This article was first published in WBM Magazine, Australia's Wine Business Magazine, February 2015
In his article on clubs (winery mailing lists) in the last WBM, Professor Larry Lockshin argued against discounts for loyal buyers and however counter intuitive that seems, he is right! Larry also said that you should continue to attract and replace your club members. Right again, but if all you do with your mailing list/wine club is offer deals and exclusives, you are wasting one of your greatest assets. When visitors give you their personal details they are saying “I like your product and I want to hear from you”. This is a tangible asset on which you can grow your business and it was actually the basis on which I sold my company, Cellar Door Direct, back in 1991.
Mailing lists and loyalty clubs are a vehicle for better knowing your customers and selling to them as individuals. Think about it, don’t you appreciate buying from the local retailer who really knows you and treats you accordingly? In today’s over-hyped marketing world, building a picture of your customers is referred to as “actionable data acquisition”. ...but it is really as simple as my childhood memory of the local grocer who knew my mum and greeted her with the advice that her favourite cake mix was back in stock.
Smaller winemakers may recoil in horror at the perceived challenge of the former, but I am sure we can all relate to the latter.
The point is that if you understand your customers’ interests and buying patterns and talk to them as individuals, there is a reduced need for discounts. We proved this repeatedly during my time with Cellarmaster Wines.
Because wine is a “personal & personality” product, the heightened sense of relationship also serves to reduce attrition (the negative side of Larry’s “churn”). Adoption of this strategy shifts the loyalty club from being “defensive” as described by Larry, to one of pro-activity. You will sell more through your mailing list!
My first dabble with this strategy was an eye-opener! A plain typed letter, with no images, sent to previous buyers of Coonawarra Cabernet in a certain price range, elicited an order response of 33%. Can you imagine how you would feel if one in every three visitors to your cellar door bought a case of the wine you recommended on any day?!
This stuff is not rocket science. It can be managed in Microsoft Access or even Excel if that is what you have, but there are any number of SaaS (Software as a Service) packages online which are cheap and less time consuming.
By personalising your communication with your customers. I do not mean wishy washy stuff like starting with the customer’s name. How many lame attempts have you seen that end up coming out as “Dear Warland” or “Dear Mr.”? Way back in the ‘80s when I tried this at The Wine Society we received a complaint from a VIP who had received a letter with salutation “Dear Earl of”! My advice here is that if you are not absolutely certain you will get it right – use a safe salutation such as “Dear Friend”.
Think of personalisation in the context of the grocer’s interaction with my mum. Once your customer has been exposed to the full range of your wines they will have “told you” where their taste and spending budget lies. Once you have this insight you have the key to providing relevant offers to them – and once you are relevant, you can send them offers more often*. We all hate being “spammed” with irrelevant offers, but even if we don’t order on that occasion, we consciously or subconsciously appreciate an offer that is relevant. I proved this at Cellarmasters with a revolutionary digital printing strategy, successfully offering wines at non-discounted prices. We actually received letters from customers thanking us for the relevancy and apologising for not being able to buy on that occasion!
*”More often” sounds like “more work I don’t have time for”, but a little investment here will produce a handsome return on investment via incremental sales. Individual wine buying patterns are an extremely complex subject and if you don’t “own the customer” (i.e. provide 100% of their wine needs) it is difficult to time your offers for maximum response. Accordingly, the more often you can send an offer, the more chance you have of getting an order. But the offers must be relevant or you risk losing that customer altogether! Also a word of caution - e-mail has made it easy to send frequent offers but don’t overdo it. While an offer needs to be relevant, it also needs to have a degree of “freshness” and a small winemaker’s limited range makes that difficult. Call me old fashioned but I remain convinced that a wine maker’s best direct selling tool is still “snail mail”, as it is better at conveying the “personality” aspects of your business and reinforcing your relationship with your customers. I can guarantee you that personalised letters will be thrown in the bin much less often than emails will be deleted unopened.
Yes I know, you have a winery to run and you don’t have time for all this black magic. Well hire a part-timer or an agency. If the latter wants to sell you Rolls Royce service tell them you want a Kia Rio! Once the database is in place and cleaned up, this should not be expensive. There are even home-based contractors, including myself, who could manage the process for you remotely after an initial visit.
One last point. Fifteen years of wine direct marketing reinforced to me the fact that (a) Consumers tastes change and (b) Heavy buyers crave variety. As winemakers you know this instinctively, but it is an important element of direct selling and one where retailers have the advantage. Once you have identified your customers’ preferences and are personalising your offers to them, you must still occasionally “show them the shop” by offering your complete range. This gives them an opportunity to show you that their taste is changing and that you should change your personalisation to them.
Of course, presenting a large variety of wines to your customers is a challenge for all smaller wineries. Perhaps this suggests that small wineries should band together and share their data bases, utilising one central unbiased direct marketing office – how radical would that be?
Yes I can hear the guffaws out there... but business rarely succeeds on the basis of “same same”. Twenty years ago who would have predicted nation-wide dominance of the wine market by “big box” retailers? It will take innovation - something radically new, combined with intelligence and determination, to redress the balance, but I believe it can and will be achieved.
Richard Warland is a Roseworthy Oenology graduate and former Hardys winemaker. He moved on to a 30 year career of senior management in the wine industry and has recently spent 9 years working in CRM consultancy in China. He is now working as a freelance consultant based in Adelaide. Contact Richard at richard.warland@rtsronline.com
