REthink Wine Blog

Before joining Inertia, I was roaming wine country roads; I would hit tasting rooms and meet wonderful people, hug the vines and taste wines on all ends of the spectrum. Being on the road brings you closer to the actual consumer experience and reminds you of what selling direct is all about. As I’ve been diving deeper into the virtual world of wine2.0 and the challenges of creating a wine experience online, I’d almost forgotten the joys of being in wine country and tasting and connecting.

Sure, you can taste and connect at trade tastings and such events also really make the process efficient – 300 brands in one afternoon! OK, we can all admit that with the exception of the most prolific wine writers – or avid swillers – it’s not easy to see, hear and taste all at trade tastings. They are great, much like Costco, but you might miss a little something. So is there a middle ground? Can you find a single place where you can get the wine country feel, while at the same time go through the serious work of tasting dozen of wines?

The answer of course is, Yes - it’s in the multi-brand tasting rooms. As I was on a little tour of the Napa Valley with my crew to taste some of our client’s wines, we decided to go for efficiency. We hit the following tasting spots:

Folio Winemaker’s Studio: is home to many great brands, several being Folio brands of course. The studio artfully blends different experiences and is a great wine country concept from Michael Mondavi.

Silenus Vintners: also a custom crush facility for artisan winemakers, this beautiful tasting room is home to 13 boutique wineries that you may not have heard of before, but that you will surely remember.

Cult Wine Central: as the name says, this is where you go for the big guns. As all the wines go for a certain status – the odd effect in having them altogether is one of democratization – no single wine has a pedestal here so the wines are much more approachable.

In all 3, the staff was extremely knowledgeable on all the brands presented and very friendly – everything was perfect for an afternoon of serious tasting. Thanks again!

While technically we were in multiple tasting rooms of 18 inches in width, these felt a bit like a cozy farmer’s market. They were all extremely comfortable, while each had its own distinct personality, which, consciously or unconsciously, infused the wines. As a wine guy, I believe such wine venues are great for the industry and the consumer. They allow small brands to coalesce and reach economies of scale in order to create a space for a precious and crucial moment to happen: the direct connection between a wine lover, your brand, your message and your wine.

For wineries without a tasting room or for those dreaming of getting their own – finding a spot on that multi-brand bar is a great go-between. The most effective way to create a direct relationship with customers is to meet them while they are meeting your wine in a glass. From that initial contact, a relationship must be nurtured so it may flourish into lasting sales. As we focus a lot on managing your existing customers here at Inertia – it’s great to go out and be reminded how such relationships are created in the first place.

At Inertia we diligently advocate customer intimacy—knowing who you sell to. A good idea is to understand your top 50 customers by volume, dollars and particular products. Predominantly, you’ll find these customers in your database based on wine club, general commerce or allocation purchasing.

This knowledge of your customers can result in even more targeted marketing and better customer service, both of which can be converted to sales and customer retention.

In this post I also want to tip you off to a pretty nifty market segmentation research tool (most of the information you can glean for free) that you can further use to understand your customers background.

First, simply, market segmentation is:

The process in marketing of dividing a market into distinct segments that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way and promoted in a certain way.

A market research software company called Claritas provides a good amount of online data that can be used for small businesses to understand their customers based on destination zip code. Their “for purchase” software tool is called PRIZM NE and it defines every household in terms of 66 demographically and behaviorally distinct types, or “segments,” to help Fortune 500 marketers learn about customer likes, dislikes, lifestyles and purchase behavior.  The 66 segments are numbered according to socioeconomic rank (which takes into account characteristics such as income, education, occupation and home value) and are grouped in two different ways:

* Social Groups: 14 groups based on urbanization and socioeconomic rank
* LifeStage Groups: 11 groups based on age and presence of children at home, as well as socioeconomic rank
The benefit here is that unless you’re Proctor & Gamble you don’t need to buy this software, a lot of the topline information is provided online for free.

Now, before I ask you to do a zip code search, it’s going to be helpful to familiarize yourself with the 14 social groups found at this link.

Now that you understand the broad ranges of the demographic categorization, let’s go to this web site whereby you can do free zip code searches.

So, let’s do an example, say you’re an Oregon winery and you have a couple of great customers in Naperville, Illinois with a zip code of 60564 that buy your $35 Pinot Noir.

By going to this zip code search site, you can now glean that those in this zip code are made up of the following demographic market segments:

1) Country Squires
2) Executive Suites
3) Kids & Cul-de-sacs
4) Movers & Shakers
5) Winner’s Circle

A quick study of each of these is going to give you lifestyle traits as well as income and a general feel for overall affluence based on household income.

Generally speaking, this information can only be used as a guideline for understanding and marketing to your customer, but if you know that your buyers, based on zip code demographics, are likely educated, affluent, drive a luxury vehicle and vacationing at resorts, then tackling this sub-set of your total database with a custom library program offer becomes all the more interesting doesn’t it?

By now, if you’re a reader of this blog, you’re familiar with Inertia’s groundbreaking Direct-to-Trade program. A program whereby we are creating a sales channel on behalf of our winery clients to allow them to access on and off premise trade accounts that is complementary to the three-tier system.

The premise of this initiative is to enable wineries (often small production vintners) to have access to markets that may otherwise be impractical or impossible for them to tap through the traditional three-tier system. In many cases, we’re partnering with distributors, who, by all accounts, understand the model and see it as a valuable tool for winery brand development.

It ends up being a win-win for everybody involved, because in addition to creating hand-crafted, special wines a winery has to ultimately find a buyer for the wine.

