Saturday, May 18, 2013

Is Your Tasting Room Successful?


It's your fault!
The other day I  stopped in at Wal-Mart to get some things. While checking out, a very large woman in very tight clothes came up from just outside the store and angrily told my cashier she lost her debit card after she paid. While I looked around the floor for the card the cashier said, "Yes, I remember you putting it back in an envelope" to which the woman replied, "Its not in there. I put it in the envelope but you rushed me to get out of line. You rushed me. I want to see your manager!"  ..... Are you kidding me? I had to work at holding my tongue.

What is it about the human condition that makes it so hard to accept personal responsibility? A similar version of that is the medical condition known as ....

Headinthesanditosis.


Quite sometime ago I had a client come in the office to talk. Already three vintages behind the market and unable to meet financial obligations, it was time to have a direct discussion about viable solutions. She was really quite an intelligent person but before we could even get to the part where we discussed alternatives in her control like sales strategy, ranking distributors success, branding, market presence, pricing strategy, proper cost allocations, ways to use inventory to raise cash, etc., I was offered the following:
"Its not like I'm the only one with financial problems. The whole industry is suffering and not current with releases. The only problem I have is you wont give me more money."
I had to tell her the view she held of the market was askew. We didn't have any other clients who were three vintages behind and in fact because of our financial benchmarking database, I was able to show her just how far out of the norm she was. She was so shocked at the information (see her in shock in the picture ----> ), that rather than accept what was in front of her, she instead tried to poke holes in the database. "Wait, are there foreign wineries in there?"

What is it about the human condition that makes us stretch the bounds of credulity rather than accept it when we aren't measuring up?

Tasting Room Success


That gets us to the point of this blog. Is your tasting room successful? How do you know? What are you measuring success against? Is the tasting room making enough money? What is enough money for the tasting room? Are your staff salaries in line with the market or are you overpaying? Is your club retention long or short of average? What's your conversion rate of visitors into club members?

Hopefully unlike the woman I ran into in Wal-Mart, you understand if it's someone else's fault, your destiny is in someone else's control. So you instead are an enlightened person and crave metrics from which you can diagnose where there are opportunities to succeed, and when you are operating within or below tolerances. Hopefully you want to find as many measurements as you can, and then rank where you can get the best returns  by investing your time and money in those. and moving past or eliminating things that give you minimal or negative returns.


 
You probably measure club membership length and your results are better than what is portrayed on the slide above (click on it for a larger view). On average, club memberships last just a little over 2 years. That means someone probably came into your tasting room, they signed up, and got their first shipment. When they got their second shipment the next year, they decided to leave the club. That is horrible performance in my view. It cost so much money to get the first sale in the door when you fully burden that sale with the overhead and salaries of the tasting room staff. You probably didn't really make money on that first sale. Then you shipped a second case the following year and they quit the club.
 
If you want to make money out of the tasting room, this is one metric that has to be improved upon. Furthermore, about those people that left - why did they leave? If I have to presume, I'd guess they didn't like what you shipped, but when I ask that question of some, I can get answers that reflect they really don't know why people left the club. Its not uncommon to start in with... it was probably the economy... maybe they lost their jobs ... they could have lost their house and there was no forwarding address ....or maybe the dog ate my homework? 
 
What is it about the human condition that makes it so hard to want to dig out facts that could point to someone dissatisfied with our product and services? Shouldn't we know why they left so we can address any issues?
 
On Tuesday morning of this week, Wine Business Monthly and Silicon Valley Bank will be hosting a live video conference on Tasting Rooms, CRM, Direct Sales, and Wine Clubs. We've had over 500 wineries participate in the survey and found some really interesting information that you can use to benchmark your own winery's performance. Its being offered gratis and I hope you can join in.
 
Videocast
May 21, 2013
Register Now
 
 
What do you think? Why do people not benchmark their performance? Why is it so difficult at times to ask someone how we can improve? Why are wine club customers turning over every 2 years in the wine business? Log in and offer your thoughts below.