Jugoslav Petkovic of Flaviar: “Shine through Service Recovery”

Shine through Service Recovery. Double down on making things right when things go wrong. You need to pay close attention to how well you’re enforcing your quality of service from the get-go. How efficient is your order and package tracking? What sort of feedback are you getting from customers? Nobody’s perfect, and mistakes will inevitably […]

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Shine through Service Recovery. Double down on making things right when things go wrong. You need to pay close attention to how well you’re enforcing your quality of service from the get-go. How efficient is your order and package tracking? What sort of feedback are you getting from customers? Nobody’s perfect, and mistakes will inevitably be made at some point, but how you recover and make things right when things go wrong will ultimately determine your reputation in the marketplace. Answer emails in a timely manner, ask about what their specific needs are, enforce internal standards for quality of service and response times, give your teams freedom to make things right without having to get further approval.

As part of my series about the “5 Things You Need To Know To Create A Highly Successful E-Commerce Business”, I had the pleasure of interviewing Jugoslav Petkovic, CEO and co-founder of Flaviar.

Jugoslav Petkovic is from Slovenia and has more than 20 years of experience in the e-commerce and technology sector. Jugoslav began building websites as a teenager and started his own company by the time he was 18. He later developed an e-commerce firm called Mimovrste whose success was dubbed “the Amazon of Slovenia.” His experience in the startup industry in Slovenia and interest in spirits led him to meet Grisa Soba, whose background is in distilling, spirit education, and brand development. Their shared passion for wine, spirits, and flavors evolved into the development of Flaviar.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I was born in Slovenia and have been in e-commerce and tech for 20 years now. I began building websites as a teenager and started my first company by 18, which was a web hosting and domain business. Later, I developed an e-commerce company called Mimovrste that was dubbed ‘the Amazon of Slovenia.’

The fun bit here is that we didn’t set out to be online retailers. So, from that domain and hosting business, we started a software development shop for e-commerce stores. But nobody would hire us because we were kids and it was ’98, so that’s why the e-commerce business was born — it was to showcase the software we built so that we could sell it easier. But that then became the business as customers actually came and we had to serve them. Before we knew it, we’d created an Amazon type thing.

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

The “Aha moment” for Flaviar was really Grisa’s (Flaviar co-founder) not mine. It was him who realized that:

a) everything was moving online and somehow spirits were going to have to move online.

b) being able to taste side by side is the only way that you can really discover what you really enjoy — as opposed to just falling for the marketing. It might be good quality, it might be good marketing, but it doesn’t mean that you’ll like it.

So that’s where the original idea came from.

Grisa and I had been in touch for a while. He asked me to provide some feedback on his idea as he knew I was the e-commerce guy, and that’s how we started talking about Flaviar — what Flaviar’s business model would be, what the product would be, what the product would look like from that point onwards — he knew it would be tasting side by side and online e-commerce etc — then it was like, what does that really look like? That’s when I got involved.

I ended up becoming the first Angel investor in the business and then joined about two years later working in the business.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

There’s been so many hard times. First of all, there was a big difference between when I was starting my first company at 18 and when we were starting Flaviar, mainly that back then, we literally had nothing to lose, so any risk taking was completely normal, fun even.

When we started Flaviar it was much more of a serious endeavor — there was some capital involved and there were much higher expectations. We wanted to be successful, it wasn’t just ‘let’s see what happens.’ I’d say those are the two big differences — each of them makes it hard but for different reasons.

Now with Flaviar, it has been hard for so many reasons, especially getting that first investment. After my Angel investment, it was really hard to raise additional capital. We struggled with convincing people that this was a good idea.

Then it was getting to the US and realizing ‘oh shit,’ it’s a very different world out there when it comes to regulation — navigating all the rules and deciding how you are going to be able to deliver your product — there are so many obstacles.

And at each of these points we definitely considered giving up as an option. But we were always like, ‘but we got this far!’ At every point when it got hard, we had more to lose as we’d already achieved so much. It’s more painful to lose what you have already accomplished than it is to get over the next hump.

In terms of some of those obstacles and regulations, was the three-tier system one of those things in terms of figuring out how you could operate?

It’s not really a three-tier system, it’s a fifty geography three-tier system with each geography having multiple different versions and nuances to it, so that was really the problem. If it was just the three-tier system that’s fairly easy to understand, it’s all the little rules and all the little exceptions that you can get lost in. It becomes extremely difficult to make sure you are not stepping over the line anywhere. And at that point, you’re like, is it even worth it? Because it’s just so complicated and costly and time consuming.

