The True Value of a Customer with Paul Kalemkiarian

What is a customer really worth to your business?

In this episode, Paul Kalemkiarian shares powerful insights from decades of building one of the original subscription businesses—revealing what it truly takes to attract, retain, and create loyal customers.

From relationship-driven growth to the hidden mistakes that cost businesses thousands, this conversation will change how you think about customers forever.

Hit play if you want to build loyalty, not just sales.

Transcript

SPEAKER_02 0:00

Welcome to Ten Keys to Thrive in Business and Life Podcast. I'm your mentor and host, Jim Krigbaum. Today we've got an exciting episode. We've got Paul Kalamakarian, one of the leaders in the direct-to-consumer wine industry, leader in understanding the KPIs of customer acquisition costs and the value of the customer, which hits well on our C and A and several of the other characteristics in the Charm Dance principle. Join us today. Listen to Paul. You learn a lot about wine from one of the leaders, somebody who's been tasted over 100,000 bottles of wine and sold over 17 million. A real pioneer, but let's see how we applied to charm dancer skills as an entrepreneur and as a businessman. Stay tuned.

SPEAKER_00 0:38

Are you sick and tired of spinning wheels, wasting time and money in your business but getting nowhere fast? With the 10 Keys to Thrive podcast. It's your masterclass in momentum by International Business Strategist and your host, Jim Craigbaum.

SPEAKER_02 0:58

Welcome to 10 Keys to Thrive and Business and Life. Today we have Paul Callum McCarry with us, who has been a family friend for a long time since our daughters went to college together back down at USC. Paul's run a business, a family-owned business that actually started in 1972 by his father. And I guess he took it over in 1989. I won't tell you his story. I'll let him tell that. But Paul is a great example of the charm dance principles and really kind of following them, even though he hasn't read the book and we haven't really talked about what each one of them are. An entrepreneur by nature follows those 10 keys, understands what they are, and applies them. And like I say, the difference between successful entrepreneurs and failures is that the successful ones apply them more consistently and appropriately. They're not secrets, they're keys. And Paul does a great job with the keys. So I'll let him introduce himself, then we'll have a number of questions that will help us kind of address the topics that really intrigued me when I first met Paul and learned about his Wine of the Month club, learned about the how acquisition of the customers and the value of attaining the customers and how he did that. We'll dig a little bit into that. Of course, I don't expect him to give away any trade secrets, but I think the general principles and the concepts will help everybody. If you want to talk a little bit about your current podcast and your history, that'd be great. And then we can get into some questions.

SPEAKER_01 2:11

Well, thanks. Great to be on the show. Charm would not be a word my wife would use to describe me, so I appreciate that.

SPEAKER_02 2:18

I will be there. You know, it's funny when we talk about charm and I try and use AI or anything, Charm Dance, they always give me a ballerina. It's a moment that that has nothing to do with it. So the Charm Dance is an acronym for uh business principles.

SPEAKER_01 2:30

So I guess that kind of tells you that the AI is not quite ready yet as it is, but it is certainly changing rapidly. You know, I was thinking about what you said just now, and it's pretty interesting because wine is such a fascinating subject for people. It's academic, it's romantic, it's got culture, you know, it's all it's tied up in culture. I had one woman who I interviewed who's a French winemaker, a brilliant woman, say, you know, welcome to civilization as a function of wine. But the reality of it was wine has always been driven by the consumer, so it's always been a consumer product, despite its connection to the s human soul, in my opinion. And so Wine of the Month Club, which was my father's started in 1972, was really a marketing company. And it was to bring to the street the idea of fine wine to get people interested in understanding the academic side. If you wanted to, you could, if you didn't, if you just wanted to explore the idea of fine wine, you could do that too. So when it really started, it was really a marketing firm. It started as a wine shop in 1972 in Palas Ferridge estates. And my father was the first to sort of come up with the idea to ship wine to your home. So much so that back in the 70s, though the rules existed not to ship alcohol across state lines in America, they nobody cared because it wasn't a huge industry, yeah. Yeah. So I used to deliver them, hand deliver the ones in the neighborhood, and we ship the ones across the country. And that started because we had a lot of aerospace firm executives who visited my dad's shop in Palos Verdes. They all lived, you know, they worked in El Segundo. And when they moved to Tuscaloosa, when all the aerospace left and went to Alabama, they said, you know what, Dad? Paul, why don't you just ship us the wines? We liked them so much, we'll just just ship them to us. And that's what we did. Entirely illegal, but I said nobody cared about it.

SPEAKER_02 4:17

Well, one of the things I've read about, and I know you can get into more detail, but you guys were really the first ones that tasted the wine before it went on the shelves. And one of the things that I told you a long time ago when we were getting wine from you, I said that there's one way to tell if a wine is good, and that's got your little seal on it. I don't have to taste it because you already have. You know, you've tasted more wine than probably anybody as far as different wineries and stuff. So I want you to go a little bit into how you maintain quality. The A and Charmed Ans is for appropriate and consistent quality. And in wine, you're working with Mother Nature, you're working with science, and uh you're working with art. And how do you make sure you provide a consistent quality? And by tasting the wines, you guys were able to make sure that you did the best you could in making sure that the customers got the wine that they expected.