Oftentimes selling to a consumer via direct sales via the tasting room, online commerce or a wine club is sufficient for a winery needs.

Oftentimes it’s not enough, or not inline with winery growth goals.

Separately, industry trade magazine Wine Business Monthly annually looks at the number of TTB bonded wineries and non-bonded “virtual” wineries and indicates that the number of wineries nationally has topped 5000. This number has more than doubled in the last seven years. It should be noted that the majority of these wineries are producing fine wines, with a super-premium price tag and limited production.

Conceptually, these two facts are clear underneath the concept of the Direct-to-Trade program—wineries want access to market which was previously difficult to obtain and the proliferation of super-premium and luxury wines is continuing to create a need for access. If you throw in the fact that consumption in these price categories is one of the fastest growing segments in the industry, and it’s not hard to see that a perfect storm of colliding circumstance is brewing for winery success, which we are leading.

But, what’s not always clear is execution underneath this simple concept.

I like to think of it in terms of a popular business paradigm called a “Blue Ocean.”

A “Blue Ocean Strategy,” born out of a series of articles on innovation in the Harvard Business Review, can be summed as follows (citation from Wikipedia):

The “ocean” refers to the market or industry. “Blue oceans” are untapped and uncontested markets, which provide little or no competition for anyone who would dive in, since the markets are not crowded. A “red ocean”, on the other hand, refers to a saturated market where there is fierce competition, already crowded with people (companies) providing the same type of services or producing the same kind of goods.

Their idea is to do something different from everyone else; producing something that no one has yet seen, thereby creating a “blue ocean”. An essential concept is that the innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.

The authors actually cite Yellowtail in their book as an example of how a brand took an increased quality-to-price ratio in an underserved price segment to create a “Blue Ocean” of business.

Another example is Netflix. When started in 1999, nobody really thought much about DVD’s by mail. Nowadays Blockbuster is shuttering its windows trying to compete.

Our Direct-to-Trade program, in my humble opinion, offers the same “game-changing” possibilities.

My challenge for our winery customers is to think of your selling in much the same way. Using our Direct-to-Trade program, where can you create a “Blue Ocean” of opportunity?

Secondarily, it doesn’t have to be about a geographical market and sub-set of targets i.e. fine wine shop retailers in the Jacksonville/Orlando area for example.

Instead of just thinking about destinations for an eventual buyer, like an Italian restaurant in a given market, it may also be helpful to think about market segments.

If this isn’t somebody else’s term, I’m going to make it my own—think about “Macro Specificity.” That is, think specifically about the big picture. Think in terms of audience, not necessarily buyer. Think in terms of creating a market where one doesn’t currently exist.

For example, take an industry and a movement in any community like the arts scene.

I’ve been to numerous gallery openings, art shows, “Broadway” on the road shows and cultural mix & mingles in which wine was served by a licensed caterer to throngs of thirsty revelers. But, the rub is, all of the wines are non-descript grocery store wines. Obviously, this is sophisticated audience who demands and/or appreciates a finer bottle of wine.

Direct-to-Trade is open in Ohio. Columbus, Ohio is about as culturally literate as you’re likely going to find in the Midwest, save for Chicago.

Think about how you can tap into arts, culture and community. You would be the first winery to associate yourself with a cultural movement in a geographical area. After you’ve created a “Blue Ocean” you ultimately might be swimming in the green.

Author Note: Check Amazon.com for a book called, “Invitation to the Party: Building Bridges to the Arts, Culture and Community” for more information about marketing to this audience.

Every time you interact with a customer, there is some type of exchange of knowledge. The quality and management of this knowledge exchange directly impacts the quality of the customer experience and great customer experiences are essential for maximizing the lifetime value of customer relationships.

CAPTURE ALL INFORMATION
Some of the knowledge required for a great customer experience are captured during customer creation, online purchases, club signups and mailing list sign ups. However other information is important as well. Capturing and maintaining accurate customer information thorough any customer interaction is vital for getting an accurate understanding of that customer. For example, in a tasting room conversation a customer may mention their dog Spot. Capturing that information and mentioning Spot next time you talk to that customer will assure you create a warm and personal customer experience.

MAINTAIN ACCURATE INFORMATION
Knowledge must be kept up-to-date. That’s why knowledge management should be built directly into your businesses progression. Constantly scrub your data and customer information to ensure its accuracy. Encourage your customers to update any outdated information. This will help ensure accurate delivery of information and help build that positive customer experience.

CONSTANTLY ASSES AND IMPROVE EFFECTIVENESS
To offer great customer experience, it’s important to constantly measure your support performance and constantly evolve your business and customer experience. The process of maintaining a positive customer experience is organic and ever changing. Modifiying processes and procedures according to your business and customers is vital to building that positive customer experience.

In today’s competitive marketplace, excellent customer experience is separating the winners from the losers. That’s why knowledge management has become more important than ever. Set yourself aside from the group by creating a personal customer experience that your customers will remember.

Stephen Mutch
Director of Support Services
stephen[at]inertiabev.com

First Dimension - “Who they are” - this is all the transactional information that gives you an indication of who that customer is - what they bought, how much they spent, where they are, how they respond (phone, email, mail)

Second dimension - “Who they think they are” - this is all information gathered from surveys of the customer for them to describe what they like

Third dimension - “Who YOU think they are” - this is how you type your customer (e.g. VIP, press, celebrity, restaurantuer)

All together - the three dimensional customer.

—Paul Mabray - CEO