REthink Wine Blog

As the web has matured, this is a problem that has become evident in many industries. And I believe it is especially relevant in the wine industry. Wine marketers are increasingly finding themselves in the position of working with fragmented pieces of information from several different technology vendors in developing and executing their marketing strategies. Consumers, on the other hand, are becoming more and more accustomed to the targeted and personalized attention they receive from some of the big box retailers who have made it their mission over the past several years to understand and master the art of multi-channel marketing. And so for wineries, the issue of reconciling several separate silos of information (POS, ecommerce, and wine club) has intensified at precisely the time consumers are raising the bar in terms of heightened expectations.

As a wine marketer, there are several factors which are of vital importance to you in developing a multi-channel marketing strategy:

• A clear understanding of your customer’s purchasing habits and wine preferences, regardless of channel
• An understanding of customer loyalty as it relates to club membership and longevity, order history and VIP status
• The ability to reach customers when and where they want to be reached, with information that is personal and relevant

The solution lies in your ability to capture all information regarding customer behavior in a format which is “actionable” for you as a marketer. I think Forrester Research has coined it best in explaining that the answer lies in the development of an “Online Marketing Suite”. And while the Forrester research involves primarily “interactive marketing” as it relates to a marketer’s ability to integrate the myriad of online marketing technologies available today (email, search marketing, analytics, and Web 2.0 technologies), there are two aspects of the “Online Marketing Suite” that are especially relevant for the wine industry. As Forrester explains, the “Suite” requires two core components:

1. “The central hub – the molten core of the suite that enables marketers to manage and integrate online data.” At Inertia, our philosophy is that all customer data should be available to you in the cloud for purposes of segmentation and targeted marketing, because this is precisely where the superior tools you need in order to reach your best customers are available. In developing a customer centric marketing strategy, we believe that you need a true 360 degree view of the customer in combination with advanced list management and email marketing capabilities. And from the customer perspective, a wine club member or customer making a purchase in the tasting room should be able to visit your website, login and view tracking information and complete order history, regardless of whether purchases were made in the tasting room, online, or as part of a club shipment. This is the approach we’ve taken with respect to point-of-sale integration and it is the reason we’ve worked hard to perfect our club and allocation packages. Of course, we believe in making the data available to your tasting room personnel as well, as this is a must in delivering exemplary customer service.
2. “The network – a thriving community of technology and service partners”. Again, I think Forrester is right on the mark here. All customers win when complimentary technology companies work in harmony, and to that end we’ve made it our mission to develop a vibrant partner ecosystem, one which we believe will significantly enhance value for our winery partners. By devoting resources to an expanded partner program, involving partners who are experts in their respective fields, we can continue to focus on our own core competencies, driving opportunity in terms of demand generation, CRM, and increased lifetime value of the customer.

We know that the ability to manage data from several different sources is a major challenge facing everyone in the industry. By partnering with companies whose business models share important synergies with our own, we hope to change all of that.

On Friday the wine industry lost an American icon.  Robert Mondavi is largely credited with putting California wines on the world’s radar screen as he worked tirelessly to educate a generation of Baby Boomers about the benefits of wine as part of a healthy lifestyle.  He believed in the marriage of food and wine and traveled extensively to feed his quest for knowledge on the subject.  “Wine to me is passion.  It’s family and friends.  It’s warmth of heart and generosity of spirit” he wrote in “Harvests of Joy:  How the Good Life Became Great Business.”

And that message found its way not only to the Baby Boomer and Gen X generations, but I think it continues to resonate with Millennials – today’s 21 to 30 year olds.  According to Nielsen Research, Millennials, also known as “The Next Great Generation,” are approaching Baby Boomers in sheer numbers (70 million compared to the 77 million Baby Boomers) and they outnumber Gen X’ers by nearly 25 million.  What I found interesting about the Nielsen Research study, which was published in November of 2007, is that this group perceives wine to be “relaxing” and “sophisticated”, opting for wine over other alcoholic beverages for more formal nights out.

Perhaps even more interesting is the fact that, probably largely due to the influence Robert Mondavi had on previous generations, this is the first generation in US history to have grown up with wine at the family dinner table.  And the resulting shift in preferences is evident in the numbers:  ten years ago beer accounted for 59% of this age group’s purchases in the alcoholic beverage category.  Today that number is twelve percentage points lower, while wine and spirits have increased in relative proportion.

As they are just now shaping their tastes, Millennials represent an enormous opportunity for wineries. 

The tasting room:
Remember that this group is just beginning to form opinions and that those opinions will be largely based on experience, experiences they are very likely to share with like-minded peers.   The tasting room is a perfect opportunity to begin building long-term relationships with the next generation by creating memorable visits through friendly conversation and enthusiastic sharing of knowledge.  And don’t forget to capture email addresses – Millennials are a “connected” group, far more so than any generation before them.

Online:
This is the generation of social media, and while it may be difficult to justify venturing into social networking simply because it doesn’t lend itself easily to results that are “measurable”, social media can be a great opportunity for branding and for engaging a whole new generation of wine consumers.  It may be a longer term endeavor, but it will ultimately translate into sales, and more importantly, into longer term relationships. 

As a whole, the 21 to 30 age group is unpretentious and hungry for knowledge, knowledge that they’re much more likely to seek out via Internet search and social networks than through wine books or ratings.  This is our opportunity to pay it forward and continue the education that Robert Mondavi started.

