REthink Wine Blog

Recently, some friends and I went wine tasting here in Napa Valley.

Our first stop was Rutherford Hill Winery where one in our group was a club member. A pick up party was in progress for club members and we were given the VIP treatment. We had our own section in the front patio, several staff members to chat with and pour and a terrific snack spread. The Cabernets are always wonderful here and the new realease Syrah was terrific! We spent quite some time there and several extra bottles of wine were purchased–a direct result of the special treatment we felt we’d recieved. I mentioned this to the club manager and she confirmed that pick up parties for club members were very successful compared to having club members stop by when they could.

Next was Baldacci where an appointment is requested. Luckily, they had time for us that day and shared some wonderful Pinot’s. We took our time, savored every sip and were rewarded with one on one time with the staff here once the tasting room cleared out. Stories were told and recommendations for other wineries were shared by the staff members (big score in our books!). Again, more wine was purchased, partly because it’s so good and partly because of the friendly out-going staff that made us all feel special.

My point? Throw a pick up party for your wine club members. Make sure your staff is friendly and spends time with your customers. My other point? Go wine tasting. Meet the winery staff. Take your time and enjoy yourselves. Ask questions. Ask for recommendations. Winery staff members have a wealth of knowledge and the willingness to share–take the time to find out what they know. Your wine tasting experience will be hugely enhanced by doing so.

Cheers,

Jennifer

Inertia’s 5th Annual Direct Symposium will take place on July 11th, from 9-3:30pm at COPIA in Napa. This year, we’ve expanded our agenda to include interactive sessions on topics chosen by attendees. Last month, we released a survey on what we were hearing from our clients and industry partners as the ‘hottest’ topics in the direct industry. Topics included:

• Website Design
• Website Merchandising
• Selling Direct to Trade 
• Direct Shipping Compliance
• Allocation Program Management 
• Wine Club Management
• Wine Blogging
• Online Social Networks

We asked attendees to ‘vote’ on their topics of choice for breakout sessions at our July Symposium. The results were tallied, and we have our winners… 

• Selling Direct to Trade: Access. Control. Sales. 
• Direct Shipping Compliance: A Dynamic Marketplace. Your Options.
• Wine Blogging: Brand Building, Customer Loyalty and Sales
• Online Social Networks: Consumer- to-Consumer, Peer-to-Peer Engagement
• Website Design: Designing for Best User Experience & Greatest Sales
• Website Merchandising:  Sell More Online 

Our Symposium agenda will allow attendees to participate in two breakout sessions of their choice: One in the morning, one in the early afternoon. During each of these sessions, panelists will lead an interactive discussion with the audience around a designated topic. Based on several workshops which we led earlier in the year, we know our clients are eager to engage and look forward to some good interaction.

Because of limited space in each of our breakout sessions, we request that attendees reserve their spot in the session of their choice as soon as possible. Signups will be taken the day of the Symposium, at check in, but to ensure you get a seat in the topic of your choice, send your request through today (along with your RSVP if you haven’t already!) to rsvp@inertiabev.com.

See you in July!

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.

It’s that time again - time for our Annual Consumer Direct Symposium which will be held on Friday, JULY 11th at COPIA. The symposium will be held in the theater at COPIA during the day; we’ll adjourn to the gardens in the evening for our Client Appreciation Party and enjoy some music, food, wine, and fun – all in the name of appreciation!

Our Annual Golf Scramble will be held at Chardonnay Golf Course on Saturday, July 12th. Even if you don’t golf, it’s sure to be a fun time. So, save the date for two days of learning and fun. More details to come. Hope to see you there!

Recently Inertia led a Wine Club Symposium for our clients and other wineries that were interested in exchanging ideas on best practices for building and growing a wine club.  One question that was raised was the impact, if any, that the current economic climate (dare we say recesson)had on club attrition.  The general consensus seemed to be that there was infact, an increase in club member cancellations.  There then ensued a discussion on what could be done about this.

This led to a question on how price elastic was the demand for club membership.  First a quick review of macro economics - Price elasticity is a measure of how much demand changes with a change in price.  In a perfectly elastic product, a 10% change in price results in a 10% change in demand in the opposite direction.  That is an increase in price, results in a decrease in demand.  Products that are easily substituitable tend to be very elastic (think fast food) while products that aren’t easy to substitute for are inelastic (think gasoline).

Okay back to wine.  I’d suggest that wine club memberships are substituitable, and therefore elastic.  So if demand is shrinking because disposal income is well, less disposable, then it flows that a reduction in price could stem the decline.  I suggested that if you normally have a 3 bottle club, you might want to proactively think of offering a one time recession buster 2 bottle offer, or some other price reduction.  Of course, you do not want to reduce the price of the wine, or increase the discount.  Maybe free shipping would work.  

Others in the room felt they would wait until a customer contacted them before making an offer. I think the primary question is this; what is more important, maintaining the Average Order Value of the club, or keeping as many members as possible.  That’s the question, you need to provide the answer.

With the economy in the dumper, consumers are cutting the fat. Unfortunately for the wine industry, one of the first things to be cut is wine club memberships. At our Club workshop last week, most wineries reported a higher-than-average attrition rate. With this in mind, we discussed steps that wineries can take now to mitigate a drop in membership.

