Sunday, August 19, 2012

Can You Succeed in the Wine Business Without CRM & SM?

You are a with-it kind of person so you probably recognize the acronyms in the title stand for Social Media and Customer Relationship Management. You are so together, you probably have your Facebook and LinkedIn accounts with more than 500 of your closest friends and colleagues connected. You have a Klout score. You have a smart phone and check in with Foursquare at every occasion. You’ve even started tweeting twice a day about such fascinating things as, "Happy #FF" and "Isn't it a beautiful #DAY all my peeps." And the result of your social dalliance with SM on growing your sales is?..... Absolutely Nothing. Nada. Zip. Zilch. Zero. What is going on? Where are all those Millennials who are supposed to be Tweeting up a storm and rushing to your door. If you do Social Media, they will come! ...... won't they?

Social Media



As far as the Millennials are concerned as you may have read from some of my other writings, they aren't beating a path to your cellar door. Why? Because while they are the future consumer, today they can't afford your wine if your shelf price is over $20.  You could have the coolest, edgiest and most current tasting room experience in the world today; even play Techno in the background but the best you will hope to do is attract a young wine tasting crowd. You aren't attracting wine buyers in Millennials.

Millennials are wine drinkers but not really fine wine consumers. That's an urban myth as you can tell from the chart at left using Nielsen data showing total wine consumption sorted by cohort. Even if you were perfectly executing your digital strategy aimed at wooing Millennials, you will fail in growing sales because you set the wrong objective. Millennials will be a huge consumer group starting in about 2020, but not today. Does that mean you should dump your Social Media strategy? Absolutely not! But you need to better understand who your real customers are and how they communicate, then target consumers who will buy your wine today.

Customer Relationship Management

 

If you use CRM and study your consumers, you might be surprised to find they all are into Facebook and smartphones - but still have the money and desire to buy your wine. If you don’t know their tastes, how are you going to sell them what they want? If you don't know how to reach them - email, text, phone, IM, etc., how will they know what you have to sell?

In this market, the wineries that will do best will be those that devote time and resources to developing customer level preference information and embed curiosity into their culture. Some questions you might want your customers to ask might include:

  • How do you prefer to be contacted by our staff?
  • Why did a club members leave?
  • How old are my customers?
  • Do younger buyers purchase different SKU’s or prefer different style wines?
  • Do they like to come to consumer events, or do they really prefer entertain at home with my wines?
  • How often do they buy? 
  • Are older buyers purchasing more than younger buyers?
What’s at stake? Figure 16 from Silicon Valley Bank's Annual State of the Wine Industry report displays the adoption of technology specifically in the smartphone segment. (Click on the figure to get a better view.) Looking at the chart you can tell more than half of smartphone users are in the target wine producers prime demographic; above age 35. But when income is added to the mix, the result is more dramatic as older subscribers with higher incomes are more likely to have a smartphone. Those 55-64 making over 100K a year are almost as likely to have a smartphone as those in the 35-44 age bracket making $35-75K per year. That is the wine producer’s prime demographic audience. Are you as a wine producer reaching that audience?

M.J. Dale - Unnamed CRM Expert
CRM and information management on the other hand is a must when dealing with your sales and marketing plan. There are many ways to collect data, including asking the sales force to collect information from their drive-arounds, asking tasting room staff to do verbal interviews, using highly-evolved CRM tools, and taking advantage of inexpensive or free online survey tools that wineries can employ. It’s somewhat ironic that as we push deeper into a digital existence, it only emphasizes the need to return to the fundamentals of knowing your customer. Fortunately, tools are finally emerging that help us understand and properly scale client experiences so we can deliver seemingly individualized experiences in groups of communications. I've asked an unnamed CRM expert to come and guest blog in the next few weeks to give a deeper dive into the topic.

The Dominant Competitive Issue

The dominant competitive issue in the fine wine business isn't making wine. It's not getting the best price for your grapes. The most important issue that defines a winery's success is sales and marketing. CRM and Social Media have a large part of any effective plan today. But specifically with respect to Social Media, my recommendation is to get in the game and experiment. Don’t over-commit scarce resources, but do develop a thoughtful approach to what you want to do, how much time you can afford to spend, what good measurements for success are, and develop a feedback loop to evaluate your successes and failures on some schedule. Are those who buy my wine using social media? What is the most a given age group paid for a bottle of wine in the last six months? The list of useful questions is endless and each drives at actions that can be taken to improve sales and marketing.


Today with the convergence of technologies, every serious wine producer has to begin to understand and employ digital tools and consider integrating those with other platforms to improve the direct-to-consumer business.

What are your experiences with CRM and Social Media adoption?

18 comments:

  1. Rob...in terms of what you have written the past few weeks I think this is the most important follow-up.

    Even a guy making wine in his garage for more than a year could probably tell you that selling a 2nd vintage to people would bought the year before is a lot easier than finding new customers. Simply, if you want to be successful you keep a list!