So, how are things going today? How did your grit and resilience lead to your eventual success?

For an entrepreneur, the challenge is that you usually only see future problems. One of the most difficult things for us is to remember to take time and acknowledge how you were able to overcome all the issues and all the adversity and acknowledge that it’s pretty fucking amazing what you’ve accomplished this far.

When you do that, inevitably, the problems you see in the future are smaller than the problems you’ve solved in the past. Even if you’re in the beginning, you just don’t see all the problems you’re going to face, but the ones that you do see seem pretty surmountable based on what you’ve accomplished so far already.

Today, I feel that we can accomplish much more because of everything we’ve already done. It’s like, it’s not even scary anymore it’s just a thing you do. As an entrepreneur, as a CEO of a company, a lot of people ask me: “how can you stand this?” Everyone is coming to you with problems and you can’t even get any work done you’re just…solving problems.

My point is: that is my job, that is exactly what my job is — it’s to solve problems, to remove obstacles so other people can do their jobs. If you frame it that way, it’s not like ‘oh my god there’s a million problems every day.’ It’s like, I go to work every day, and I solve problems all day long, that’s it!

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

I don’t know if it’s funny ha ha, but in hindsight it’s funny how naive we were. You always underestimate how difficult building a company will be, and hopefully at the end you can laugh about it.

What do you think makes your company stand out? Can you share a story?

It’s very difficult to take something that is very physical and personal like tasting something and take it online, so the challenge was always: how do we bridge all the benefits of online with the physical requirements of the industry? You have to put that liquid in your mouth, and you have to taste it — there is no other way to experience it, there is no telepathy going on here. So, this has been pretty ethereal to explain and it was always an esoteric explanation of bringing this online — all until COVID happened. Then we were there, and our service was the ideal solution.

There are a few great stories customers have shared about how Flaviar fits into their lives and helps them bond with the people they love, speed up their learning curve when it comes to spirits, and expand their horizons and access to exclusive rare bottles they are going to enjoy. The first that springs to mind was from a woman who wrote sharing how she and her Dad would get together to connect over whisky, it was their ‘thing’. At the time, due to COVID, she was unable to see him, but being able to share a virtual whisky tasting helped them feel more connected and continue to share something they both love.

Another customer shared his story of how he became a scotch lover through the discovery moments he and his brothers shared with their Dad over Scotch — learning to understand the differences between drams by trying them side by side and the joy his family took in seeking out rare bottlings they could enjoy together to build their knowledge. I won’t spoil the ending for you, but you may need some tissues!

Just this week we hosted an exclusive preview screening of a new whisky documentary The Water of Life and it was incredible to watch the members’ feedback to the format of double screening — so watching along and chatting to other whisky geeks in real time. The post-film chat went on for at least an hour longer than planned as if you help people find their tribe and add in a measure of whisky — the conversation can go on all night, people just love bonding and connecting with others over a drink, it’s been happening forever but now we can help facilitate this from more remote locations.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

I’m an Angel investor in a bunch of other start-ups, so when I’m thinking of tips to succeed and not burn out, I’m thinking of tips I give to other founders.

For an entrepreneur, one of the most difficult things is to let go and allow other people to do stuff without you seeing their work — they could potentially ruin your baby, but they could also potentially make it a lot better.

The way I’ve hacked myself to not burn out is when I feel overwhelmed by the number of requests people are coming to me with — asking me what to do, how to do it etc. — I just disappear for a few days of vacation. I force them to figure it out on their own and force myself to physically remove myself from those situations. 95% of these situations will get resolved correctly and people just need an excuse to think for themselves and to do it themselves.

So, I recommend to founders that when they feel they are being overwhelmed by inbound requests from their team (that should be the ones defending the founder from all of these things) they should disappear and only be there for extreme emergencies — like I’m on a mountain top, you can reach me by cell phone, no iMessage, no Slack, no nothing, and then all of a sudden no one is calling you because it really isn’t that big of an emergency.

The other hack I use is always scheduling your next vacation ahead of time, before you get back from your current one.

My rule is to go on vacation every three months. So, I will always book everything three months out and I won’t even try to have refundable tickets and hotels. I almost force myself to go because somehow, if you book enough in advance, things just end up working out. All the projects that were supposed to be finished while you were gone end up being delayed a little bit, but they are finished when you come back, so it’s fine. It kinda just works out, and if it doesn’t, it’s not that big of an expense to cancel.

