Sunday, March 16, 2014

What Percent of Tasting Room Visitors Buy Nothing?

Ridding the World of Melon Squeezers
One dark and stormy night (yes I used that one) ...early in my banking career in Mendocino County, I attended an internal banking event where Jim Miscol; one of our senior executives would speak. He told us what a great a job we were all doing then asked us to help change the culture of the Bank. He said we needed to "get rid of melon squeezers." What in the heck was he talking about? I had no idea where he was going but my mind started racing to possibilities.

He went on to explain his comment by talking about a grocery store he banked in a retirement community. The store was carrying too large a waste/spoilage factor in the produce section. As it turned out, the store had evolved into a social gathering place for seniors who would walk the isles with an RC Cola, freely sampling grapes and nuts like it was a smorgasbord, and squeezing melons and peaches while talking to friends. It was the analog prequel to SeniorMatch.com. The store owner was at a loss how to address the problem without chasing away his customers. How would you handle that situation?


At Silicon Valley Bank, we have been doing research and writing reports on the wine business for years now. We released the Annual State of the Industry Report in January, and just this past week closed off the Tasting Room Survey which we run in conjunction with Wine Business Monthly. WBM will release the findings in their annual Tasting Room edition coming out in May and if you are one of the lucky 860 wineries who completed the survey, expect the complete results of the SVB-WBM survey in your in-box within the next two weeks.

We are still sorting through the analysis of the survey as I'm writing this, but the Melon Squeezer Slide was one I noticed right away. The slide is sorted by region and describes the percentage of tasting room visitors who visit your tasting room and don't ever buy anything. When you look at the slide you will see that on average, 35% of people who enter your tasting room are just eating nuts, squeezing melons and enjoying the great experience you've created along with their friends, but they are not purchasing anything. Melon squeezers are a drag on earnings but like that grocery store owner, what are you going to do about it? You can take a negative approach and put up signs that discourage melon squeezers. Some retailers out there have a minimum purchase sign posted. You could do that. 

Many wineries mentally process a tasting fee as an incentive when its applied back to a purchase. That makes a little sense because you can at least say you got a tasting fee, but I can assure you without even doing the math that the true cost of building a public tasting room, complying with county regulations, building codes (bathrooms, ADA, etc.), TTB regulations, and staffing, in no way are those costs covered by the tasting fee. And if that fee is satisfying, you haven't heard me preach about "the second sale."

Some wineries think about tasting fees as a disincentive. By charging a large tasting fee, they think that will discourage Uncle Ned from bringing his VW van filled with revelers. It probably does work to some extent. As side bar, while I don't have the stats to prove it I suspect if you charge the least for a tasting in your wine neighborhood, your melon squeezer quotient is probably higher than your neighbor. But while a higher tasting fee might make some sense, does it make sense to discourage potential customers? That's the conundrum the grocery store owner had. My answer would be yes it does make sense, because what you really want to do is have the right people enter your tasting room in the first place, but how do you do that?

I believe this is where many in the wine business need their own change in culture. Many think of a tasting room just as the Native American's in Alaska think of fishing weirs. They build a fish trap on a river with a good population of migrating salmon swimming by, then try and funnel the fish into the trap. It works pretty well but they don't just get salmon. They pick up carp and other junk fish. If you put the "Library Tasting Today" sign out on the road with balloons on  it to attract some of the migrating wine tourists, you are going to snare more carp than if you had no sandwich board at all. Why is that? Because a higher component of people will be coming to your tasting room already looking for your brand. They either had your wine or read something somewhere and don't need a "reserve tasting today" sign to get them to turn up the driveway.

Rather than taking the passive approach of waiting for the fish to drive by and stop at your winery, you should be defining the profile of your ideal client then developing a marketing approach to attract that profiled customer to your tasting room, long before they are in their car.

In many respects, those with a by-appointment approach are already ahead of the game because they have to target shoot and pre-qualify potential customers. They have to work harder at getting people attracted to their place of business or they fail. That's not to suggest that an open-to-the-public tasting room is any less desirable an approach, but today, as you will see in the soon released SVB-WBM Tasting Room Survey - its the by-appointment wineries who are demonstrating superior metrics.

Rather than the type of location or style of tasting room experience, I believe it's the strategy employed to attract people to the winery before hand that makes the difference. The strategy can include a "drive by" component but only if you have a process in place in which you direct melon squeezers to one area and the high potential customers to another. You can't allow melon squeezers to distract your tasting room staff from the experience of a high-potential client, even if Uncle Ned is an engaging and entertaining fellow.

What do you think? How do you lower the melon squeezer quotient in your tasting room? What strategies do you employ to get the right potential customers to your place of business before they get in the car?