    Anyone with more than a few dozen customers should also be able to tell you that keeping a paper list in this day and age is crazy.

    Ok...so you've got a digital list! Great....but how many lists? If you are a full fledge winery with a tasting room and have been in business for a few years you probably a list of people you have bought from your tasting room. You also probably have a wine club...but is that list integrated with your shipping list from the tasting room?

    You are using social media (and that is great) but the people who connect with you and follow you are another list..have you merged these names with your main database? Obviously, if they are a regular customer and they use social media you would hope that they follow you...have you asked for their comments?

    As Rob already pointed out, there should be a ton of questions that you want answers to but what about the people who are following you but are not customers...don't you want to know why? If they are following you on several of the social networks doesn't that give you a strong indication that there is considerable interest in your winery...but again why?

    This much I can tell you that between LinkedIn, Facebook, and Twitter I am probably following at least 2,000 wineries and NO ONE has ever asked me why.

    I think Rob's post is suggesting it and I agree...there are many wineries out there that need to do more homework!

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    1. I wonder what percentage of winery groupies are groupies that the winery just doesn't know because they aren't paying attention due to the fact that many of those groupies make their purchases through the bottom (or is that top) tier of the current wine system. They love a wineries wine but have never bought the wine direct or visited the winery for many reasons.

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    2. And as Rob's two prior posts (Is It Politically Correct to Make a Profit & How Much Do Wineries Really Make?) suggest those wineries that do focus on the winery groupies and make sure they buy through the DtC sales channel are the ones that are doing well and those that "just skip it" are probably the ones skating by hoping things turn better soon!

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    3. Thanks for the comments both of you. The reality is way too many wineries dont think about sales enough. They think maintenance of a system when they should be thinking of having a critical and strategic review of the system using whatever talent out there they can. Maybe its all fine, but strategic review of your digital marketing strategy is way too rare. If there is a CRM system in place, its often not scrubbed for clean data. In today's direct to consumer market in particular, its not an option to function without information on your customer tastes and preferences.

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  2. The gap between wineries who treasure their customers/end users (the consumers who buy and actually drink the wine)vs. the wineries who treasure more the third parties that truck their wine around is growing. The the distribution channels are shrinking, and as a result, selling wine directly to consumers is (OR SHOULD BE) becoming higher on the priority list. Powerhouse consumer products sellers like Amazon, Zappos and Pepsi use social media brilliantly to DRIVE SALES AND REVENUES. The wine industry can and should be using CRM for basic customer service. Here's a good blog on that: http://tinyurl.com/8pusrtm One of the leading reasons for why people drop out of wine clubs is because they didn't get enough attention from the winery. They want to reconnect to their wine country experience. Even a phone call counts as Social Media! It is amazing what a little love and care can do for sales. Stay in touch.


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    1. Erica...love your comments...does the sky need to fall (a.k.a Chicken Little) for the wineries to realize that "social media" is not new...yes... in the context that we are generally talking about it is in a new "format" (digital)but the practice of communicating with customers goes back to the dawn of buying and selling. A good CRM system would allow a winery to keep track of their "touches" with every customer (whether online, on the phone, or in the tasting room)....sophisticated businesses have developed online forms for their staff to record every interaction they have...wineries need to follow suit!

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  3. Great article and analysis Rob. As someone who manages the social media presence for a fairly good size winery with distribution in all 50 states and a pricepoint that matches what Millenials are buying we think it's imperative to keep track of those that follow us and engage with them. I regularly ask where they found our wine and at what price point as it can vary in markets based on the distributor. I keep track of every report from user to Restaurant so that I can help those that are asking the question, "where can I find a good wine at a reasonable price around here"? If you look at the latest data on where people buy wine it is still more than 85% in grocery stores because they have better pricing than even us wineries. What incentive is their for folks to buy direct? Club members tend to be on average 45-55 and like the parties we host and discounts they get, but for consumers that just want a good wine at a decent price... These guys will buy what has good packaging at a good price. I.e. CupCake, Apothery red, etc. owned by big brands who have figured out what sells and have the numbers to back it up. We sell wines at $14 line itemed and yet in retail stores you will find it at under $12. A hell of a deal and popular with all age segments, although Millenials like our other brand with hipper packaging for the $10 price in retail outlets. Image is everything and listening for the conversations or even answering the questions of those looking is the best Pre-emotive solution. I love to get feed back from our sales team, but it isn't always easy. They deal with distributors and accounts and less with consumers, except when they pour at events. Aggregating all of this with a Social CRM tool that everyone knows how to use (not easy) is key and we are still a work in progress. Finding a way to take all this information and port it into a usable database accessible on the fly by all... The Holy Grail of Wine CRM" - not there yet, even with expensive tools. Plenty of Free or inexpensive systems, getting the Human factor to be disciplined to use them, another story.