1. Be good to the members you still have.
The members that you do have are worth more to you now - what are you doing to take care of them? Throw in some extra goodies with their wine club shipment, a tee shirt, an aroma wheel, or some wine glass charms. Let loyal members try top level club benefits for a prescribed amount of time - for free. Throw a party for your club members just to thank them for being a part of the family.

2. Take advantage of your repurchase program.
If you are not following up your Club “sample program” with an opportunity to repurchase, you are missing out on sales that could make up the difference in a time when attrition rates are higher. Offering your member the opportunity to buy the wines they just sampled is another way of taking care of their needs.

3. Give exiting members another reason to stay.
Create a new, entry-level Club and offer them a “step down” in membership as another way to stay involved with the winery. These, entry level, clubs may ship only once or twice a year and may include only one or two bottles but are a great way to keep members involved.

4. Offer to put them on hold indefinitely.
If all else fails, ask a member who’s thinking about leaving if you can put them on hold until their finances get better. On hold members can still use their club discount for that occasional purchase, will still receive news, and invitations for winery events.

5. Keep a list.
If members absolutely must leave, don’t delete them from your database. Keep past members on a list so that you can follow up with them later - they may want to rejoin when the economy picks up.

Think of times like these as opportunities - to be creative, to touch your customers, and to offer exemplary customer service.

If you haven’t already heard (or already RSVP’d), we’ve holding another workshop! This quarterly workshop at COPIA is on Wednesday, April 9th on wine clubs and allocation. We’ve divided the workshop into two, two-hour sessions.

The first session, Wine Club Basics, is from 10am to noon and will cover a variety of topics on planning, building and measuring the success of your wine club.

The second session, from 1:30pm to 3:30pm, is called Growing Your Wine Club and will focus on member acquisition strategies, maximizing your re-purchase program and considering an allocation program for one or more SKUs.

The Client Development Team who will be putting on the workshop need your RSVP by Tuesday, April 1st to clientdev@inertiabev.com. Space is limited.

We hope that the different tools, such as these workshops, monthly newsletters, planning tools, etc. have been useful to help our clients to grow their direct business. We’re working hard to ensure all the information provided is relevant and useful to their needs. If you have any suggestions or want to learn more about our workshop or other helpful tools, please reach out to the Client Development Team.

For more about our upcoming workshop, go to: www.inertiabev.com/inertiabev/page/workshop.jsp

This is something that can both positively and negatively affect your business. There are 4 things that you must think about when projecting your clubs revenue or better yet, truly understanding the value of your club. Most wineries fall into a trap of thinking their wine club revenue is simply the number of members times the cost of the shipment. If that is all you are looking at, then you are simply letting money fall through your hands. Here are the keys to focus on:

1. View your club shipment as a sample program and focus on getting your club members to repurchase what you just gave them an opportunity to taste.

2. Know your average decline rate for your club runs and keep it under 10%. Well run wine clubs have a decline rate of under 10 percent. If you find that you are running a higher percentage than that, then you have some cleaning to do. Implement a de-activation plan for those club members that are simply sitting on your list and never purchased, let alone received your last club shipments. If you don’t do this, we guarantee you will have a difficult time planning for your year’s financials.

3. Have a repurchase plan and execute on it 2 weeks after your shipment has been sent. This will remind your members to purchase the wonderful wine they just consumed. More often than not wineries condition their clients to simply wait for the wine their shipped and every once in a while consume it. Successful wine clubs condition their club members to consume the shipment they receive so that they know how many bottles/cases they should repurchase.

4. Know the % of club members that are repurchasing and continue to find ways to increase their order. By watching this percentage you will see what your club members like and don’t like. (Very valuable information)

When you put all of this together you get:

((# of club members – 10% decline rate) x package price) + (# of club members x 20%) x Ave purchase price)) = Total Club Value

CLUB ACTIVE NUMBER x CLUB REPURCHASE = Total Club Value

Most 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.

Almost all businesses fall into the Pareto Principle - optimistically 20% of your customers do 80% of your business.   Applying that math to your ecommerce in order volume will yield you interesting math to help you estimate your yearly sales.  So let’s apply this to a database number.

If you have 500 ACTIVE members in your mailing list you can expect a maximum of 100 members ordering in a year.  Divide that by the months in a year and you will get approximately 8 orders per month.  The average order is 3 bottles.  So multiply your SRP times 3 time 8 and you will arrive at your estimated gross income on the web per month.  Please consider that this is IF YOU HAVE AN ACTIVE and VALID email list of 500.  In general we find that customer databases have approximately 35% of the list inactive.  Using that math against a mailing list of 500 (not active) - you find that you have a potential of 325 customer and only 20% of those will translate into orders in a year.  That equates to 65 orders per year or approximately 5 orders per month.

My net message is that to run a successful direct business (ecom and phone and club) you need to do a lot of data hygiene.  Moreover, you need to really grow your list to continue to press your numbers higher.  Even more meaningful is that the 20% of orders you receive you need to really reward and engage with that limited customer set and find ways to increase customer satisfaction and order size.  Direct sales are a game of numbers and your metrics will drive your business if you stay rooted in the numbers.   If you have a weak customer database, your results will be significantly less.  As my first mentor always says, “math never lies.”