Since our last blog post, we decided that it made sense to separate the Tin Sheets Consulting presence from the Tin Sheets to the Wind presence on Facebook. In an effort to provide content on the Tin Sheets Consulting page, we have started farming news from various sources; as well as working on producing more original content. One of the articles that we recently posted got us to thinking about pricing.
Pricing. If your immediate reaction is to groan or run away screaming in the other direction, you’re not alone. We would wager to say that it’s no one’s favorite subject. The article referenced above discusses the “Marketing Placebo Effect”, which is best described as the influence of price on the perceived quality of wine. In simpler terms, more expensive wine tastes better than the same wine sold at a lower price. A number of other sources shared this piece on social media and there seemed to be a consistent theme in their respective takes on the article:
“Cheap wine is better than expensive wine”
“Stop wasting money on expensive wine”
“Uh huh. Don't be fooled!”
In essence, these sources think that consumers are being hoodwinked by the producer and there is no reason to ever buy expensive wine, and furthermore that wineries should take the hint and lower their prices.
The study in the article does identify some limitations of the marketing placebo effect, namely that there is a range where this is a valid approach, i.e. when choosing between a $10 product and an $18 product; and a range where isn’t applicable, i.e. when comparing a $1 product to a $50 product, because the range is so large that there are noticeable differences in the products. While these are valid points and should not be ignored, discussing the merit of these conclusions is not the point of this post. The most important takeaway for you, as a winery, is that you should take advantage of these ingrained biases in your consumer and use them to make more money selling the same amount of wine.
Your wine prices in your direct-to-consumer (DTC) outlets are too low.
Go ahead and read that again. I’ll wait. This is contrary to what we as winemakers, winery owners, and general managers hear day-in and day-out. It is important to realize a few things about this feedback, sales to distributors and to licensees are not the same as DTC sales. As a sales agent for a winery, you hear over and over again how “the wine is great, but can you get the price down $1/bottle or $25/case, so we get a floor stack” or “this would be great on our feature list at ‘x’ price”, where ‘x’ equals current price minus 25%. This constant pressure to drop prices in the wholesale world can create a winery-wide attitude that you must always be strategizing about how to decrease product prices in order to increase sales. This is a good and healthy approach with wholesale sales where competition is both ever-present and fierce, but this attitude adds an unnecessary hurdle when it comes to DTC sales.
One of the things that’s easy to forget when you’re caught up in production, marketing, HR, or one of the many other hats you wear as a winery owner or manager is that when customers come into your tasting room it’s because they want to be there. They made the decision to walk through the front door or get on your website and you now have their singular purchasing attention. This is the time to forget your wholesale pricing structure and instead use a different structure of pricing to your advantage.
If you have multiple tiers of wines, separating them by price can significantly increase the sales of the more expensive wine without harming the sales of the cheaper wine. By keeping the prices too close, you are, in essence, cannibalizing your own sales. Let’s say that in your offerings, you have two Cabernet Sauvignons, whether it be that they are different vintages, one is a reserve, or any other factor, so long as they are titularly different; and you have a relatively “narrow gap” in pricing for these two Cabs at $14.95 and $17.95. This “narrow gap” does two things:
1) You have invited the consumer to actively compare the two products and immediately incentivized them to choose the cheaper product by “rewarding” their choice with a $3 savings. This is especially troublesome in the tasting room where a customer can taste wines side-by-side and judge for themselves; and with only a $3 difference in the wines, you have made it clear to them that the difference is slight.
2) You do not allow the customer to meaningfully upgrade their choice. For example, Mr. John Jacob Jingleheimer Schmidt comes to your tasting room on his second date with his significant other. In hopes of getting to a third date, Mr. Schmidt wants to impress his date with either a) his frugal choice of the $14.95 bottle, or b) his luxurious lifestyle by spending more and “upgrading” to the $17.95 bottle. We can all appreciate spending less and some people will always want to be frugal; but if Mr. Schmidt feels like impressing his date and wants to upgrade his product selection, he is unable to do so because $3 is not a significantly higher price and does not offer a meaningful upgrade in product or perceived value.
These same principles are potentially even more important when it comes to online sales. With nothing other than your eloquently written description of the wine (no tasting notes, please), a killer bottle shot, and the price, Mr. Schmidt has no other information to help him differentiate between two similar products. When the prices are close together, the message you are sending is that the two products are not noticeably different. Clearly, this is not an incentive to sell the more expensive wine.