SPEAKER_01 5:01

It's absolutely uh critical in that industry, and it's changed a lot since we started doing it. But my father in 1972, when he started the club and actually prior when he bought the shop in nine, was probably the first in LA. There were five wine shops in LA at the time that were prominence. Palas Redis Wines and Spirits was one of them. But when people would walk in to sell them Jack Daniels and Chartreuse and Matouche and things, they would just say, Hey, we've got the Mandavi Cabernet, we've got the Sebastiani Cabernet Franc, put it on the shelf. And my dad started saying, No, I'm not putting it on the shelf until I taste it. And that was revolutionary, really, for the industry that early on. Wine in America was not part of the regular culture. The judgment of Paris in 1976 hadn't occurred yet. Yeah. So yeah. So it was sort of a novelty and a sort of a disruptor for the liquor salesman to have to open a bottle of wine and pour it for my dad to taste. Why? Well, there's, you know, in an infinite number of combinations of wine. There's certainly horrible wines on the marketplace, and that's a different scenario altogether. Let's just put it this way if you're gonna plant the grapes and spend the money and then sit on it for two years in a barrel, you're not gonna toss it because you don't like it. So you're gonna bottle it and you're gonna try and sell it. And so there's lots of bad wine on the marketplace. In fact, only 15% of what we taste today actually makes the grade for the kind of wines that we're trying to present. And what are those? They're wines that are representative of what they're supposed to be. Does it taste like Cabernet Sauvignon from Sonoma? Does it taste like Cabernet Sauvignon from Napa, from Chile, from Argentina, from France? Is it representative of its desire, what's on the label? And that was our goal. And if you taste enough, and you mentioned already, I tasted 100,000 wines in my career, and that is a lot by anybody's standard, even I can figure out at some point what it's supposed to taste like. You know, like you have the good ones and the bad ones, you figure it out eventually, you know.

SPEAKER_02 6:57

Well, one of the things we talk about in the assist appropriate and consistent quality. As you say, some years you've kept it in the fats for two years, and you pull it out at the end, you come out and it's not what you expected. And the challenge of having a first brand and a second brand and always making sure your first brand is your top of the line and your second brand is your second line so that you're not trying to sell a lower quality product under a premium label, and that's important to do that consistency.

SPEAKER_01 7:21

Trevor Burrus, Jr.: Well, that's an interesting thought because this is what happened to the industry, and it's what consumers have to protect themselves from. The idea of Wine Mutt Club originally, which much like the Trader Joe's model, was we found interesting things on the marketplace that you hadn't tasted, wouldn't know about. The budget for the winery was too small to market to the general public. So we got access to these wines to taste and found these really interesting things that were very reasonable priced. And that happened for you know 30 of my 35 years of doing this, maybe even you know, 25 of the 35 years. This was very it's not I'm gonna say easy, but I was never shy of finding something. It wasn't until about 10 years ago, maybe 15 years ago, that they started bringing in this 50 cent a liter, and that's just very, very, very cheap in the world of wine, you know, dropping it in New York in a 20,000 liter, you know, vinyl bladder, right, and packaging it under billions of labels and putting on the street like a Groupon and some of the other clubs saying, hey, this is a fine wine from you know Valencia, Spain, and they weren't. So because the margins are bad in the wine business, so this is the way they got their margins up, but you can only fool the public for so long and saying this is good, but when they taste it, it's not.

SPEAKER_02 8:33

Right.

SPEAKER_01 8:34

So the model changed for that. And that also changed the loyalty factor of the wine trade. The subscription model changed rapidly there.

SPEAKER_02 8:42

Aaron Powell Yeah, and you're direct-to-consumer business, which like you say, you guys really revolutionized in the wine industry. Let's talk a little bit about acquisition of customers. How did you go about finding customers? Obviously, reputation will drive some customers to you, but then you were buying mailing lists and databases that had access. How did you place a value on them and how did you kind of track that?

SPEAKER_01 9:00

Aaron Powell Well, that's a really good question because I don't know if everybody in the industry today, it's particularly the younger generations that come into the industry and they're born of the internet, born of the metrics of the internet, born of, you know, KPIs. Our KPI, when we started, and this is really important to understand because we started in the trade shows. My dad, you know, I respect him so much because he would go out with my mom, set up a booth at the lawyer show, the doctor show, the boat show, the food, the home improvement show, and sell memberships. Well, what really is that? You know, he's speaking directly to the consumer. There's a relationship being built there. And when we stumbled across the fair circuit, California State Fair, LA County Fair, et cetera, wow, it wasn't the premium, I'm going to say premium, it wasn't the educated consumer that bought onto my dad's program because they all thought they knew it already. It was the masses that would go through a million and a half people through the turnstiles at the LA County Fair that knew nothing about wine, that would see the booth, hear the pitch, and get a handshake. Wow, can you imagine if you could handshake every customer today on the internet and build that relationship? Our retention back in those days was extraordinarily long because the relationship was built over a handshake. And so our longevity was really good. Our acquisition cost was really low, and we got our money back sometimes in the first shipment, which is unheard of in the subscription world. Yeah, yeah. So, but that evolved, you know, as marketing changed, we stopped doing shows. Actually, we did them until 2007. But let me give you an example. In 1996, was probably the best acquisition cost year we had in the fair circuits, and that was$9.75 to get a new customer. Now I was making probably$20 a shipment at the time.

