. Instead we told the customers that they deserved a solution. At a party several months later, Bonnie was admiring a woman’s skirt. Was it the fabric, or the weave she liked? No she said, it was the middy length that covered the knees and showed off the ankles. That was it! We created a longer closure cap that covered the fill line no matter what the atmospheric pressure was doing to it! It was a little thing but it gave us just one more subtle advantage.
How did Barefoot attract and keep such loyal customers over the years?
We kept providing exactly what our customers wanted: a fun, approachable, wine staple that was always in stock, delivered high value and consistent taste profile. This took a lot of diligence on our part, and required a vigilant representative in every territory.
The customer experience in any business should put the customer on top. Many organizations say they put the customer on top, but then put sales and customer service on the bottom of the corporate pyramid. Pyramids are for dead pharaohs aren’t they? Customer service is often relegated to “complaint resolution.” Sales are somehow separated from the office and relegated to a lower status. Yet these two teams are the only ones that speak to the customer every day.
Our company had only two divisions, Sales and Sales-support. Everyone who was not in Sales was in Sales Support no matter how removed their job may appear. We enforced this concept by making everybody’s bonus based on sales, growth, and profitability. We made sure they all knew how the money got from the consumer through the retailers, through the distributers and ultimately into their pay checks and bonuses. We had regular meetings where the Sales and Customer Service teams would address the marketing, production, administration, and everyone else about current customer needs at all levels and shifting market conditions. This kept us relevant. Most of our breakthrough ideas came from the most unlikely sources like the janitor, bookkeeper, and the receptionist.
We also found getting the word out through Worthy Cause Marketing allowed our brand to stand for more than its mercantile value and help numerous important causes at the same time. It gave our people a sense of pride and a feeling that they were making the world a better place. It gave the membership of those non-profits a social reason to choose our product and spread the word. It gave our customers who supported those causes a way to participate through their purchases.
It was our comprehensive view of customer service that gave our customers the experience that earned their loyalty.
What are your plans for the future?
We are sharing the lessons we learned, sometimes the hard way, with aspiring, start-up, growth-phase and established entrepreneurs. We do this through speaking, training, webinars and publishing. Last year we spoke to 30 schools of Entrepreneurship and delivered keynotes at 10 professional conferences here in the US and around the world. One of our turn around clients made the Inc 500 last year.
Our NYTs Bestseller, The Barefoot Spirit, How Hardship, Hustle, and Heart Built America’s #1 Wine Brand is a business adventure story designed to entertain and inspire a new generation of entrepreneurs. It is broadly used in universities across the country. Its companion, The Entrepreneurial Spirit, 23 ways to Engage and Empower Your People was just released at the C-Suite National Conference and is a practical guide for corporations that want to infuse the entrepreneurial spirit into their culture. We really enjoy helping companies achieve their goals by establishing the firm cultural foundation to deliver an exceptional customer experience.
To learn more about The Barefoot Spirit go to: http://thebarefootspirit.com
To listen to my interview with Michael and his partner Bonnie on The CEO Show go to: http://ceoshow.com/index.php?page=shop.product_details&flypage=flypage-recent-