Here at Tin Sheets Consulting, we are proponents of intelligently designed pricing strategies (seriously, who isn’t?). Based on the flaws in the “narrow gap” pricing structure, we suggest employing a “wide gap” structure when pricing products through your DTC channels. To help illustrate what using a “wide gap” structure can do, let’s look at a real-world example. One of our clients, that we’ll call “Winery XYZ”, produces a traditionally-treated Cabernet Sauvignon, its flagship wine, at a retail price of $29.95. In an average July and August, XYZ sells 120 cases of Cab Sauv in combined online and tasting room sales. In the midst of a great vintage and based on the success of their flagship variety, the winemaking team at XYZ decides to produce a small quantity (680 bottles) of a single clone Cab Sauv. XYZ, in consultation with their marketing team and Tin Sheets Consulting, decides to price the product aggressively at $64.95, more than 50% higher than the standard Cab Sauv price. The rationale for choosing this price is that XYZ has a reputation for producing high-quality Cab Sauvs, the single clone was produced in limited quantity, and it would be sold exclusively through DTC channels. Released in early summer, the single clone Cab sold out in just four months and earned gross sales of $20,754.47; and most importantly, had no negative impact on regular Cab Sauv sales.
In doing the math (which we’ll do for you, since no one likes math), the average bottle price, including samples, was $30.53. While not that close to the $64.95 retail price, this was not concerning and expected. First and foremost, XYZ did not spend any additional money in creating this product compared to the production cost of the traditional Cab Sauv. Second, one of the primary objectives of the winery at this point was to increase wine club memberships. To accomplish this, pricing was used as a tool to “buy” more wine club members by providing incentive with a significantly lower price for the single clone Cab. Although the retail price was $64.95 to a regular consumer, existing wine club members and anyone that chose to sign up while this wine was available, had a significantly reduced price of $34.95. The value to the customer of joining the wine club is blatantly spelled out on the tasting menu by comparing the two prices of this limited production special product. This pricing structure easily demonstrates the value the winery places on their club members. Ultimately, this pricing structure led to an increase in club conversions of 25% when compared to the same time frame in the previous year, an increase in Cab Sauv sales, and more engaged customers for the winery.
The three big takeaways from this pricing experiment at XYZ Winery are:
TL;DR = Spend some serious time thinking through your price structure for DTC sales and don’t just copy your wholesale prices.
On my usual morning browse through Facebook, I came across a post linking to the Gray Report, written by W. Blake Gray, the self-proclaimed “Best Blogger/Online Wine Writer (in the World!)”, in which he opines on digital marketing in the wine world. After reading the report, I had the feeling (as did the wine industry leader that posted the link on Facebook) that the Gray Report is not in tune with the current landscape of digital and social marketing. Further perusal of his website and other social media posts confirmed this, and I believe the reason why is because Mr. Gray didn’t grow up with an iPhone in his hand. In other words, he is from a generation that has not had exposure to the digital world until later into his working and personal life.
I fully realize that this position can be called ageist, but the fact is that many members of the generations that came before the day-to-day adoption of digital technology, just don’t get it. In our winery owning days we frequently ran across this, particularly as most other small winery owners that we routinely dealt with were multiple generations removed from me, who born in 1982, falls squarely into the “Millennial” generation. I have many examples of this lack of technological understanding, but it’s easiest to start with my father since I have worked with him in so many aspects of the business from the first days of the winery until taking over in 2009. In 1996, when we first started selling wine to the public, I suggested we launch a website, and predictably (this makes a lot of sense if you’ve met him) my father asked why. It was early in the days of the World Wide Web and websites were definitely more of a novelty, so I realized that getting online might be a bit too radical for the time. I instead opted to push for a computer; first and foremost, so that he could/would stop doing the accounting by hand, among other reasons. Not surprisingly, I got push back with that suggestion (though I was eventually victorious). When the time eventually came for us to upgrade from the standard electronic Sam’s Club cash register to a more modern POS system that could provide much more insight to our sales data, he was, again, not a fan.
Over the past decade or so, I have been a member of various committees with other industry members, and often we would undertake projects that required us to share documents. As we know, sharing via Google Drive or Dropbox should make this a simple and painless task, but frequently I would run across the "I don't have/want/need/understand a Drive or Dropbox account, can you fax/email me that instead?" SMH. It’s hard to believe that as late as 2016, I had industry members requesting that I fax them things. I can’t even think of the last time that I did business by fax machine. In fact, I’m pretty sure that the last five or so years that we kept our fax machine hooked up at the winery, we received somewhere on the order of 758 junk faxes to lower our insurance rates or get cheap tickets to Cancun; and all of our outgoing faxes were from my parents, who preferred it to emailing documents. In fact, as of this moment my father only checks his e-mail once a day and actively has turned off notifications on his phone. To my contemporaries (and me), this behavior is near unfathomable.
