You’re in for a treat today.  We’re talking with Danny Govberg from Govberg Jewelers.  We had a wide-ranging conversation that covered the buyer’s journey, his membership in the Young Presidents Organization and even some conversation around he being the third generation in a family business.

If you know anything about retail, you know at the very least it’s been very challenging.  In today’s episode, you’re going to hear from someone who has taken a difficult industry and turned it into a fast growth and profitable organization.

Danny has done this through developing his own apps, social media presence and learning how to work with customers not even in the same state as his store.

In today’s episode you’ll learn:

    • What the buyer’s journey is and why you should care.
    • How you can make sure your retail store doesn’t go the way of the dinosaur.
    • How he handled the business transition from his father.
    • Why focusing on strategy is so much more important than being tactical in your business.
    • Why Danny celebrates mistakes at his company.


Transcript:

Narrator:         Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.

Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.

Josh:                Hey, how are you today? This is Josh Patrick. You’re at The Sustainable Business podcast.

My guest today is Danny Govberg. Danny is a pioneering force of the contemporary watch industry. His vision and insatiable passion for watches and technology enable the evolution of Govberg from a Philadelphia-based retail shop to one of the world’s premiere authorized dealers of both new and pre‑owned timepieces.

We’re going to talk with Danny about the world of retail, luxury retail and possibly even family transitions because he’s a third-generation business owner which I find really interesting. So instead of me just yammering on about Danny, why don’t we bring him on?

Hey, Danny. How are you today?

Danny:            I’m doing well, Josh.

Josh:                Thanks a lot for joining us today.

So tell me, I mean, you’re in the retail business which, you know, some would say maybe the worst industry in the United States. How have you made your business thrive? Or what changes have you made to make it thrive?

Danny:            Basically, what we’ve done over the last five years is, I recognized that the journey for people to acquire a product is no longer going to be learned about at a first-stage in a retail store. So the journey switched from people getting educated at brick and mortar to getting educated online. So once I realized that the entire journey was going to start there, then we started to focus on that.

So the way we started, we broke down where I saw omnichannel but this four or five years ago. We called it luxury commerce because there was no terminology called omnichannel. And we broke it down into two things. One, guaranteed plank was that we had to establish trust. The second plank was we had to put the savings of time into the business model because more and more people’s most valuable commodity, their number one luxury, was time. Even though we sold time but their number one luxury was time.

So what happened was we started to then break it into four segments. We called it learning commerce. And we called it e-commerce. Then we broke it into, let’s call it, personal commerce. And then we turned it into personal touch. I can elaborate on those four because it, you know, changed our whole business.

Josh:                Yeah. So it sounds to me like you’ve really changed what we call the buyer’s journey. And that’s something that would be an important thing to talk about. So, yeah, let’s go through those four things.

Danny:            Okay. So learning commerce is everything that we do or a company can do that educates the customer before they get to your website. So, for instance, it could be your YouTube channel. It could be your Instagram account. It could be your Facebook account. It could be your app. It could be your email blasts. But anything that you do that when the journey begins for the customer today, that you’re able to get to them even before they hit your website. Your PPC campaign included.

Josh:                So you’re using paid advertising on social media is what you’re saying?

Danny:            Some of the that is paid. But, for instance, we have an app today that’s probably the top of class in our industry called WatchBox. It has hundreds of thousands of downloads from consumers.

We have a YouTube network called WatchBox Studios. That’s a full-fledged network. I mean, like a real studio – Studio A, Studio B, that we have a couple million unique followers [inaudible 00:04:15]. And we run a show every single night of the week. Plus, we do watch reviews.

Of course, we have an Instagram account. We have a Facebook account that aren’t necessarily paid because if people follow us on Instagram or they follow us on Facebook. They follow our YouTube channel. But it’s a whole budget that we have in place around education, okay? That’s why I call it learning commerce.

Josh:                So that sounds kind of expensive to me. I’m assuming you have a sizable business—

Danny:            Yes.

Josh:                –and you have a sizeable budget for doing this sort of stuff.

Danny:            You know, in the beginning, like anything else, it’s baby steps. But our budget today is, our studio business is probably a half a million dollars in overhead or more, a year. Our app technology is a half a million dollars or more a year.

We have a big budget in technology but that doesn’t mean you don’t start small. Lots of people can have a YouTube channel. It’s just not as professionally done. People can have their Instagram account, their Facebook account. Educating the customer and reaching the customer has never been less expensive because you can go to the world for free, basically.