But then you always have this vacation coming up and it helps you cope with the current situation. It’s so much easier to get by every day regardless of how stressful it is, plus it helps everyone else adapt to your schedule. And you absolutely do need to go on vacation, otherwise you will burn out.

My colleagues and co-workers at Flaviar all have this same respect for work/life boundaries and taking a break. Being in the spirits world, we have these great offices — with a bar, nice coffee — and the team can suggest things to make the work environment better and more enjoyable. We look to accommodate. One of the things that was suggested one time was an office masseuse, which I declined but wanted to explain why:

We’re not about becoming a Google campus type environment where everyone is encouraged to spend all their time in the office and not have a life outside of it. You should be able to work here, get your job done, finish at a decent time, and still have a life — including having time to get a massage after work, if that’s what you want, not only be able to do it if you’re within a few feet of your desk. Having clear lines between work and play is important, people need to switch off or they’ll burn out.

The lines get very blurry between when you’re working from home. Our suggestion — and we’ve been repeating it for all these months now — is to start your workday, even if you work from home, as you would if you’re going into the office. So, you would get up, put your work clothes on, even if they are a lot more relaxed. You don’t want to be in sweatpants and sweatshirts — put on something that is a bit more workwear, you can even go for a walk, you can go check your mail and then you sit down as if you’ve left the apartment. Now when you’re done with work, go out for a 15-minute walk, however much you can afford to do based on your other obligations, but have a physical break. You don’t want to blur work and private life, you want to have a clear-cut line because it helps you mentally, it helps you know that you’re done with something and now it’s something else.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

This is always really difficult for me to answer as I never had a mentor or anything. So, I’m most grateful to the internet, because I was able to learn everything from it. I learned how to code, I learned how to design, I learned how to run a business, I learned how to do everything pretty much online. So, I guess I’m grateful to every person online that is sharing their knowledge and opinions as they become inputs that help me think and make decisions.

Ok thank you for all that. Now let’s shift to the main focus of this interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that eCommerce businesses are implementing to adapt to the new realities created by the Pandemic?

The biggest change is the convergence of digital and physical — we’ve been locked up inside, there’s less physical experiences generally. Not only are you not going to the store, but you’re also not going to the movies, you’re not going to see your friends, you’re not going to work, to school, to anything!

Everything can now be done over Zoom from shopping to court to marriage to meetings.

We’re seeing a lot of interest in our products that straddle the digital and physical world. That’s what we focused on last year, and what we’re doubling down this year to have more digital events that are supported by physical goods you receive to your home so you have some semblance of an in-person experience, even when you can’t leave your house.

So, masterclasses, themed events — you can’t go to a distillery, but the distillery master comes to you and you’re tasting the drinks and getting an explanation by the distiller themselves.

For example, right at the beginning of lockdown last year we created Blended at Home and mobilized an army of armchair blenders to create a new whiskey with WhistlePig. We shipped out a thousand or so Blend Your Own Whisky Kits to members and hosted blending tutorials with Pete Lynch, WhistlePig Master Blender. Instead of baking banana bread, our members could boast about blending whiskey during lockdown. We bottled this as WhistlePig HomeStock and the reaction was fantastic sales-wise, people wanted a piece of liquid history they’d been part of making.

We run lots of interactive exclusive events that members clamber to be a part of and which allow them to bond over drinks together and to feel connected even while they’re apart as well as producing products that are ripe for sharing, The Whiskies of the World advent calendars is a good example. People were buying one for them and one for a friend/family member and enjoyed the experience of trying new drams together, even if they aren’t actually together. We’ll be doing dual kits for things like Father’s Day so people can enjoy tastings together and can bond while learning about what they like and understanding why.

Consumers have had more time on their hands for one reason or another and many are interested in using that time to learn a little more about what interests them. There is this thirst and hunger for knowledge that e-commerce businesses can capitalize on. Knowing a little more about spirits, for example, means you’re more likely to try something new and different or spend a little more if you understand and appreciate the quality behind what you’re buying. We’ve always onboarded new consumers with Flaviar’s School of Spirits, but at the beginning of the pandemic we made this available to all consumers as we saw there was a real interest in seeking out and levelling up knowledge.

Amazon, and even Walmart are going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise retail companies and eCommerce companies, for them to be successful in the face of such strong competition?

It’s even more important in this day and age to have a differentiation strategy or a proposition why people should buy from you — a ‘reason to buy’ is how we refer to that internally. Increasingly, these big retailers who are getting crazy good at logistics, like Amazon and Walmart, are clear leaders in being able to deliver things fast and reliably. Then DtC from China is able to go direct to consumer and be cheaper.