SPEAKER_02 10:47

Yeah.

SPEAKER_01 10:47

So I got my money back and profit when I first sent out that first box, including the freebies we gave away. Like the last time we did that show, it was$175. Wow. Which I probably never got back. Right, right. So we moved into the next element of marketing at that point, which was direct mail and cataloging. And you know, we learned how to, for instance, to live on three quarters of a point of response. In other words, we send out a hundred thousand mailers and we got 750 back, we could make money doing that.

SPEAKER_02 11:15

Wow, that's crazy.

SPEAKER_01 11:17

Yeah. And that lasted a long time. And we were doing a million pieces a year approximately, and that still had loyalty because they'd never seen this before.

SPEAKER_02 11:27

Right.

SPEAKER_01 11:27

And you would test, you know, you always tested. So if you sent out a hundred thousand pieces of mail, we averaged three hundred thousand per drop. 150,000 were to the known list with the known creative and the known pitch. And then we would test probably 150,000, a different, probably three different creatives with probably five to seven new lists that we would buy, and then look for that information, look for the results, look for the ROI, look for the acquisition costs, and then drop it again in three months, testing the new lists along with the stuff that lasts that we know worked. And that lasted for a long time because there was still loyalty at that level. We were still getting 24 months out of a customer, and we were just testing sort of the creative, the pitch, you know, the gifts, whatever the free gifts were. We would test different free gifts. But here's the difference, Jim. You would send that out and you would take about 60 to 90 days to get your enough results to know where you're at. And then you would modify those results and then you'd send it again. Well, today, I could do an email blast tomorrow, and I'll know the results the next day.

SPEAKER_02 12:34

Yeah, yeah, yeah. Because you can track it with the services that are out there. We use MailChimp extensively to do that and be able to track who's looking at it, who's opening it, who's clicking where. And it's interesting. We have seen, and one of the things we try to teach people is that the time of personal relationships has really changed a lot because of the internet. You know, I can buy wine from anywhere in the world sitting at my desk here without ever meeting anybody in that process. It's all digital. And I can ask my chat GPT or my perplexity or whoever it is to help identify who what wines I should do and what's going to match my profile. So yeah, it's definitely been a change over the years. But one of the things I know that when a customer got a bottle of wine that was corked, you guys immediately replaced it. We had one of the years that we had that we opened it and it was corked and immediately it was replaced.

SPEAKER_01 13:18

I'm shocked. Why you should be able to do that. No kidding.

SPEAKER_02 13:22

Oh, yeah. Well, you know, it's that is Mother Nature, you know. And part of it may be, you know, in our situation, we have more wine than we ever drank. So it was probably a white wine that uh we sat for a couple of years and then opened it and go, wait a minute, this doesn't taste quite right. And so it was probably as much our fault as it was just coming out the way it did. But I know the customer service immediately we got the wine replaced, and that's because you guys placed the value on the customer, the beyond the relationship was there. And that's like I say, from my standpoint, we used your services because I didn't have to taste the wines. I had confidence. You know, when I serve a wine for you guys, I knew that it was going to be good, except for one occasion.

SPEAKER_01 13:57

You knew one thing, you knew that it had been vetted from all the cabernets from Sonoma, like if we showed a wine from, let's say, a Chilean Undaraga wine or from the Casablanca Valley, that you knew that it was a good example. Now you may not like it because, but you also at that point knew that wine from that region would be something you'd just stay away from. You know, the idea of the guarantee and the concept really is born of it's so funny that you brought that up because my mom, when she would work the booth, was terrified to tell a potential customer that you could cancel. Because her attitude was, well, they will. Well, yeah, they're gonna for a billion reasons, of which most of them are out of your control.

SPEAKER_02 14:35

Right.

SPEAKER_01 14:35

So the idea was can you lift a response to the offer by convincing a potential client that there's an unmitigated, no risk at all to signing up and trying it. And in fact, that includes a money-back guarantee and a a hundred percent satisfaction. What was the word I used to use? I said that if you're not satisfied or not happy with for any reason, I'll make it right, I'll fix it, I will replace it, refund it, do whatever you want to make sure that you're a happy customer because I can't please all the palettes all the time. That's just the nature of the business.