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61 comments:

  1. Great and timely info as always Rob and I am sharing this with my Sonoma State online wine business class. We are studying tasting rooms, wine clubs and other D2C aspects of the biz!

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    1. Thanks Tim. Hoping someone in the group participated in the full tasting room survey and would be willing to share the results due out soon. That too will be excellent information for their maliable minds.

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  2. Former student of Mr. Hanni's 2013/2014 Intro & Interm.

    I think something to touch on is the customer interaction from the wineries staff. Is the place adequately staffed? Is there enough one on one interaction where the member can educate the consumer while selling wine. Is it the process? Is there a white tent with a group of people and 1 person pouring wine to 15-20 people? How is crowd control? Is it over crowded? How about educating the little kids as well.....no, not in drinking vino but the basics of viticulture. There are a lot of families so why not have something for kids as well(weekend event).

    Some things off the cuff here, I still think the staff is the most important tool for increasing sales.

    Great Article
    Johnathan

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    1. Thanks for offering good thoughts. I actually left off the part about what the right way to market should be, simply because it varies between venues and wineries. There are more than one paths to success. That said, there are more paths to failure and your point about staff is absolutely true. One of the slides in the Tasting Room results that will be sent out to participants is a view of how hard it is to find tasting room staff. But right after that has to come a discussion about the service culture and training.

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    2. Johnathan - great points.

      Rob - great article and market insight.

      Your point about staff sourcing challenges is spot on. Where I am, there is a market rate for tasting room folks and really, the market is tapped. But I have 2 thoughts:

      1. I don't want to pull from the same staff pool, as my tasting room experience is designed to be distinctly different and therefore my staff also needs to be different. Note - I'm not saying better, I'm saying different. And you hit it very much on the head about service culture. Really, the tasting room and therefore the tasting experience is all "theater". We craft an experience and then deliver it "new" to each client - because it is new to /them/. That drives differentiation and engagement. And as you've talked about before: engagement (particularly in the wine club) yield loyal clients with many second sales...

      2. My second point is that when you look at the sensitivities associated with profitability - it is clear (to me) that the employee cost, while important, is significantly less important than driving average ticket sales, average per-bottle pricing, wine club sign ups and client good will (as measured from the previous metrics and others). A 1% increase in EE costs in the tasting room is far less costly than the expected benefits 1% increase in average ticket, average selling price, or average wine club sign up yield. Further, that single 1% increase in EE costs can positively influence all of those revenue figures...

      I hope this makes sense. Thanks again for your ongoing blog.

      --Chris

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    3. Chris - thanks for logging in. I always appreciate addressing someone by name.

      1) You seem to have the appropriate service hat on. I agree about the theatre aspect of your comment. You are pitching something as special and your staff have to believe that too. Not so sure about pulling from the same staff pool, I believe people who have experience elsewhere have already paid tuition and learned from mistakes ... at least I hope they have. I also believe pulling from non-industry pools like hotels service staff, concierges, strong sales backgrounds, first-class flight attendants, white table cloth waiters and the like - even with no prior tasting room experience are probably going to turn out to be good hires. Either way, its all about the winery culture of service and your training that really matters.

      2) Great point on tasting room staff as a cost of doing business. Most are paid a modest hourly wage so there shouldn't be much of an excuse for under-staffing a public tasting room and allow it to become a trough. It also says paying more to get the right people and expect better results is a preferred approach for a higher price point wine sale and experience.

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  3. Right on Rob!
    I went "Private" a few months ago and accept appointments from "members only" except for referrals and persistent people - every visitor now buys wine. What a big savings in tasting room labor and wasted wine poured.
    Don

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    1. Thanks for your thoughts Don. That's an exciting change and I'm sure many who read this blog are thinking of doing the same. Next week I will have some added thoughts about the style of tasting room and how that impacts success that I think will be interesting. We are looking at that as we speak.

      Take a look above at Chris response on labor costs. Its a great point. On wine poured - I can't figure out why all tasting rooms that have a high dump rate of high priced wine don't employ the Coravin system in the tasting room. Its an awesome new product. I discussed it on this blog here: http://svbwine.blogspot.com/2013/08/do-you-like-drinking-day-old-wine.html

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    2. I am curious...... How many customers did you get per week on average when you were open to the public and how many are you getting now ? Anne-Marie

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  4. I buy a lot of wine in tasting rooms. While staff is a big factor, the wines are even more important. I go to open rooms and to "by appointment only." The former has led to some enduring relationships. If all tasting rooms were appt only I would probably make fewer trips to the CA, OR WA wine AVAs.