So, the only thing left to you, if you are not one of these categories, is to be better at things that are difficult for them to achieve. What we’ve been doing to address this is focus heavily on content by definition. Both Flaviar and Caskers, but especially Flaviar, are discovery platforms where people come to learn and get inspired. And of course, having engaging content around these products. Then you’re able to sort of garner and promote a community aspect, where they feel some sense of interacting, a sense of belonging, of being together with likeminded people. That’s a huge added benefit.

In general, content and community is the answer, but how does that apply? I can only speak to Flaviar and what we’re doing. Not every business can do that — if you’re selling something cheap with a low margin, then you’re screwed!

What are the most common mistakes you have seen CEOs & founders make when they start an eCommerce business? What can be done to avoid those errors?

So, the most common thing I see is that people try to grow immediately. They end up spending a lot of money on advertising before the product is necessarily ready, and before figured out all the kinks of the product and the user experience.

And then also underestimating the basics — everyone assumes, ‘yeah delivery it’s going to work, and customer support is going to work, no problem, and let me focus on the other things,’ but it’s these basics that can really damage you if you’re not perfect. Everybody has come to expect real, reliable, fast delivery and amazing customer service. However weird it may sound; I’m still seeing those things fairly neglected or underestimated when people are getting started.

In your experience, which aspect of running an eCommerce brand tends to be most underestimated? Can you explain or give an example?

While everyone knows logistics and customer support are important, too often they think they can do them later. When, in fact, you need to do them immediately.

In terms of things that are underestimated I’d say building a community and helping connect people to find others like them is probably one of the big ones.

Before it would be that you would align a brand with its mission and customers would align with the mission. The mission is no longer a thing. It’s now more of a community, if possible. If not, some sort of purpose, some sort of movement. A tribe, if we go to the very basic level.

We certainly underestimated the importance of bringing together people, our thinking was that we’re an online service, people want to get their stuff delivered and that’s it. But then with the acquisition of Caskers, we inherited this physical event, the Craft Spirits Celebration. We decided to continue to do it, even though we didn’t start it initially.

At those events, we saw how there was such an amazing energy and vibe of the people that came there — it was always sold out and packed and people were insanely happy. And when we saw that and we started doing more live events, we noticed how much people wanted that experience. Yes, you are a part of the service, part of that digital community, but that physical experience really solidified that for you. And every person that left that event became a long-term fan because they were reassured that there were other people like them who liked these things.

On the one hand, it’s validation because it’s okay to be a spirits geek, there’s a bunch of others and you’ve just met them and you want to stay with that service for as long as possible. And that’s where we’ve started to see the power of exposing people, a community, to each other. Physical events are difficult to scale, so how do you scale that digitally? That’s what we’ve been focused on for the past 12+ months.

Can you share a few examples of tools or software that you think can dramatically empower emerging eCommerce brands to be more effective and more successful?

I would say that any tool that makes your service seem like magic — whatever the cost is — the ROI is going to be amazing. Talking about customer service for example, you need a tool that covers the basics of it so you are not missing people’s emails and where you can enforce a certain standard of speed of response, things like that. But if you can find the tool that actually allows you to respond to people within minutes when they need help, that’s magic.

When people send an email and they expect an answer tomorrow and they get it in five minutes, that’s magic. Investing in magic definitely has good ROI. The more magic you can provide, the better the experience is going to be, and the more likely success will come.

As you know, “conversion” means to convert a visit into a sale. In your experience what are the best strategies an eCommerce business should use to increase conversion rates?

We’ve all heard of growth hackers — I really hate that term — but you can definitely get a lot done and improve your conversion rate dramatically by hacking things.

Like timer countdowns on your website that show the number of people that are currently looking at this product — you usually see them on travel booking pages. These are conversion rate hacks.

That’s all fine and dandy, but those are meant for incremental improvements and they can be a little cynical to the consumer. Sometimes people just need a little push over the edge, and these may serve as that push, but the outsized returns come from communicating clearly. It can be easy to underestimate what kind of language you’re using to describe your product. From that perspective, the best strategy for increasing conversion rates is to do extensive user/consumer interviews and find the words that your best customers are using to describe your product or service and start using those words and that language.

Interview customers, find which words most of them are using and start using those words — the effect of it is going to be multi-fold as opposed to small incremental changes.