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    1. Thanks for the well thought comments Mark. Really appreciate the contribution to the discussion.

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  4. Mark Buckley is quite correct in reminding those of us who might have forgotten that the vast majority of wine sales take place in retail, near the homes of the consumer. Still, customer experience and behavior at the winery, visitor center, and tasting room are valuable to understanding who the retail customers are when they are not visiting the winery. That's why it astounds so many of us when we realize how few of the mentions of a wine brand which are published anywhere in the internet are ever tagged, catalogued, and analyzed to help produce the type of business intelligence that Rob McMillan prescribes. A good CRM practice everyday keeps the bankruptcies away.

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  5. This is a great conversation and one that is of particular interest to me. I work for an industry supplier (Nomacorc) and am a marketing guy with half my career as an entrepreneur and half in corporate marketing. I love the wine business but have never marketed a wine. In observing the use of social media in the industry, I think there is so much value in slowing down and trying to have real and deep engagement with a few customers. As was mentioned in the comment trail above, why not ask someone to talk on the phone in exchange for something of value to them. Learn about many individuals who are following you on Facebook or Twitter and try and understand why. Do they follow many wineries, was there something that intrigued them about your winery in particular? Use the opportunity like a one on one interview to understand as much as possible about the drivers and motivators of the buyers. Patterns will emerge over many of these conversations.
    My suggestion is to learn from each customer - one at a time and build learn why they bought from you and track (through a good CRM) all the data you collect.

    I recently had the pleasure of being on a panel discussion on wine marketing with Jamie Goode at London Wine International Festival along with Dan Jago at Tesco- the buyer. It was a spirited discussion and I wrote about it on my blog at: http://momentslater.blogspot.com/2012/05/london-whining.html The event was recorded and it the audio file is available too. I learned a lot from Dan, Jamie and Alex who represents a craft beer in the UK called Mad Dog. Much of that conversation is relevant to this discussion too.

    Cheers to the wine marketers and those of us who enjoy the results of their work!

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    1. Thanks for the cross post on the other blog Jeffrey. Appreciate your perspective.

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  6. It would be very interesting to hear your thoughts about the differences between Database Marketing and CRM. Most of the posts I read from wine industry marketing consultants and "experts" seem to use CRM as a catch-all phrase. Where both based on databases of prospects and customers I suggest that Database Marketing and CRM are based on very different suppositions about why, when, and how people buy products - needless to say that both present very different economics to achieve a positive Return on Investment.

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    1. Thanks for contributing David. I think we use CRM and Social Media for catch phrases that have far more depth than the manner in which we use them. I believe its also a statement in how far we still need to go in these areas that "experts" are far and few between. Progress is being made however.

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  7. Great post, Rob. Don't you think the challenge is looking at Social as a communication channel (a wonderfully frustrating and constantly open line of communication), but not a strategy in and of itself. You can't get a PO Box or a phone and say you're moving your sales, retention or otherwise strategies forward with your customers anymore than if you set up Twitter or Facebook, (and even monitor it) without a plan, a voice, execution and tracking. Until it is taken seriously I don't think we're there.

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    1. Susan - We definately aren't there yet. I tell people in speeches that its a little like the early days of telephones where there were signals in the wires, but someone was at a switchboard connecting your call. We have the wires up and running, we are speaking into the ethos, but there isn't a ringer on the other end yet. Progress is being made. Platforms are being developed and at some point, we will have a communication system that will be defined by your network and preferences. Its still a while out but we'll get there. That's why I suggest people dabble in Social. You don't want to wake up and find you have no understanding of the most important vehicle to communicate. Just go along for the right and watch the changes. At some point, you will be ready to jump in and find your way and get your message to the people intended in the simplest manner possible

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  8. Good post. Like the comment on millenials that echoes closely what I wrote in a consumer wine influence study 2 years ago.

    "The importance of the social web will increase as today’s 19–25 year old group reaches their prime wine drinking age over the next 10–15 years"

    Rob, FWIW, you may be interested in the study - which analyses major influence factors at retail by gender, age, consumption, etc. Had great feedback from retailers all over the world. Download at http://ow.ly/1KmUe

    As a postscript, for our retail store the most effective communication tool is still posters plastered on telephone poles!

    Best
    Paul Rickett
    Bowen Beer and Wine Cellar
    twitter @paulrickett

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    1. Thanks for the direction Paul. I'll take a look.

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  9. Excellent Blog post and some very informative comments. As a CRM consultant I would recommend you check out Nimble - http://bit.ly/SRmgFn - which is a low cost CRM with powerful social media connections.
    In the interest of transparency, I am a Nimble partner, but I have been selling different CRM systems for over a decade and have yet to see one that matches Nimble on the social side of things.

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