As it appears we’re moving closer and closer to a recession, one interesting fact has come to light:  the Internet continues to be one of the few areas where many multi-channel retailers are experiencing sales growth.   According to an article by Internet Retailer this month, the web currently accounts for only 10% of The Talbots Inc’s sales but accounted for 68% of sales growth in 2007.  Likewise for many other merchants – Staples, Circuit City and the Gap are three examples cited in the article.  Another interesting statistic mentioned – online spending by households with higher incomes grew more rapidly than households with lower income (this is according to comScore, Inc.).  Year over year growth in the over $100,000 category was 28%, while those in the $50,000 to $100,000 category spent 17% more than the previous year.  This is a statistic which is not lost on the wine industry.  And given the fact that margins are clearly higher for direct sales, I think this year, more than ever before, is a perfect year to concentrate on increasing direct sales.  With a down economy facing us, a secondary goal of course, is to protect against margin erosion as much as possible - which leads to the title of this post.  There are two free tools available today to help you increase online sales and protect against margin erosion.

Google Analytics

I know many people are intimidated by the mere thought of analytics, especially if math was not a favorite subject in school.  And if you’re one of those people, I would suggest taking a look at Google Analytics from a slightly different perspective.  When you get right down to it, all of the numbers and graphs you see are really designed for one purpose:  to give you a glimpse into human behavior.  To further simplify, there are really two things you are looking for in all of the numbers:  1) how are people arriving at your site, and 2) what are they doing once they get there?   Remember that each click you see in your Google Analytics statistics represents an actual human being.
How are people arriving at your site?  Look at specific keywords and search engines consumers are using to find you.  Then take a look at the pages they are landing on.  Are they finding what they’re looking for on those pages?  If not, what can you do to improve your landing pages and increase conversion rates?

What are they doing once they get there?  This is where the funnels available to you in Google Analytics become extremely interesting.  Where are customers leaving in the sales process?  After looking at your Google Analytics numbers, I always feel it is important to go back to the website and look at it through the eyes of your visitors.  Follow the same path you are seeing your own customers taking.  Why are they leaving when they do?  What changes can you make to those pages to encourage them to proceed to the next step?

Even the slightest change in conversion rates can be significant in terms of your top-line revenues.

Rethink Compliance™

As many of you know already, our REthink Compliance™ tool was released this past week to all US wineries, fulfillment houses, and compliance services.  And the response has been amazing.  As the tool is free to all, I can’t think of a better way to protect against margin erosion.  REthink Compliance™ greatly simplifies your direct shipment reporting for each state, meaning you have more time to devote to increasing those conversion rates.  So if you haven’t already done so, I would strongly encourage you to register and to sign up for a webinar to see exactly what the tool has to offer.

One of the primary effects of Web 2.0 on the wine industry and direct-to-consumer in general has been a gradual shift in the marketing mix from one that was more focused on traditional push marketing methods to one that places more of the emphasis on pull marketing.  If you think of push marketing as involving the more traditional methods of targeting the right demographic through paid advertising and email, pull marketing is aimed more at encouraging consumers to actively seek you out.  By nature, the focus with pull marketing is more on building your brand through blogs, user-generated reviews and syndication of your content.    It only goes to follow that consumers who have arrived at your site by way of positive reviews on an influential wine blog or after discovering your content on a favorite foodie site, will be more receptive to your push marketing efforts (permission based marketing as an example). 

But the sheer number of wine blogs, forums, and social media sites in and of itself presents a whole new challenge.  How do you monitor what is being said about your winery?   There are many benefits to be gained by listening to the conversation:  1) if you have a tasting room, you already understand the benefits of interacting with your customers on a daily basis.  Social media presents an opportunity for online interaction.  2) You’ll gain insights which can be used to increase the effectiveness of your traditional marketing methods, and 3) those same insights will allow you to improve your customer service.

One of the wine industry’s most effective marketing tools has always been recommendations – by friends and acquaintances, sommeliers, waiters, and more recently extending into the realm of wine bloggers.  Positive word of mouth, especially when coming from more influential sources, can have a tremendous impact on sales.  So how do you monitor 1) what’s being said, 2) who’s saying it, and 3) who’s listening to the conversation?  Depending on exactly what you’re looking for, there are a number of resources available.

• Google and Yahoo! Alerts provide real time email updates of relevant search results based on keywords you choose.
• Search blogs for mention of your company and set up an RSS feed via Google Blog Search.
• In a similar vein, track comments that are posted on blogs via co.mments.
• BlogPulse Conversation Tracker helps you to follow the entire conversation, showing not only the original post, but other bloggers referencing it in their own posts. And BlogPulse trends helps you monitor whether a specific keyword is experiencing an increase in mentions or not.
• Technorati is probably one of the best tools available for tracking social media sites. Set up an RSS feed for blog posts mentioning your company name.
• See if anyone is using your company name as a tag by using Keotag.
• Track posts on forums using Boardtracker.
• For a complete picture of brand perception and awareness, you might consider a paid subscription service that monitors all channels and presents the information in an easily actionable format such as Andiamo Systems.

Finally, what should you monitor?  Everything related to your wines, your winery, your winemaker and owners, and possibly the industry in general.  You may also want to watch select competitors to get a feeling for how they’re navigating the social media waters.