SPEAKER_02 15:06

Yeah. Well, and as wine, as you say, the wine that I like is going to be different than the wine that somebody else likes. We all have our own preferences, our own our profiles. But your job was to make sure that if it was a cab from Sonoma that it matches the characteristics of a cab from Sonoma. Well, I like cabs from Phenoma, that's my problem. But you made sure that it was in line with what it was supposed to be, and that's critical. And we mentioned your mom and the family involvement, and that's one of the things we talk about too, in that family businesses are able to look long term. You know, we've all worked for public companies where it's what were your sales yesterday, last week, last month, last quarter. And with the family-owned business, you've got the ability to look 90 days ahead to get the response from your emails. And 90 days, that's another quarter. So somebody's in a publicly traded company, somebody's gone, you sent this mailing out eighty or nine days ago, and you got no response or limited response. Explain to me how you know working in the family business, the advantages and disadvantages, because I've got those as well. We've had a family-owned business, and unfortunately, there are times when all we talk about is business at the dinner table. And you know, if there's a crisis in business, there's a crisis in the family. So those factors have come in there as well.

SPEAKER_01 16:10

Well, it's interesting. I have a brother and sister. My sister is academic type, she's a judge actually in San Diego now. My brother was introduced to my father's businesses as I was. He's six years older than I am. Not a merchant entrepreneur type, though he ended up with a small business in Lincoln, Nebraska and did very well and has retired since. But I was the kid, the family member who seemed to see life the way my dad did. He dragged to his manager meetings, who he had me run out to the pharmacies at midnight and wash the carpets. I did inventory for him. I worked at the wine shop. That's where I learned much of my, you know, sort of backbone of my wine knowledge. So I was the child of the three of us that seemed to latch on to what he was doing. And I'll never forget this. I've told the story a thousand times. My dad was a merchant. He was an academic guy, he had a master's in pharmacology, he was a pharmacist, but he was a merchant. It's in our DNA. We're Armenian. Exactly. And one Christmas Eve, my dad did a liquor store, he's staying open. Man, and we didn't get home until 11 o'clock at night at Christmas Eve, and my mom was gone. She had taken off. And she had taken my sister to have Christmas Eve dinner like Parasol, which was like a Denny's. And my dad and I had little smokies in the Oscarmeyer little smokies, you know, and bread for dinner for Christmas Eve. Because my mom was so upset that he would prioritize the store selling a carton of cigarettes over That's right. Yeah. So I've always thought to uh and Santa and I have had this conversation with my wife about the merchant mentality in the f family, which is who we were and what we were. And in our trade, you know, should we have gone and thought about a larger picture and gone corporate and tried to manage buying other firms, which we did by many little clubs uh off and on, but I mean really go kind of global with it. It's not in our DNA, it wasn't part of our business plan. So you're right, we would come home at night. Now Sandra didn't work for me or work with me. Don't say that, she didn't hear that, the whole time. So it was she I was probably doing it for about 10 years before she came on board, and she's a CPA, and so she looks at life differently completely. Yes, they do. So I actually made more money on the bottom line, percentage-wise, when she wasn't there. But you know, that it was a risk. If that conversation happened many times in our family, like, you know, all we do is talk about business, and we're talking about this at dinner time. And I guess as a male, it didn't bother me because that's what I did.

SPEAKER_02 18:31

But I think you you touched on it, and that's one of the things we emphasize too. It's in our DNA, the entrepreneur. There's a lot of people that try and open businesses because they are between jobs or they're seeing opportunity, but they don't have the DNA genetics. It's just not who they are. And one of the things about entrepreneurs is we take risk, and risk is an experiment. There are times when you fail, and then times when you got to brush off your shoulders and get back up again. Those of us that have it in our DNA do that. I mean, that's just what we do. We'd look at the next opportunity. And as I say, my problem is I have too many ideas and not enough time. It's a bit a question of narrowing them down. You know, my wife's job is she's not an accountant, but she is my accountant.

SPEAKER_01 19:09

Yeah, right. Well, same difference.

SPEAKER_02 19:11

Yeah. She makes sure that all the T's are crossed and the I's are dotted because I'm flying away over here on some idea and she's keeping us grounded and stuff. And that's one of the things that's key is that you have the right people to assist you, whether it's a family or whether it's somebody outside the family, that you understand your weaknesses and you make sure that you strengthen those. That's kind of the I think one of the things we talk about is doing a SWOT analysis of ourselves. What are my strengths, opportunities, and weaknesses, threats that I have. And then on my weaknesses, I got to figure out how to make them either non-factor so that they're not important, or I need to strengthen them with family or with outside people. And we've always had family businesses, and it's like I say, the challenges from Jennifer and I were brushing our teeth the other day upstairs, and she mentioned something about a truck not being on time, or something's like, we're brushing our teeth. You know? Yeah. Right. So this is not a bathroom conversation, but it does. And again, some people, some spouses can accept that, and others are like, no, no, we're drawing the line here. I always kind of envy the guy who goes to work and does his eight hours or six hours or whatever it is, comes home and doesn't have to think about it. But I think that would drive me crazy. People keep asking me when I'm going to retire. It's like, why would I do that? What am I what am I going to do in retirement? You know, as long as I'm doing what I want. And if you've moved on and you're doing a podcast now and kind of taking the knowledge that you have and making sure that it gets out of your head and into the population so people understand that and kind of brings it back down to nature and why the bottle and what's the story behind the bottle. Can you touch a little bit about that and kind of where you see that going?

