Do you really understand the Value of your Club?
Posted by Carole Loomis on February 4th, 2008Most wineries fall into a trap of thinking their wine club revenue is simply the number of members multiplied by the cost of the shipment. If that’s all you are looking at, you’re letting money slip through your fingers!
There are four things to think about when you are putting a value on your club:
1. View your club shipment as a sample program and get your club members to repurchase the wines you’ve just given them the opportunity to taste.
2. Know your average decline rate (for club runs) and keep it under 10%. Clubs that are managed well have lower decline rates. If you find that your club’s decline rate is higher than 10%, you have some cleaning to do. Implement a deactivation plan for those members who are continually non-active and a three-strikes-and-you’re-out clause for perpetual declines.
3. Have a repurchase plan and execute it 2 weeks after your club shipment has been sent. This reminds your customers to purchase the wonderful wine they just consumed. More often than not, wineries condition their members to wait for their shipments - and do nothing else. Successful wine clubs condition their members to open and consume the shipments they receive so that they know how many bottles/cases they should repurchase.
4. Understand and increase your club member value. Keep track of all the purchases your club members make: in the tasting room, online, over the phone, and with club shipments. Once you know the value of a club member you will have a good idea of what an increase in membership will do to your revenue stream. This kind of knowledge will help you plan for Club specific events, loyalty programs, etc.
We encourage you to take the time to evaluate what your true club member value is and set goals to increase both your membership and their re-purchase rate. Remember that the more accurate your club membership is the better you are able to successfully market to active customers and continue to increase your bottom line.
February 5th, 2008 at 10:55 am
Great Post! I think if more small wineries ( up to say 5000 cases) understood these concepts, most would do away with their retail distribution and focus 100% on direct to consumer and direct to trade.
Additionally I feel that for such club programs to work really well, and this is from past experience, several like wineries would do well to somehow partner up, like a co-op tasting room and offer several brands and labels in rotation to club members to keep consumer’s choices fresh and still maintain their higher margins. I know…..easier said than done.
Cheers!
Chris
February 5th, 2008 at 4:38 pm
Chris, I agree with you. Cross marketing is a smart way for wineries to do business as well. A winery with Pinot Noir and Chardonnay are a natural fit with someone who produces Cab and Sauvignon blanc. If the wineries market to both contact lists, they have the potential to grow their own lists and the customers get more varied choices.
Thanks for your comments.
February 6th, 2008 at 12:55 am
Original post is spot on. It works. Don’t tell anybody!
Carole and Chris - yes, in principle - but it is one of those things that must be crafted to the situation. To say Pinot and Chard mesh perfect with Cab and SB is too simplistic. What if one winery is into (say) Rubber Chickens, and the other is more “staid”? I think the personalities involved are at least as important, and probably other factors.
February 6th, 2008 at 7:40 am
Absolutely el jefe!
In additional, the participating “group” of wineries would need to overcome their reticence over ’sharing’ customer lists or turn such a management responsibilty over to a third party operator. In fact unless a group of Rubber Chicken loving wineries just fell into each others lap it would almost certainely be up to a third party marketer to pull these folks together under one website theme.
Cheers!
Chris
February 8th, 2008 at 7:04 pm
I agree with Carole and El Jefe. Wineries should look at partnering up in creative ways. Perhaps far flung wineries can do like “sister cities” type thing..not only drive sales to each others sites or clubs, but traffic to their tasting room.
I think it would be fun if we had people start showing up at our winery with a rubber chicken…kinda like a secret handshake..we would know they are truly “Twisted” folks and welcome at our winery any time! El Jefe..want to partner with a winery in Paso Robles?
This is a great idea that has been thrown around IBG since the days I worked there, but how to manage it and get over the idea that you have to keep your list secret is the trick.
Patty
March 11th, 2008 at 10:47 pm
I love the idea of partnering! It could be taken a step further to community or cooperatives. For example, rather than just choosing similar wines, choose similar interests (ie. dog lovers). There are many wineries that choose to use photos or art of dogs on their labels. Can you imagine a dog lovers website offering discounted tours of the dog label wineries. Bring your dog, too! Offer treats in the shape of wine bottles with the winery names engraved on them.
Jennifer
October 27th, 2008 at 3:03 pm
I buy 100% of my fine wine direct from wineries either by picking up or having it shipped direct. I do this because I feel more assured that the wine has been properly stored and shipped.
I join wine clubs for a minimum of 12 months and I definitely view the shipments as a sample program. I APPRECIATE a winery emailing me and reminding me to purchase (with my special discounts!) a few weeks and months after a shipment. (I don’t always drink it right away so sending me targeted emails periodically is a welcome reminder.) If the wine is consistent and the discounts are good enough, I’ll stay with a club for a long time.
I also purchase wine gifts direct from the wineries. I don’t use 3rd party online distribution if I can buy direct from the winery online.