Of course, the main way to increase conversion rates is to create a trusted and beloved brand. Can you share a few ways that an eCommerce business can earn a reputation as a trusted and beloved brand?

Having the best possible customer service or service recovery is the name of the game here. The better you are at service recovery — because things will go wrong — will truly define whether your reputation online is going to be great or not. Because it doesn’t even matter how amazing the service is when it works, what matters is if it doesn’t work, you’re going to have a shit ton of unhappy people on your hands whose problems weren’t solved.

One of the main benefits of shopping online is the ability to read reviews. Consumers love it! While good reviews are of course positive for a brand, poor reviews can be very damaging. In your experience what are a few things a brand should do to properly and effectively respond to poor reviews? How about other unfair things said online about a brand?

Poor reviews are a fact of life, it’s very difficult to avoid them. The best solution is to have good service recovery. You will have problems inevitably — as you grow, the more problems you will have, but what really matters is how you resolve those issues. And even if you’re amazing at service recovery, you’ll still have poor reviews.

Some of them are going to be malicious, some people are even lying or basically trying to extort you to receive something they want. The only real thing you can do is encourage your happy customers to also write reviews.

You can’t fight bad reviews by removing them from the internet — the more you fight them, the more you feed the trolls and the louder they get. But what you can do is drown them in positive reviews.

We’ve had a lot of success by asking customers who send us an email that says, ‘oh my god thank you for solving my problem, you’re such an amazing service’ and you reply and say ‘that’s so nice to hear, would you mind sharing your positive experience on a review site?’ and give them a link to a few review sites.

You’d be surprised at how many go and do it at that point in time. And that helps drown out all the negative reviews. For every one negative review, there’s 10–50–100 positive experiences that they didn’t write about, so the negative reviews are usually the loudest.

Ok super. Here is the main question of our interview. Based on your experience and success, what are the five most important things one should know in order to create a very successful e-commerce business? Please share a story or an example for each.

1. Build connections and communities. Create opportunities to connect and bond that straddle the physical and digital world.

Create experiences that bridge the gap between the digital and physical world and products that can lead to bonding experiences. Our tasting kits not only make a wonderful gift, but they’re also a special way to experience new liquors together as a family or group of friends.

2. Speak your customer’s language — understand the words your best customers use to describe why they buy from you and mimic that language in your comms.

Interview your best customers and find out how which words they use to describe you and your service and why they buy from you and then mimic that language clearly and prominently in all of your comms.

3. Shine through Service Recovery. Double down on making things right when things go wrong.

You need to pay close attention to how well you’re enforcing your quality of service from the get-go. How efficient is your order and package tracking? What sort of feedback are you getting from customers? Nobody’s perfect, and mistakes will inevitably be made at some point, but how you recover and make things right when things go wrong will ultimately determine your reputation in the marketplace. Answer emails in a timely manner, ask about what their specific needs are, enforce internal standards for quality of service and response times, give your teams freedom to make things right without having to get further approval.

4. Encourage positive reviews — you can’t prevent negative reviews but you can drown them out.

Even with the best service recovery in place, negative reviews are par for the course. To protect your online reputation, you can’t prevent negative reviews entirely, but you can focus on drowning them out with positives. If you’ve got satisfied customers gushing about your product or service, prompt them to leave a review online and make it easy for them to do so by providing a few links. Most people if they’ve bothered to contact you privately with positive feedback will be more than happy to jot down a few lines publicly too!

5. Nail the basics before scaling — Focus on nailing the basics first, logistics, product functionality, customer service before scaling bigger

The basics are the foundation of your business and need focus before you can rush to scale if you truly want success. It might seem like a no-brainer, but it can really make all the difference. The foundation of any good e-commerce business is the fundamental stuff — productive customer service support, reliable shipping, etc. Once you have that nailed, then go big on promotion and build a bigger base, do it before and you’ll be storing up trouble.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

A movement to improve media literacy — that’s what could bring the most amount of good to the most amount of people right now. Understanding what is media, what is journalism, what are facts, what are opinions, being able to separate that and being able to gauge credibility of information you read and adjust your reactions accordingly. We are living in a time when this thing is breaking and where everyone can have an opinion. Understanding the difference between news and an op-ed for example, if as a consumer, if you’re not able to distinguish the two, you may have problems. All the stuff that’s been happening over the past few years is a product of that media illiteracy and it’s had serious consequences.

How can our readers further follow you online?

I’m not that active on social but I can be found retweeting stuff I find interesting here.

This was very inspiring. Thank you so much for the time you spent with this!

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