SPEAKER_01 20:35

Well, seriously, you said something very important. You know, I have friends on both sides of the fence, right? We're never going to retire. I'd go nuts. But I have other friends that went into corporate America. They did really well with their stock. They retired on their pension. They went to work every day. Now they play pickleball and do whatever. And that's the kind of life and it's in their DNA to do that. And that's almost too secure for me. And I'll tell you a quick story before I get into the wine talks. But when Sandra got pregnant with Sarah, our first daughter, and I had been with a company that was a complete raw startup. And we started with a fishbowl of business cards and two-line phone with no office. And that was starting to change really rapidly with five partners. It wasn't, you know, we did okay. You know, we were nationwide. We sold a lot of software. But then I I realized that, you know, what was coming up, responsible for a child and a wife and a home. And I was still out there. I mean, there were some Fridays, Jim, where I would go out looking for either a deposit on a sale or collect on a sale because we weren't going to make payroll. And that probably happened half a dozen times. And we always pulled it off. But I'm like, I don't know if I can handle this with a child. So I went back to Xerox. At that time, the greatest sales organization in the country. I'd been there for five years prior. And I went to the interview, and there was this young, a good looking sales manager, a woman, and she's and I told her my dilemma. I said, My father's offered me this company, it was 1988, and it's this little wine company. But I had a, you know, I told the whole story. She said, Are you crazy? Because everybody between these walls of this company is trying to get out and do what you have the opportunity to do. She goes, I'm not going to even interview you. Go out and live your life. Yes. So I took that advice and bought into my dad's company, and that's what happened. But when we sold it three years ago, just prior to selling it, maybe two years prior, I was realized that people were coming in every Tuesday to taste wine with me. And the nature of the business is they come from all over the world. And they all have these incredible stories to tell. Winemakers that grew up in France or Italy or Armenia, and then now out trying to slap their wares, and they're hitting all the big markets. And they come in my office, they tell me the story in 15 minutes, they pour the wines off, we taste it, and out the door went the story the minute they left. And they were going off one at a time. Right. Maybe they saw three stores that day that three people heard the story. I'm like, what a waste. Yeah, yeah. So I started the podcast Wine Talks, where I built the studio you see here, and they would come in here and they would book half hours to worth of time, maybe 45 minutes, and we'd sit and tell the story and record it and then let uh hundreds, if not thousands, of people hear the story that they just told me. And that's the nature of social networking and podcasting. So that actually became a a huge passion of what I do today, which is uh storytelling. Right. Trying to get people to understand the value of a glass of wine and what it means and what's in it. I just re-released a podcast with a guy named Stephen Spurrier, who was from one of the greats in the wine trade, orchestrated the Judgment of Paris. And the soundbite I took from him to broadcast the show release was wine should be telling you the story the minute you taste it. There's so much built into that glass of wine. And you already know this as a customer of the wine of the month club, you already know all this. Yeah. But that's what I wanted to do when I sold the day-to-day operation of wine. I'm working harder now.

SPEAKER_02 24:00

Well, yeah, yeah, that's the thing. I keep telling, I'm working harder than I've ever worked and I'm making less money. Yeah, exactly. But I'm enjoying it, and that satisfies the intellectual, not necessarily the cash flow, but the intellectual satisfied because it is fun to, you know, I've been to 82 countries and I've had a lot of stories to tell. And now I get a chance to tell those and share those with people. You mentioned Armenian, I know you're proud of your Armenian heritage, which kind of leads right into your wine heritage and the cradle of wine, right?

SPEAKER_01 24:27

Well, they did find the oldest winery, intact winery, with the guy's shoe, some poor winemaker 6,000 years ago lost his shoe. And it's quite fascinating to see it. I've been there, it's near the Iranian border, down by the Adadi district of Armenia. And that's a really good example of consumerism and marketing versus product and story. This is probably the oldest known wine district in the world, but not close to it. The industry was plagued by Soviet rule. They were relegated to make brandy, you know, which is distilled grape juice, and never advanced the needle while the rest of the world and the wine world was advancing learning technologies, changing the way they grew things. And I'm rather impressed really with the ascent of the quality of the Armenian wine trade in a short period of time since freedom, which was 1991.

SPEAKER_02 25:16

Right.

SPEAKER_01 25:17

Such a slow business. You get one chance a year.

SPEAKER_02 25:21

Yeah.

SPEAKER_01 25:21

Right? And I was telling that somebody last night at a dinner, I said, you know, think about it. If you're a winemaker and you stay in one hemisphere, in this case the northern hemisphere, your career maybe is 30 vintages, maybe 40 at tops. Right, right. It's not very much. And not to document your expertise, yeah. Yeah. So anyway, I'm very proud of that. The industry still has some movement to make to get worldwide recognition, and it may never really happen to these to where they want it to be.