It isn’t a matter of education or comprehension; in my opinion, the vast majority of small winery owners just don't want to understand social media and digital marketing plans. There is a simple cognitive disconnect here- it is not that they don't want to have successful marketing campaigns or that they don't want to grow their DTC sales, it’s that they just don't internalize the necessity and value. In advertising, one of the key decisions is where to put your ads so that potential customers see them. In other words, visibility and targeting. Outside of the digital world this is a pretty straightforward concept, a billboard on the interstate provides highly visibility, but is not highly targeted (unless you are a car company). Sending a direct mailer can be highly targeted, but is not particularly visible as it rarely travels beyond the addressee. In traditional advertising strategies, these trade-offs are a known quantity.
Understanding and effectively utilizing visibility and targeting in the digital realm can be a challenge in that the ad buyer (winery owner) understands the application of these strategies based on their own bias and experience. A winery owner buying traditional advertising does so because they know that it would be effective to capture their attention, and hopefully translate to a sale. This is generally understood as a known bias, as it is easiest for product producers to advertise as if they were the customer for their products; but this inward-looking bias also applies to the platform upon which they choose to advertise. In essence, the typical small winery is expressing an internal bias by selecting traditional platforms for their advertising and effectively missing the most effective path to reach those new younger markets.
For Baby Boomers and perhaps some of the earlier Gen-Xers, traditional marketing platforms make sense, be it phone book listings, billboards, or shelf talkers, as they have seen these traditional methods of advertising every day for basically their entire lives and have a "feel" for what works to sell to them as a consumer. Social and digital media, on the other hand, does not pass the “feel” test for the older generations. In the wine industry (as an extension of farming I can only assume), there are many people that do not use Facebook, Twitter, Instagram, Pinterest, Google, Bing, Google Plus, Delectable, Nextglass, etc. on a routine basis, or ever. Those people will not have that internal "feel" for what works, which is a difficult thing to overcome when it comes to spending money. People that do use those tools frequently, on the other hand, will internally appreciate the value of online marketing. In fact, just the other day I acted upon a well-placed Amazon ad in my Facebook feed…how many septuagenarian winery owners can say that?
Perhaps you’re starting to feel that this post sounds like dozens of others, shouting into the void to try and reach people that don't "get" social media and encourage them to get off their backsides and recognize the value of these tools. That is not my point, however; my point is that for those of us who do use this valuable set of marketing tools, now is the time to double down. With so few small and medium wineries taking advantage of digital and social marketing strategies, there is a huge opportunity for those that use the digital space to have a disproportionate advantage for their marketing money. In essence, embracing social media and digital marketing in your winery will make you an early adopter - at least from a wine industry point of view. The benefit to you is that the rest of the non-wine industry direct-to-consumer marketplace has already proven the tactics and success of these strategies. I would go as far to say that if I were still running our winery, I would cut all traditional advertising and spend the entirety of our marketing budget exclusively on targeted social media and digital marketing efforts.
I have been in the wine industry since before the time of Facebook and Twitter; however, a review of my social media activity and the rest of my digital life (when was the last time you looked at what Google knows about you?) can provide deep insight into the my interests and it’s not too hard to determine that I am an easily targeted wine consumer. Strangely though, as of today I have never once seen a targeted ad in my Facebook feed (or anywhere else) from someone that is not a Constellation or Diageo brand. To this end, I will make an offer- I promise to buy the first winery product that targets me. How’s that as a reward for your time reading this blog?
Here is a story that we put together for our partners over at Vin65! Find out why your tasting notes are killing your conversion rates.
Tasting notes are an important part of a winery tasting experience. Most wineries provide visitors with a tasting menu that contains at least a small amount of information about the wines. Since it is important to provide your customers with enough information to help them choose which wines to taste, or at the very least provoke a conversation about the wines, it seems as though tasting notes should be an absolute must-have for running your winery. They’re not. In fact, they can be detrimental to the experience, which can lead to your customers not finding wines they enjoy and ultimately not making a purchase.
How can tasting notes possibly be a bad thing? In order to best illustrate, we will use a personal example. I don’t like bananas. I don’t hate them. They don’t make me ill. I am just not a huge fan. Sure, I’ll eat them, it just takes me a moment to remember that they aren’t really all that bad. If I had to guess, I think my issue with bananas stems from a tonsillectomy I had when I was young, during which time I consumed an underride banana that caused all sorts of trouble (read: pain), but no need to get into the gory details. Why did I divulge this seemingly unimportant piece of information to you? To show that tasting notes can immediately deter me from liking a wine. Imagine I walk into a winery and find a Chardonnay with tasting notes proclaiming that the newest and most exciting vintage is creamy, balanced, and has alluring aromas of banana. The moment that I see the word banana, I have to work to dismiss my initial reaction of disgust in order to taste the wine without bias. Easier said than done. Let’s take the situation one step further. Imagine that I was allergic to bananas. My reaction would be even more dramatic and my ability to ignore that reaction and taste the wine without bias is even less likely.