Josh:                So what is the biggest challenge that a customer who is going to buy one of your products is probably facing?

Danny:            So that’s where trust comes in. So we try to educate the customer beforehand. Okay, in the learning segment. Then we do everything in our power to get them to come to our website. The website is just further education. Okay, it’s e-commerce. But in luxury, it’s the next step to developing trust.

Now, of course, the customer can click and buy. But our average sale is $10,000.

Josh:                Wow.

Danny:            So what we find is the customer doesn’t want to click and buy.

Josh:                Right.

Danny:            They want to go from learning commerce, to e-commerce, to what I call personal commerce. Personal commerce is the good old-fashioned telephone. It’s very little friction. Somebody can pick the phone up. They’ve seen the watch. They’ve heard about it. They’ve seen our website or they’ve watched the video or review. They call us. And immediately upon calling us, they have somebody that can transact. That somebody is highly educated in the field of watches. And that person is able to buy, sell, trade, educate.

And what I find is, at the personal commerce level, that is the degree of trust because it’s now the third leg of what I was talking to you about, that you can actually conduct 90% of the business. So once you get the person on the telephone and they’re are already educated because more and more people are more educated today than ever. So when they call you they already have a very good idea of what they want. And many times, they’re as educated as our own staff about the timepiece.

Once it goes from personal commerce, which is that third climbing, it moves into personal touch. And what personal touch is, that’s brick and mortar, okay. But brick and mortar has a twist to it today because you can meet somebody at a hotel, on vacation. You can meet somebody at an event, a dinner, a conference. You can meet somebody by taking your customers to Switzerland, for example. But as long as you touch them once. Meaning, one-on-one interaction, that’s the last degree of trust to establish because that can last for years, even if they haven’t come into the store or into your brick and mortar location, they can always call you. They can always go to your website. They can always watch your videos. And that’s the last plank of what I call the four pillars of luxury commerce, omnichannel.

And then, we’ve broken that down even into what I call Retail 3.0.

Josh:                I have a question for you, first. What percent of your customers are from the Philadelphia area where you have brick and mortar stores? And what percent are not?

Danny:            I’d say that 15% is from the Philadelphia area where we have brick and mortar stores.

Josh:                So all this investment you’ve put into your technology, and running a daily show, and having a buyer’s journey that makes sense is consciously building trust has also helped you— I’m going to say, at least, nationalize, if not, internationalize your business.

Danny:            Yes, so what we try to do is, every one of those four areas I spoke about, we think local but we also think global. And then, when we make investments to think global, we also make sure that we think local. So our business is now global but we still have a very strong local feel because people do fly here and they come visit us and we keep that kind of feeling alive.

Josh:                Cool.

So because someone’s going to pay $10,000 or more for whatever they buy from you. I’m assuming that you’re going to have some sort of a concierge service.

Danny:            Correct. That’s personal commerce. So personal commerce is our concierge service which is phone sales. People call us. They’re getting instantaneous gratification. It’s not being connected to four different places. You’re able to call us and immediately get to what you want to get to.

Think about how many places when you look online today, you can’t find the phone number. Sometimes you get instant– you know, you can chat. A lot of that’s turning into, you know, artificial intelligence today, so you won’t even know if you’re talking to somebody when you’re on the live chat. But, for the most part, today, people in e-commerce, they want to automate.

And in the old days, only two or three years ago, companies weren’t rewarded for retail. They were only rewarded if they were e-commerce companies. So even the human capital that goes into e-commerce is very different than brick and mortar.

So think about it. You’re a kid today. And you graduate NYU. And you love sneakers. And you say, “Mom, I’m going to work in the mall at the sneaker store.” And mom looks at you and says, “Son, I didn’t send you to NYU for $60,000 a year to be working in the mall playing with your sneakers.”

So you take the same kid that says, “Mom, I love sneakers. I just graduated NYU. I’m going to sneakers.com in New York.” “I’m so lucky you’ve gotten that job at sneakers.com.” “And mom, all these 25- and 23- and 22-year-old-kids, mom, you should see. We eat together. We’re on the screens all day. We’ve got our headsets on.” And mom says, “I’m so proud of you, my son.”