SPEAKER_02 25:49

Well, that was one of the challenges we faced with the Georgian wines. And I know Georgia and Armenia have a debate as to who was oldest in establishing it. But the Georgian wines, you know, we'd have a name of the varietal of wine which had two valves in the rest of the consonants, and they were designed for the Russian market. It's just interesting. The first time we went in there, we brought 100 bottles of wine from the U.S. into Georgia and had them taste it and ask them where they'd place it as far as quality and price. And at that time, I don't remember what year it was, but the average price in the US, according to the data here, was$7.50 a bottle. You know, that's taking all the low-end stuff and averaging it out. But you know, they would come back to me and say, Well, we want to sell ours$18 X works. It's like, okay,$18 X works, you're talking a$70 bottle by the time it gets here and it at restaurants, it's even higher with a name that nobody can pronounce. And it really became a challenge. But we've enjoyed working with the Georgian and the winemakers there, and then also in Kazakhstan. And again, you talk about the Russian influence, the grapevines in Kazakhstan were all buried. And there's only been a couple of them that have unburied them. They brought in some expertise from Italy to teach them how to produce it, and they're trying to get their art back. And I've got some excellent bottles of Saparavi, which is a nice, easy word to say. And uh we kind of put it in the Italian spin. It's uh saparavi. It can kind of become their Malbec, you know. As Malbec became the Argentinian flagship, saparavi could become theirs. But it's unfortunately when you go into the grocery store, you don't go to the section that says Eastern European wines.

SPEAKER_01 27:12

Trevor Burrus, Jr. You can't. It's just the slowest grind of an industry there can be unless you have tons of capital like the gallows and the can weather that time frame, which is years, and may still not get traction. And the margins are terrible, as you know already. You just had an example. And that was one of the issues with the Armenian wine trade when they came to me, which by the way, going back to your comment, that winery that's 6,100 years old they found wasn't in Armenia when it was built. It was just out in the Caucasuses. So it could have been anything. You know, the Armies just claim it because it's in their land now. So who knows what the cradle of the winemaking really is. But yeah, and I had these comments, and we just dropped a show called The Back Label. It's on the website and on YouTube called The Civil Net. And those are four episodes I created, produced from talking to winemakers in Armenia. And we don't talk about the swirling and sniffing of what's in the glass, we talk about the passion and the tenacity it takes to do this because it's almost impossible to survive it or make money doing it. It's a tough analysis to make. I consult with a lot of people, and it really comes down to what's your objective. You want to compete with Apothec Red and Josh on the shelf at Ralph's?

SPEAKER_02 28:20

Right, right.

SPEAKER_01 28:20

You're gonna lose that argument, you know.

SPEAKER_02 28:22

Yeah, yeah. You're gonna lose that argument every time. And you know, winemaking is an art, as you've said. It and then you only get 30 tries if you just stay in one hemisphere. So, yeah, it's obviously a challenge. And you guys have done a great job of educating people. I remember when we get the bottles that there's the story behind it. You know, one of the things that we try and do is get people to move their product from being a commodity to being a niche product. The question people ask is why in the world would anybody buy your product? Well, if you're selling a wine, a Cabernet, how do you set it apart from all the other Cabernets out there? And that's right. Yeah, but the story behind it's got to make the difference. Or the label, you know, as I always say, when I buy a bottle of wine at the grocery store, I have no idea what it tastes like. No, I have an idea what it's supposed to taste like.

SPEAKER_01 29:01

I mean, I've tasted so much, but I don't either. I go by the reputation of the winemaker. This is a very interesting thing for your listeners and your viewers to understand that if you do join a club and you get that first shipment and you read the newsletter as you spoke, the model you're talking about, my dad created it in the 1970s. They all use the same model. And it's it's a logical, practical model. Right. But if you read the story and they can't talk about a person, and they can't talk about a piece of ground, and they can't talk about the process to make that wine, you've joined a club where they're just buying generic juice and bottling it under different brands.

SPEAKER_02 29:35

Right, right.

SPEAKER_01 29:36

They have to be able to talk about the person and the region and the ground and the dirt. Otherwise, if they're just talking generically about Cabernet Sauvignon or generically about California or generically about the weather, or generically about what to serve it with, you've stumbled across just a, you know, a white label type subscription. A true subscription wine club should be able to tell you the story.

SPEAKER_02 29:57

Yeah. I remember when I went to Georgia with uh I think six masters of wine, and they all were into the story, into the soil, you know, and they were always all right, even if they disagree with each other, because again, there's opinion thrown in there and uh but it was the story behind it. It wasn't just the grape, it was what side of the mountain was it on, what was the soil like? You know, how did they actually do the processing and stuff? There's a lot more behind it than just what the brand name is or just what the riotal is.

