As summer slowly fades away, the wine industry can look forward to busier days ahead. Whether it’s the chillier weather, or holiday gift giving, wine sales — and especially Direct to Consumer (DtC) sales — tend to peak.
But just because the entire wine market tends to grow at this time of year doesn’t mean you can complacently expect to benefit with everyone else. Now is a critical time to make sure you’ve cultivated your customer base well enough so that your place in the overall wine market thrives.
Recent data from the Silicon Valley Bank (SVB), available in the July 2017 Wine Business Monthly, shows where success in the DtC market comes from. Unpacking some of this data provides insights that can help you improve your DtC presence.
What Makes A Winery Succeed In The DtC Market? Connecting With Your Customers
First, why is it so important to make sure your DtC market is primed to succeed? As the SVB data and our own annual Direct-to-Consumer report show, DtC sales make up a large, and growing percentage of total wine sales.
Fully half of all sales for wineries with less than 25,000 cases in annual production come from DtC sales. For even smaller wineries, who face greater difficulty breaking into the 3-tier market, this percentage averages at around 70% of total sales. The DtC market, then, provides a way to avoid the pains of relying on distributors and trying to distinguish your brand in crowded wine and liquor stores.
But how, then, do you make your DtC market thrive? The best way to encourage customers to spend, and come back to spend again, is to cultivate a deep connection with them.
At a base level, this means following a number of common marketing tools: create a vibrant brand; develop a story that explains your brand and allows your customers to connect on a personal level with you; make sure you can distinguish your story from your competitors.
With wine sales, though, there is one key action you can take to make sure that you’ve established that connection with customers: grow your wine club. Wine clubs provide a unique and direct link to customers. They’ve shown their commitment to your brand by making the effort, and possibly paying money, to join your club. They are ready to receive your messages regularly, and want to hear about deals and what’s new. Per the SVB data, wine clubs are also key revenue generators — wineries with more wine club members see more regular income from DtC sales, and those sales are generally for more expensive products than one-off sales.
What Makes A Great Wine Club? The Experience
Not all wine clubs are created equal. There can be enormous regional differences affecting how effective wine clubs are, and how they succeed. For instance, tourist destinations, such as the Napa or Sonoma Valleys generally see higher revenues from their wine clubs than other regions. In part this is because Napa and Sonoma wineries tend to charge more for their wines. But it also reflects the extra effort that these wineries put into their wine clubs.
The SVB data shows, perhaps contrary to expectations, the vast majority of Napa and Sonoma wine club members live farther than a day trip away from the winery. These areas are destination spots; visitors will come from far and wide to enjoy the experience, and will likely treat a visit to these regions as part of a larger vacation. It is therefore more important for these wineries to create that direct connection with the customers, to make sure that they aren’t forgotten when the customer is back home in Michigan or Georgia. It therefore shouldn’t be a surprise that wineries in these regions depend more heavily on wine club sales.
Other regions, such as those less renowned for wine, like New York, Virginia, and Texas, but also some more developed wine areas like Washington, tend to rely more on day trips, according to the SVB data. This doesn’t mean that wine clubs are less important to these wineries, just that there can be a different flair to them. Instead of advertising deals and bulk shipping options, these wineries can focus more on events and the personal, local appeal that these wineries have.
It also can help to attune the tasting room experience for your wine club. The SVB data show that different services and styles can greatly affect the visitor’s likelihood of joining a wine club. More relaxed and open tasting rooms, say where the tasting bar is standing only or with casual seating, tend to draw more visitors than more formal tasting bars and private tastings. However, the more casual approaches also have lower rates of conversion to wine clubs, and less expensive average tasting room purchases. So a winery should find the right balance: do you want to bring in more people, and rely on those numbers to make revenue, or will you speak to a more select, but more likely to spend, audience?
The tasting room experience is only the first half of the process. Follow-up is key to turning an initial good impression into an enduring connection. Customers appreciate personalized notes. A handwritten thank you letter, or an email directed to a specific client, can go a very long way to letting your customers know you care — and that they should purchase more wine.
When your club members do make an order, it’s a great idea to let them know how the shipment is coming along. Merely sending them an invoice can be cold. Consider regular and friendly updates, showing them that their wine is on the way and being handled with care. Being proactive and communicating when there is a hitch in the delivery can turn a potential problem into a success. The package may be with the carrier, and out of your hands, but the consumer will still reach out to you for support. If you’re ahead of the game, and let them know when an issue has come up (say the carrier can’t deliver to their address, the package is damaged or they need to go to the carrier’s store to sign) you can be a hero in their eyes.
While all customers should receive high-quality treatment, wine club members represent a select group of customers who have shown their commitment to your brand. Making sure that they know they’re respected and valued can go a long way to ensure they’ll keep up that commitment. Maintaining your clubs, fostering them into lifetime relationships, is increasingly key to succeed as the entire DtC market continues to grow.
Again, these suggestions may seem like common sense. But as we near the busy time of year for wine sales, it’s critical to make sure that your wine stands out from the rest. Having your wine club succeed is one of the best ways to make sure your entire brand succeeds.