The wine industry as a whole has a tremendous talent at unintentionally making its consumers feel like idiots, and this is a terrible hurdle that we as an industry have to overcome. The eloquently worded descriptive tasting notes that you, your winemaker, GM, or whomever worked laboriously to create are from a wine industry standpoint, totally normal; but to the average visitor they can be hugely intimidating. Here is an example of some expressively worded tasting notes that paint a picture of an elegant wine:
“This Malbec expresses aromas of fresh huckleberry, blackberry pie, ripe cassis, and cocoa-dusted berry trifle, all integrated with the spicy sweetness of oak, cedar, cinnamon, anise and a hint of black pepper. With dark stone fruit and berry flavors, this Malbec is mouth filling, elegant and opulent.”
As a wine professional, you can appreciate the time it took to create these tasting notes and write them in a way that allows a taster to imagine what the wine experience will be like before they even pick up a glass. However, as a professional, you also have to put on your customer service cap and look at it from the taster’s perspective. It is pretty safe to say that the average person does not know what a boysenberry smells like. Wine as a whole, and in particular, wine tasting in a professional environment can be incredibly intimidating. So imagine how potentially embarrassing it could be for a visitor to your winery to admit that they have absolutely no idea what a boysenberry smells or tastes like. And imagine how many people have never heard of cassis, a standard tasting note descriptor that we’ve all used (perhaps more than we should), and how daunting it would be to encounter it within tasting notes. This extends beyond your tasting notes to any venue in which the average consumer would consider purchasing your wine- from your shelf talkers to your website to events where you are providing information about the wines.
There is yet another potential negative issue that can stem from listing individual aromas and flavors. For example, the latest vintage of your Petit Verdot exudes a rich pepperiness that grabs you and provides you with a great sense of place. You (surely unbiased) are convinced this is the best example of a peppery Petit Verdot that you have tasted and it is the highlight of your tasting notes. A consumer reads the excitement for the presence of pepper in the tasting notes and buys the wine online; however, when they get the bottle a few days later and taste the wine, they find no pepper on the nose or palate. As we know, people have hugely varied perception thresholds for particular aroma compounds; and this person who clearly isn’t sensitive to pepper is now frustrated and perhaps a little embarrassed, and worst of all, perhaps upset with you as a company, ensuring that they won’t be a repeat customer.
So what should a description of a wine look like, if you don’t actually describe what you taste? Presented below are some examples of tasting notes that we have found to be both interesting to tasters and helpful in provoking conversation about the wines without using actual aroma and flavor descriptors; as well as some examples of tasting notes that demonstrate what not to do. All examples are gathered from actual tasting notes on active winery websites.
Do’s and Don’ts:
Do: Discuss the season in which the grapes were harvested and how the weather and other environmental factors affected the fruit and ultimately, the wine.
“Never a dull moment in the 2013 season, we experienced our usual warm and sunny days; but also faced record rains, fog, wind, and some unusually chilly evenings. This weather roller coaster, while trying at times for us as grape growers, made for some complex and flavorful wines that highlight the fruit, earthiness, and intrigue of our unique terroir.”
Do: Provide information about the grapes that were used to produce the wine. If you have a blend, please list the varietals in the blend- you’d be surprised how frequently this is skipped.
“The second vintage of this wine is a blend of 50% Cabernet Sauvignon, 37% Petit Verdot, and 13% Malbec and is very special as it is the first wine ever grown and produced from our winery containing Malbec. The first fruit received from a Malbec clone planted in 2011 adds an exciting element that we’ve never before experienced in a blend and has us anxiously awaiting the opportunity to work with more than just one single barrel in the future.”
Do: Elaborate on any unique (or normal) processing methods and how they were a part of creating this particular wine- i.e. time on skins for rosé, whole cluster pressing, oak usage, etc.
“Barrel fermented in neutral oak, this 100% Syrah rosé spent a mere three hours on its skins to achieve its rosy hued goodness. Dry and crisp, this limited production rosé will have you spreading the word that 'it’s cool to drink pink.'”
Do: List the vintage (believe it or not, this gets left off frequently); or if it is non-vintage, talk about it and why.