SPEAKER_01 30:21

So you know, that comes down to you know, it is storytelling. You know, I learned that lesson from Adam Carolla, the famed comedian, when I was on his show. We were talking about racing and stuff, and he made the comment. He goes, you know, it's always about the story. And what is social networking? Story. Storytelling, right? It could be a simple story, it could be a fact they're making a Carnita's dinner or something, but it's about the story. You don't watch it for just for the visual part of it. You watch because you want to hear something interesting.

SPEAKER_02 30:47

Yeah, well, that's been one of my challenges on this internet thing is that everybody says you can tell a great long story. It's a short story that gets their attention. You gotta have that fire, that hook out of the launch cannon, ready to go. And that's not where my strong point is. My strong point's in the longer term. And you've got some charisma that helps it as well in pulling people to you and your reputation and everything else that's great.

SPEAKER_01 31:08

Well, that's kind of you say. I'm like you, I have a billion ideas, and Sandra, you know, this goes back to your family conversation. It does take somebody to a counterpoint, particularly people like you and me that have these our brains are spinning with ideas and trying to you know capitalize on something. And it's not really about the next great idea. It's really about the tenacity to find one that you have passion for and show that passion. Let people see it. And that's when the honesty and the reality of a subscription model, a marketing plan, a marketing program, eventually the consumer's gonna see through the dishonesty, but they can't see through the passion because there's nothing to see through. It's sitting in front of them. And that's what the wine trade's about. The real wine trade is about those passionate people. That's what marketing is about. Like, I really want you to know this story. Yeah, I really want you to understand this. I'm gonna give you some incentives to invite you in to hear the story, like free glassware. You know, there was a you were talking about the guarantees, and this is where when Groupon came about in the internet and clubs started showing up. You know, we were the first wine club on the internet in 1997, we had our first website. So loyalty was starting to wane a little bit because people were just looking for the best deals, right? Remember when Groupon came out? Everybody's scouring Groupon for whatever, whatever you were doing. And so one guy called me and he was complaining to me that one of his glasses had broken. And at that time, you got four free crystal wine glasses, exactly like this one. These are from Italy, they're bormeolis, they're crystal. And I didn't have a notion at that moment to look them up. And I said, we'll replace it for you, sir, no problem. He was like in Virginia or something. So after I hung up, I got on my database. It turns out that this guy, this was his third attempt. So he joined the club, got four free glasses, got two bottles of wine for ten dollars, and then he would rapidly cancel. Yep. And then he'd get the next solicitation, and this, by the way, for your listeners, is about database cleansing and making sure that you go through your database every time you mail to make sure you don't have mail to somebody like this. And then he did it again. And so this was the third time. So this would have been his 12th glass, beautiful crystal wine goblets, you know.

SPEAKER_02 33:16

Well, yeah, and had to set up for a party.

SPEAKER_01 33:18

Yeah, and he says, After you send me the glass, I'll determine whether I'm gonna continue with you or not. So that was why I looked them up. So this guy for$30 got six bottles of wine and 11 crystal goblets, and I did not send him the replacement.

SPEAKER_02 33:32

Yeah, you gotta place value on that. That was one of the questions I was gonna ask, but to kind of address that is the entrepreneurs, we do make mistakes and we have things that we look back on and say, I would have done it differently. And you gotta draw the line, you gotta know when to cut the losses, and you could probably still be sending that guy four bottles or four glasses if you hadn't paid attention to what you were doing there.

SPEAKER_01 33:49

So, you know, one of the mistakes I really and I I I want to make sure I got to this point, and depending on the industry that your listeners are in or that you're in, or that anybody else is in, wine, you have to look at its uniqueness, how unique is the industry I am in, that the regular consultant, and particularly now with the all the AI consultants, all the AI platforms and all the internet people, that they understand where you're coming from before you hire them. And what does that mean? I spent, I'm gonna say, a hundred thousand dollars training consultants on my trade, only to figure out that they didn't grasp it enough to consult me in any you know fashion that benefited me. And so let's put it this way for the first time during the social networking world, I hired a guy, he was the guru at the time, parallel to Gary Vinerchuk, all that whole era. And I hired his company to help me move the needle on my revenue sources, and one of them was Facebook at the time. Now, back then, Facebook was a totally different animal. You got on Facebook to socialize not to buy stuff, and so for somebody to step away and buy something was pretty unique. But they did it, not like today. So I hired him, and he did. He moved Facebook from the ninth position as a revenue generator for me to the seventh, and they were very proud of that. But what did that mean? I was spending$2,500 a month for them to do that, and that extra revenue stream was another, like I think it was$250.

SPEAKER_02 35:10

Yeah, yeah.

SPEAKER_01 35:11

Right? Think about it. The consultant goes, hey, we were successful. Yeah, we did what we do. Right. But you know, from a revenue stream, it was worthless.