You know these kids today. He’s at that sneakers.com. It’s a startup. So one kid actually gets to touch the sneakers and mom says, “What do you do?” The other kid gets to go to sneakers.com in New York and everybody’s proud of him. And that’s what’s happening today, even in our own business. I’m realizing that a lot of the kids or a lot of the youth— I call them kids because I’m 57 and still look at my young son, who is 30, as a kid.

But with the millennials today, they like screens. They’re okay being social. They understand their social Instagram. They understand when we take our own traders or we take our own, what you would call, concierges and they’re the ones that do our YouTube shows. So our talent that’s actually providing the concierge service are also the experts on YouTube. And then each one of them has an Instagram account. Each one of them has a Facebook account. Each one of them has YouTube shows. So that they’re becoming their own celebrities which gives them credibility. So when people call them, they’re able to say, “Wowl, I saw you last night on YouTube.”

So I’d say that the human capital is changing a lot today. And I think a lot of businesses— my biggest takeaway when you say, how do you transition my business at 57 – 58 to the next generation? What happened was, for the last 50 years, mostly, as I would get older where you get into your 50s or your 60s, we would have the experience to teach the kids in the 20s and the 30s what to do. So they always looked up to your elders as people with experience. Today, the hardest part is the people that are 55 to 60, that are in some of these leading positions, they’ve got to rely on the kids that are 20 because they’re the ones that have experience and we don’t.

Josh:                They have the technical experience for how they make the stuff work. I’m not convinced they have the wisdom to make the business work.

Danny:            But that’s where, when you start to let them build Instagram programs, or YouTube programs, or you start to let them post and you start to let them use their creativity, I believe that – yes, we have business guidance. But guidance on technology, a lot of times, we don’t really understand what they’re even doing or how it’s getting done, I think. And I think by trusting the generation below and letting them teach you instead of us naturally thinking we’re the natural teachers, I think is something that is a big transition for a lot of people. They’re not used to being taught by the younger generation.

Josh:                So, Danny, I want to ask you a couple of questions around that. One is, how many employees do you have? 

Danny:            Right now, I think we have around 140 worldwide.

Josh:                Okay. And how many employees did you have when you started?

Danny:            When I started, we had five.

Josh:                When you joined the company, there were five employees and you’ve grown it to over a hundred?

Danny:            Yeah. When I started, it was me– you’re going to laugh at this. Me, my grandfather, my grandmother, my brother— I’m sorry it was six. A gentleman named Mike and a secretary. In 600 square feet.

Josh:                So I’m going to submit something to you. I mean, you’ve had an incredible growth and you need to be congratulated for that. So, first, please accept my congratulations. But, more importantly, you keep talking about the word trust. And I can tell you from seeing where business owners get stuck on a regular basis, it’s around trusting the people they work with. You’ve got past that, so what do you have to do to learn to trust the people you work with?

Danny:            It’s a good question.

Josh:                By the way, it’s a big deal question.

Danny:            Yeah.

What I did was this, I started to realize that by letting them make mistakes, I started to equate things to a college education. So I would look at somebody – especially somebody buying and selling watches.

Josh:                Yes.

Danny:            If you’re a trader and you’re buying and selling timepieces, luxury. You’re going to make mistakes.

Josh:                Yup.

Danny:            So what we started to do, we would start to celebrate mistakes. So nobody that made a mistake was allowed to hide it or feel bad about it. What we did was, we started to celebrate if somebody made a mistake and we would joke about it.

But then, after the celebration, because everybody gets to learn from somebody else’s mistake, what we would do is, we would then come up with systems on how not to make that mistake again. So you’re going to think this is crazy but something as simple as something being thrown away. Normally, somebody would throw away something for 3000 or 4000, heads would roll, people would be crying. You know, we got everybody in the room. Somebody said, “Look, I made a huge mistake.” And then we went around the room to figure out how we would never have that happen again with the new organization.

So I just look at trust as something that (1) you have to earn. So everybody starts to earn trust. But at the same token, you have to be willing to give in to trust. So that’s basically how it goes around.

Josh:                Well, you’ve just given the biggest lesson on how to become a good delegator because in my experience people who delegate well have a high tolerance for mistakes. They require that when mistakes are made, they’re made public. And they make sure there’s learning around the mistake. And then they systematize the learning that happened in the mistake so there’s a low probability that it happens again.

Danny:            Correct.