“Produced from the original vines in our Riverside Vineyard, the 2015 Chardonnay showcases the bright, rich complexity developed from producing a 100% ML-fermented and fully oaked Chardonnay. Two lots, one aged in stainless steel barrels with medium toast oak staves for five months, the other in new French and American oak barrels combine to make this Chardonnay full and rich with a creamy mouthfeel.”
Do: Talk about your special project wine that was created because it supports a cause important to you, has significance in the way it was created, highlights your unique location, or for whatever reason that makes it “special”.
“Paws with a Cause! Red Paw is a limited release of special project wines from both of our labels. The blend is a secret, but the reason for its creation is not- for every bottle purchased, $10 will be donated to a local animal rescue. Additionally, you'll receive a 7" stuffed animal of our mascot with your purchase- now you too can have your very own fine wine canine. Stock is limited and we never know when another will be available, so get yours today and help us help shelter dogs and cats find foster homes!”
“A railroad term meant to wish train crews a quick and uneventful journey, 2014 Eight & Sand’s name was chosen to pay tribute to the railroad and tracks that run through our property dividing our Cliffside and Riverside Vineyards. A Late Harvest Cabernet Franc picked at 32.70 Brix, this is the first time that we have ever produced a dessert red wine. The last fruit remaining in the vineyard until we picked on November 4th, our resident bear for the summer found these grapes quite tasty and was kind enough to leave us enough to produce just 83 cases. A special project unlikely to be repeated, stock up now before this one passes you by!”
Don’t: Avoid using obscure flavor descriptors - no one really can connect with roasted lychee, or stemmy brambleberries – you risk embarrassing your customer or worse, scaring them off.
“This Petit Verdot has aromas of black cherries, cassis, plum, and toasted honeysuckle flowers, with flavors of abundant cinnamon, vanilla, linalool, and white pepper. It almost makes you feel as if you’ve crawled into an oak barrel.”
Don’t: Avoid making claims and promises about the experience your customer will have with the product, especially if it is subjective, as this sets up a possible failure. What if the dessert aroma nose promised here is the reason for purchase? Lots of people like vanilla, marshmallow, and cocoa, but since the description below is about a Cabernet Sauvignon and not a dessert dish, it probably won’t deliver the true essence of s’more flavors and for some that will be a huge disappointment.
“Our carefully crafted one-of-a-kind barrel program provides the wine with aromas of vanilla, marshmallow, and cocoa, eliciting images reminiscent of everyone’s favorite campfire snack, the s’more. This wine is delightful and will impress even the most jaded wine lover.”
Don’t: Avoid being condescending or preachy by assuming your client will mess up your wine by pairing it with the wrong foods or won’t appreciate it by not understanding your intended purpose for the wine.
“Old-World in style, because of its earthy character”
"This wine is underserved as a post-meal digestif.”
“The correct glassware is of utmost importance for tasting this wine. Colored stemware will distract from the radiant hues of this wine and the narrower the bowl, the more of the power of this wine you waste.”
Don’t: Take special care not to do all of the don’ts in one tasting note!
“The wine glistens in the bowl of the glass releasing its aromas of ripe peach, cooked apple, and a touch of honey. The mouthfeel abounds with characteristics of cobbler and agave nectar along with and freshly wetted stone. Refreshingly acidic, mouth filling, and decadently rich, its effect is everlasting, the challenge will be to not drink this wine before its time. Enjoy with a first course of blue crab and caviar, or after dinner with a sweet stewed fruit or washed rind cheese, nuts or crème fraiche.”
Adjusting your tasting notes to draw the customer in rather than scare them away is just one way to help people feel welcomed and at home when they interact with your company, but it’s an important one. Trust us, no one will miss your long-winded tasting notes listing everything in the spice rack. Pros will appreciate being able to assess the wines with an unbiased perspective and the public will be more comfortable - and they won’t even know why! What do you think? We’d love to know!
As of the very second that I am typing this story there have been 333,920,235 tweets posted today. Since I wrote the previous sentence, there have been another couple of hundred thousand tweets. Check it out for yourself here.
There are (as of July) 8,796 photos uploaded every second from over 200 million users on SnapChat.
The numbers seem unreal; but the sheer volume of people talking about themselves is a huge boon to anyone in a sales and customer service business.
Think back to the single best customer service interaction you have had as a consumer- what made it so amazing? If it wasn't amazing or if you had a problem, did they empathize with what happened? Did they understand your needs when, or even before, you did? Did they treat you like an insider? Whatever it was that caught your attention to make the experience great is the key. The best part- it wasn't a fluke, wasn't a one-time thing where they got lucky. Chances are that your positive experience was calculated, clever, and quite intelligent from a business perspective.