SPEAKER_02 35:18

You got away the costs and the balances. Yeah, we spent a lot of money on a pay-per-click campaign, and they would show here's your click-through rate, which looked great, but it was a click-through rate that wasn't our customers. You know, it wasn't the target market that we had. We spent a lot of money chasing after, and then you know, COVID hit and everything else and changed the whole world as far as the brewery and the winery industry, which we supplied with our stainless steel tanks. So it's a matter of knowing when to cut the cost. And a lot of entrepreneurs aren't willing to do that. You know, old I'm right, I'm right, I'm right. And there are times when, yeah, you may be right. We feel we did all the right things, but our market was still falling. Not our market share, but our market. Well, you know, we at some point in time we had to say enough is enough. Yeah, the market has shifted and we got to readjust our industry, adjust our strategies.

SPEAKER_01 35:59

Well, it got to be for me, especially in that realm. Now, every Wednesday I had a meeting with my staff. It was usually three hours. We went over every campaign that we were going to do for the week that we mailed every day, emailed every day. We went over the graphics, the artwork, the promos, the offers, all those things happened all the time. And we included our consultants, whoever that was at the time. But the consultant model back then, and it's still probably prevalent today, was put you into the mill of their group. Now, I get from an economies of scale, from their standpoint, they've got one associate that's doing just the Facebook, and one associate doing Instagram, one associate writing, whatever they're doing. Right. And then you have this weekly meeting with them, and sometimes you felt like that they weren't paying attention because you were just another client in the mill. Right. There was no real desire or passion to do well for the wine of the month club versus any other company. And so that frustrated. We finally landed on a group that was very good at understanding the metrics, that was very good at explaining the situation and coming up with solutions or trying to test solutions to the marketing problems. But that led me to realize that nobody knows it as good as you.

SPEAKER_02 37:04

Right.

SPEAKER_01 37:04

Right? Eventually it's you, and now you can't do it all. And so you have to find somebody aligned with you in the world.

SPEAKER_02 37:10

Yeah, and that is a challenge. It's one of the nice things about not running my big consulting business, is I don't have to worry about employees.

SPEAKER_01 37:16

Yeah.

SPEAKER_02 37:17

Not that any of them were bad. It was just a matter of managing them all. And we invested a lot into a lot of employees that uh at the end of the day they go get hired away by the competition or whatever. They don't show the loyalty that you showed them. And that's a tough thing. But the others, even to this day, I could there's a dozen people around the world I could call and ask them to walk across hot coals and they would. The other people would be the first ones to push me out on them. I had a good friend that I finally at one point in time he'd asked me for favors. I gave him favors all the time. I asked him for one on the flip side, and uh he would brag about how he could do a great job and get me where I wanted to be and then never get me there. And so the last time he asked for a favor, I'm like, I'm done. This has been a one-way street and goes, yeah, but we're friends. It's a one-way friendship, you know. At some point in time, it's it's you know, got to stop. I always said I'd trust him with my kids, but not with my business, and you gotta make sure you when to draw those lines.

SPEAKER_01 38:04

Well, I always say business would be easy without the people.

SPEAKER_02 38:07

Yeah, exactly. Well, I appreciate your time. I know you're busy and wish you the greatest of luck. And like I say, I appreciate you covering the points and good luck moving forward. And good luck with all your family living with you and everything else that's going on. That's one of the nice things about being in a work at home and an entrepreneur with your own time. You can spend the time you need to with your family when you need to.

SPEAKER_01 38:26

Well, likewise, grandpa. Yesterday I was sitting at the computer at home. I bought a Mac studio so I could do my editing and stuff there. And I it was the first time since the kids have been living with us, just for your listeners. My grandkids live with me because of the fires from Altadena. House didn't burn, but they've been displaced. There's three of them there. And it was the first time, though, Jim, they were running through the house, screaming, yelling, make all, and I sat and focused. I was freaking out. Like I go, how am I doing this? I go, maybe it's just 12 months worth of doing it, but I was able to get a lot of work done while they were running right by me screaming.

SPEAKER_02 38:59

Well, it's funny, one of our family friends, he worked for one of the Japanese companies years ago out of his home as a salesman for him. And every morning he'd get up and take a shower and get his suit on. And he'd go into his office downstairs with his suit on, even though we wasn't going to see anybody. We didn't have the internet as far as you know being able to do face-to-face type of meetings. But his kids knew when dad had his suit on, he was in business and he was in the business mindset. So yeah, it's all a matter of how you control it. And I did the same thing that, you know, working out of the home and the kids were growing up, and they knew that when I was in my office, that's where I was supposed to be. And it was funny because time to time I'd go out and try and correct something or change the rules or whatever, and they'd like, go back to your hole, go back to your office.

SPEAKER_01 39:36

That's really funny. This is mom's territory. So if dad's wearing sandals and shorts, he's working.

SPEAKER_02 39:41

Yeah, there you go. Well, again, thank you for your time. I appreciate it. And hopefully we can get together sometime.

SPEAKER_01 39:47

My pleasure. Thank you. Right. Thanks. Bye.

SPEAKER_00 39:52

So that's it for today's episode of Ten Keys to Thrive. Head on over to Apple Podcasts or wherever you listen and subscribe to the show. Be sure to head on over to tenkeys to thrive.com to pick up a free copy of Jim's Gift. And join us on the next episode.