Josh:                So how do you learn this? Because, you know, it took me about eight years to learn it when I had my food service company. And it was a really rocky journey.

Danny:            For me, I have a handicap. I have pretty bad ADD.

Josh:                Join the club.

Danny:            So from a standpoint of how I look at things, I look at things at a very macro level.

Josh:                Yup.

Danny:            At a creative level. And my weakness is, I would say, is the microlevel. So what I try to do is, at a macrolevel, we have an idea that I want to make sure the vision stays intact. So my main goal is to make sure that people follow, that they should make sure I hire the best people I can hire and make sure we don’t run out of money. If I do those three things, then I’ve done most of my job actually.

Josh:                You’ve actually done all of your job if you’re the owner of the company.

Danny:            Right.

And then, at the microlevel, the people that are running the company, processes, procedures and systems, I find that a lot of times what happens is, owners particularly, they’re flying on the ground. You see, if I’m flying at 30,000 feet, you don’t hear too much about what’s going on on the ground on a daily basis. If you’re flying right in the weeds every minute of the day, then it’s very difficult for people to grow because you’re right there every day. So what I try to do is, even when bad things happen, I try to just take a very global look to say, “Look, it happened but, at the same token, we have a 150 people now that are all growing in the same direction.” I certainly couldn’t be on the ground with all 150 every day.

Josh:                Right. Right.

So, Danny, it sounds like you really have learned some really hard, important lessons. And you appear to have learned it pretty easily. Where did you get help for this?

Danny:            You know, I don’t know. I say I have some friends in a forum group. I’m in YPO, that is—

Josh:                Okay. Sorry. I was sitting here, thinking to myself, I said, “This guy sounds like a YPO member” [laughs].

Danny:            I am. But I only really stuck, for the most part, to a few guys like 10 guys I’ve been close with, in the group.

Josh:                I was also a YPO member. And I think that’s true for all YPO members is you find a small group of people you can really depend on for advice.

So we just have a couple of minutes left. Can you talk about your Forum experience a little bit and how that has helped you grow as a business person?

Danny:            Yeah. I’d say that one part of Forum that I’ve tried to take away to the business is be open with people. And, to your best of your ability, be transparent so that if something’s bothering you about somebody and you’re holding it in or you’re talking behind their backs, then most likely that will lead to bringing down the organization. I think good, old fashioned hard feedback for your fellow workmates is crucial.

And if somebody— like my mother used to say, “What’s on her lung is on her tongue.” If something’s really bothering you about somebody or you don’t think something’s right, speak up. Because once you get it – what we call clear the air, a lot of times, then people actually feel a lot better. And you can really muddle your business up when personalities start to not share those feelings that they have, either good or bad within organizations. So that would be a big takeaway I got out of our forum group because we’ve been together for 17 years and we start every meeting by, “Let’s clear the air, guys.” Say, if I have any problems with anybody.

Josh:                That’s a great way to start a meeting.

So, Danny, we’re unfortunately out of time for the podcast and I’m going to bet some people are going to want to find you and/or your company. How would they go about doing that?

Danny:            If they go to Govbergwatches.com or WatchBox.com, they would find us. They can download our app, if they happen to like wristwatches a lot. It’s WatchBox, Watch Collector’s toolbox. It’s one of the best pieces of technology in our industry for a watch collector.

Josh:                Cool.

I also have an offer for you. I just finished writing my first book— or actually, in January, I released my first book so it’s been a while now since I finished it. And here’s a picture of it. It’s called Sustainable—

Danny:            Oh, that’s great.

Josh:                –A Fable About Creating a Personally and Economically Sustainable Business. And you get to read, if you read the book, about a completely dysfunctional business family. And along the journey you’ll learn that John Aardvark learns the five things to create an economically and personally sustainable business.

Easy to get. You just go to www.sustainablethebook.com. Click the big orange button. Buy the book. And you get a 35-page cheat sheet on how to implement the stuff that we talk about in the book and you could have a free 20-minute conversation with me.

This is Josh Patrick. You’ve been at the Sustainable Business. Thanks a lot for stopping by. I hope to see you back here really soon.

Narrator:         You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an email at jpatrick@askjoshpatrick.com.

Thanks for listening. We hope to see you at The Sustainable Business in the near future.

Topics: sustainable business podcast, Sustainable Business, family business, buyers journey, business exit planning, Innovation, YPO

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