I will use a personal example here: when I was managing sales for Canyon Wind Cellars and dating my girlfriend (now wife), we loved a particular restaurant in our then hometown of Vail, CO. They weren't the necessarily the best brand supporters for CWC, but they were one of the few that would work with our products in the Vail Valley. Every time we dined with them, they made a huge effort to make us feel like royalty. We would frequently eat items not on the menu, get extra small bites and snippets of great wines that they had open for one reason or another; and frequently, servers that we had never seen before knew our names. It was not like we were their best customers or even in the top-100 customers, with a wine list starting at $50 and reaching to the mid four digits, we were not even a drop in the bucket for their bottom line given our small budget as a ski coach/wine salesman and fundraiser for a local non-profit. We were not the hottest winery on the block. Heck, at this time Colorado wine was almost a dirty word. So why did they do it? Simple, they wanted to be great at customer service for all of their guests because in the Vail Valley great food is everywhere, but epic service is not. This was an easy way to set themselves apart and get repeat business in the restaurant industry there. How did they know that this is what made us happy and feel special? They listened, they saw the tips we left, they took notes (restaurant CRM’s are an incredibly powerful tool); quite simply, they built a relationship.
The wine industry from the tasting room standpoint is very much like the high-end restaurant industry in a Colorado resort town. There are many great wines out there, and while we all stake our business on the quality of our products, relying solely on your product is the hardest way to stand out. The service that you can provide, on the other hand, is an easier and more effective way to make an impact on your guests. So what does all of this have to do with social media? Your customers, potential customers, and long time regulars are utilizing a myriad of social media platforms and posting information about themselves- photos of themselves with friends and family, places they've traveled, experiences they've enjoyed; shared posts about things that interest them and things that upset them- a wealth of information that can be easily accessed. Since great customer service is about building rapport and a relationship, why then would you not spend time and money to make that happen?
This is doubly important in the tasting room because the product, by and large, does not matter. Let me say that again, your product is not important. Now before you throw your iPad across the room, jump over to Facebook to post your hatred for the upstart consulting firm out of Colorado, or something else rash, hear me out. The average person can clearly taste and internalize somewhere around five wines and that is probably being generous. Now if you're fortunate enough to be the first winery visit of your guest's day, then you are in well poised to have your product be memorable (assuming that they didn't just brush their teeth, drink some OJ in the car, or have a smoke before they came in). But what if you are the third winery visit of the day? The sixth? There is simply no way that your product will impact a customer that has had 20-30 tastings, and may or may not be slightly inebriated.
You will be better off as a tasting room if you embrace the fact that you are actually selling an experience and not just product. If you make this paradigm shift, your tasting room sales will go up, your customers will be happier, and you in turn will be happier too. The downside to all of this is that it takes work and time, no longer are you waiting for people to walk in the door, you are working for every person you can reach.
I want to be clear here, this is not just sending a few emails every month and posting a story on the company Facebook page every couple of days (you have a Facebook page for the company, right?). This is not hopping on #followfriday and #winewednesday on Twitter every couple of weeks. This is looking at your customers, finding them on social media, listening to them, and taking notes. In our company point-of-sale program, we utilized flags to notate tidbits or special information that we learned about our customers. A wine club member's favorite number is 24? Great! We make note of that in our system and when we hand number our premium wine, we'll be sure to set aside bottle #24 to go in that wine club member's shipment. Over the top? Nope.
Social media is a deep pool of information and it is up to you to do the work to fish out the information that can make you a customer service rock star. Your customers will be happier, your tasting room will be more interesting, your sales will be up, and you will have connected with your customers in a whole new and more meaningful way.
Need help safely and efficiently navigating the social media mine field? Reach out to us and we can help!
One of the many challenges of running a winery is marketing. The first step to a solid marketing plan is creating your elevator speech, a term that you no doubt have heard a million times. But, what is it? Well, it really boils down to this: what makes you unique? Are you the first winery that is run by the fifth generation, while canning your wines from estate-grown fruit, urban, biodynamically-curious, wildlife-focused, charity oriented, and exclusively utilizing organic office supplies in your region? The world? No? Not to worry, as there is surely that "one thing" that makes you unique. Does the detail behind that "one thing" that makes you unique matter? Yes, but not as much as the fact that you have that "one thing", which should be the core of your brand marketing strategy. Now that you have identified that "one thing", you need to get out there and sell it.
A fact of the modern marketing landscape is that this is the era of social media. It is widely accepted that the social media industry changed the game for all businesses years ago, and if you haven't caught on to that then it's time to stop relaxing on the weekends, start getting up early, staying up later, and getting out there to learn about and utilize social media platforms. Does it matter which ones? Yes, but not that much, it's more important that you get started telling your story. Sounds pretty easy, right? Well, believe it or not, it can be. Start a Twitter account, create a few tweets and use a few hashtags; take a few photos for Instagram; make a couple of posts for Facebook. Done. Or not.
Social media is a long game - you have to reshape your winery marketing around a new core of social marketing. It used to be that you would focus on getting people to think of your product when they were in wine country, shopping for wine online, or in a liquor store. Now your marketing job is to connect with your customer on a meaningful, personal level, AND to get them to think of you at purchasing opportunities. This change has been written about ad nauseam, and should you want to read about it, my favorite example is "The Thank You Economy". The point is simple though- your customer has so much personal information that they put out there for the world to see via social media platforms, your job is to start using it.
You might be sitting there asking yourself what this has to do with content. So far you know that you need to use social media and connect with your customers in a meaningful way, but what about your content? Your content is the other side of the customer connection coin. Everything that you post on the social media channel of your choosing needs to do at least two of the following three things:
1. Reinforce your message about what makes you unique
2. Provide opportunities that appeal to your customer
3. Provide a connection with your customer, apart from your product
Examples are numerous. If you are a passionate fly fisher, then use brand social media to integrate that personal detail into your unique message and help customers connect with you as part of the brand. Love dogs? So do many of your social connections and (take it from us) photos of your winery dog go a long way to establishing a connection with your customers. If you are traveling somewhere for work, keep your social channels up-to-date and connections will pop out of the wood work. Why? Your customers are people and want to show you what they know. You are the expert on your brand - but if you engage them on what they are experts about, it will amaze you how much they have to say, and how much they want to engage with you and your brand.
Skeptics out there will say that there is no demonstrable ROI on this sort of stuff. That is absolute nonsense. With the advent of Google Analytics, Buffer, Hootsuite, TWRW Engine, and dozens more that I won't list here, tracking the activities of clients and associating them with social media profiles is an easily achievable goal. Does this take a large investment in time, monitoring services, CRM's and the like - yes. But it's worth it.
Don't believe me? Check this video by Gary Vaynerchuk (author of the aforementioned book)
I want to start by saying that I love Vin65. They have been quietly spearheading the revolution in DTC (direct-to-consumer) wine sales in the face of giants like Amazon and doing it in a hugely innovative way, namely through decentralization. Unlike Amazon that continues to centralize by buying fleets of trucks to preform their own last mile delivery services or fleets of planes to perform first mile delivery. Simply put, Amazon is growing by centralizing their services under their own roof, whereas the model that Vin65 puts out there is different, instead of seeking straight growth for themselves, they are providing tools for helping their customers grow. They provide massively powerful systems like the ecommerce self-fulfillment solution EasyShip, client SMS communication, unified CRM platform, social media monitoring via TMRW Engine, and wine shipping collective 46Brix and put those tools directly into the hands of their client wineries. They are betting on you to succeed so much so that their company growth depends on it.
The traditional winery model is one that makes most sales via the three tier system, working from the recognized scales of efficiency: 8,000-12,000 cases, 14,000-18,000 cases, 25,000-30,000 cases and on up. Should you as a winery follow the traditional model of continuing to max out your scale of efficiency by maximizing equipment usage, expanding via distribution to new markets, constantly maintaining and focusing on third tier clients, then the Vin65 platform may not be the right choice for you- but your days may be numbered.
If it makes you physically ill to see that your best products sell for half of the retail value to the distributor, if the thought of earning the margin back that you are giving to the distributor sounds amazing, then Vin65 might be the right choice. However, it is not an investment-free choice, and I'm not just talking the cost of the service. For a moment lets consider the case of the fictional Rivet Winery. Rivet Winery is fairly close to a population center, but still a little off the beaten path. They make 20,000 cases of premium wine retailing for an average of $20 per bottle, with the wholesale price on that wine at an average of $125 a case ($10.42/bottle). After crunching the numbers, that is a "to winery value" decrease from retail to wholesale of 52%! If you work this out to gross revenue, the numbers get a little more startling: the 20k cases sold via DTC would yield a revenue of $4.8M, while the same wine sold through traditional three-tier systems would yield a much lower gross of $2.5M.
Of course most wineries are not in a position where they sell 100% of their product through one channel.The key here is the ratio of DTC to Wholesale sales. For Rivet Winery, let's assume that they have been running a moderately-sized wine club and have a busy season that keeps their tasting room busy for 4-5 months of the year. In volume, the tasting room barely manages to earn 10% of the volume of the wine made at Rivet, but the 10% brings in $480K or 21% of the total revenue- that's some heavy lifting for 2,000 cases of wine! What if Rivet Winery doubled that to 20% DTC sales? The DTC total is up to $960K and the gross revenue is up to $2.96M from $2.73M. It's not that hard to see the impact on the bottom line of investing in DTC sales. If you look at the cost of the top-tier product offered for the VIn65 system as your sole investment to grow your DTC business, in this case of Rivet Winery just $11,988 was spent to earn an additional $230,000. Not a shabby ROI.
Obviously in this example Vin65 is the variable that grew sales in the tasting room by 10% and that certainly is not the case for everyone. From my personal experience, we saw even greater success and grew sales in our tasting room 25% year over year for the life of our use of the system (3 years) on only 4-5% visit growth Prior to implementing Vin65's products, our DTC sales were 40% of our volume to begin with - the ROI for us was huge.
Focusing on DTC sales takes a lot of time investment above and beyond just installing the right system; it also involves lots of record keeping, a substantial amount of face to face time, and most importantly, perfect customer service practices. It is these details that let you maximize what a great system like Vin65 has to offer. It is pretty simple- if you think you are okay at customer service, you probably aren't. You have to know that you are awesome at it, or you aren't good at it - this is hard work, and takes more work than winery sales on the wholesale side do by a multiple of at least four. Vin 65 is a great tool box, but if you don't use it well you can't expect amazing results.
I have said over and over why Vin65 helps a winery - but why them? To help Illustrate why they are the top of the heap in my mind here is a quote from a recent newsletter:
1. Personalization-Wineries have come a long way in using technology to get to know their customers better. DTC has allowed wineries to actually know who is buying their wine, unlike the 3-tier system where it was always a mystery.The problem? You're not actually using the data that you've collected. In order to send effective emails with a great call-to-action (CTA), you need to personalize the content. In order to personalize, you need to have the data available to segment and analyze.
2. Email Marketing- Email marketing goes hand-in-hand with personalization. Sending emails is easy - but sending good emails, with an effective CTA, to a targeted audience is tough. So, don't ask "how often is too often to send emails? I don't want to spam my customers." The truth is there isn't a secret sauce answer for every wine business. Here's the long and short: Stop focusing on frequency of emails (once per month, once every 2 weeks, etc.) and start focusing on the content. One simple, single-focused email with a great CTA will outperform the traditional newsletter type email with 3 recent blog posts, an event, 2 wine releases, and a club event. There's too much going on - so no action is taken. Half of your customers are reading your emails on their smartphones, so a single-focused email will get much better results. Target and segment to see the sales role in.
3. Dialing in Technology- Technology has gotten better and better each year - but wineries still seem to work in silos. A customer walks into your tasting room and asks about the wine club, or whether they can buy wine online and your tasting room staff doesn't know. Staff aren't collecting email addresses because their boss isn't in charge of the website. This flows through the technology: your tasting room staff is using a POS that's not tied to the winery CRM. Your marketer doesn't meet customers face to face. Your wine club manager works with active members - and not your entire customer base.As an industry - we've got to blend the pieces of our business together so the customer has a seamless experience. After all, the customer experience is the most important - and your systems should work to make it better and better."
This is the way they think. They want you to have access to their data to let you know what matters - this is not a situation where you buy the tools and have to figure out how to use them, the relationship with Vin65 is a partnership where Vin65 wineries benefit by being part of the bigger picture of the DTC wine revolution. So if you are the winery that is focused on maximizing economies of scale and not working on the DTC experience you will be fine, but how long will it be before the DTC revolution is the new way and you will be the one struggling to catch up?
In summary you should consider Vin65 and/or growing DTC if you:
1. Are in a location where people walk in the door
2. Have web presence (or the desire to have one)
3. Recognize the importance of Social Media
4. Rock at DTC sales tactics or are trying to learn
5. Want/have a wine club
6. Are willing to invest a significant of time building your reputation, training staff, and making people happy
7. Have access to stable internet and basic technology skills
You should avoid Vin65 and/or growing DTC if you:
1. Recognize that you simply do not have enough customers coming through the door
2. Are not willing or able to train staff
3. Do not see value in a web presence
4. Think social media is without merit
5. Don't want to deal with the complexities and workload of a wine club
6. Don't have the time to invest in the necessary support work
7. Don't believe, embrace, or understand technology and have no desire to learn.
Curious to know more about DTC sales and what Tin Sheets can do to help? Want to talk about Vin65 with someone or need help setting it up? Reach out to us via e-mail at email@example.com.
Disclaimer: Vin65 did not ask us to write this and is by no means the only option or mandatory to grow DTC wine sales - but it certainly is the best, if you ask us.