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    1. Thanks for the comment Anon 8:16. That is indeed the quandary and the heart of eliminating the melon squeezer issue. Does going by-appointment really create better profit? I hope to get at that question this next week in the blog. We are working on the analysis as we speak and I hope to have some more answers.

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  5. A winery could possible do both. Perhaps Saturdays only open to the public, the rest of the week it's by appointment only. And within a few months they could tell whether the public day is producing sales and end it if not, or expand it if it is.

    And please, train the staff not only in how to serve customers, but in the ability to close a sale. We had one person who was not even close to meeting sales goals and when asked she said "I don't want to force people to buy wine they don't like." She was gone soon after, but why she was there in the first place is a mystery.

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    1. Larry - Thanks for logging in. I always prefer to call someone by name.

      That is a good experiment you position. I suspect it comes with its own challenges, for instance the couple on a wine vacation with others who stopped by on the weekend then brings someone else back during the week, or returns during the week at a later time. Also, weekend traffic is different than weekday traffic so you might not compare apples to apples. Its worthwhile exploring the idea though. You might be on to something.

      Totally agree with sales training for staff. I wouldn't be too hard on the person who says "they don't want to force people to buy something they don't like" though. In reality sales are about discovering a prospects desires and finding a way to help them meet those needs/desires with your product of service. That tasting room person had part of the equation right. She shouldn't want to sell wine the prospect doesn't like. She should be trained in sales strategy though, and discover what wines they do like then help the prospect meet their desires by closing a sale that the prospect feels is a great value (many parts to the term value beyond price.)

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    2. Actually, this is a very interesting question - why should people buy the wine they don't like?

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    3. TAV.com - The answer is people shouldn't buy wine (or anything) they don't like. It's the proverbial selling ice cubes to Eskimos. The point I think being made here is the sales person wasn't really a sales person and never uncovered what the prospective customer DID like and so perhaps convert a skeptic/non-fan into a happy customer.

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    4. Our small brand does not have a tasting room but I am very tuned in to the DTC model and make a point to observe the process when I visit wineries in my area. Samples are the most effective, but also the most expensive sales tool. A few observations.
      1. I was surprised to see the staff at one winery hit folks up for T Fee immediately upon stepping up to the tasting bar. I found that once folks pre-paid the tasting they were less inclined to pull their wallet out again and buy before they left. Did they feel they had already met their obligation or did the 'hassle factor" lead them to pass on a purchase. I am led to wonder but think the former. In any case, it most definitely reduced the number of purchases made that day at that particular winery.
      2. When VERBALLY told up front there was a tasting fee of XX which would be waived upon purchase, even prior to tasting a wine, I noticed discussion began over what they were going to buy. So that simple comment was all it took set the sales expectation from the start.
      3. In busy tasting rooms when there are many people at the bar and milling around the retail center I see people 'sneak out' time and time again without buying OR paying the T Fee. Not having enough staff to manage the flow is a clear detriment to sales in a busy tasting room.
      4. People do not want to hear about quince, currant and shoe leather they want to feel welcome, be acknowledged and simply not ignored. Start the conversation with what wine do you typically like to drink or ask what will they be having for lunch then lead them to share with YOU what their favorite is from your winery.
      5. Finally, as I am in the business I am quite often compe'd the T Fee (which I appreciate) and unless I absolutely don't like the wine, I typically buy a least a bottle of wine. When you live in wine country everyone you have ever known wants to visit and go tasting. I am offended by my own friends who simply want to visit every winery, make it a party and hope their fee will be waived as well. It frustrates me when the tasting room personal doesn't ask for the sale. The customers need to be reminded that the wineries are a place of business not a bar. A simple " which wine would you like to take with you to share" or "may I stock your cellar with your favorite taste today?" may be all it takes to close a sale. ASK FOR THE SALE, don't make me do it for you. In the case of my visiting moochers I make a point to remind them to please support the wineries who welcome us by buying a bottle or two when they find one they like.
      5. Visit the mall and hire the best cosmetic sales person you can find. Anyone who can make someone feel great about dropping $75 on an ounce of clear liquid can sell wine. You can teach the technical stuff, hire the confidence sales person who can engage a perfect stranger as they walk by.
      6. Finally, I know they take up space but I encourage you to keep a few wine shippers on hand. (I love WineCheck.com) Many folks don't want to ship one or two (or their states prohibit it) or join every wine club but if you can sell them a shipper- they will buy more wine if they have a way to get it home.

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  6. Well said Rob. The tasting room must be part of the CRM strategy. Tasting fees do not contribute as much value as personal contact information - especially their phone number.

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    1. Spot on Martin Jones. I'm sensing through my crystal ball that you have a highly successful direct to consumer effort ... or .... wait .... the ball is a little foggy here.... OR .... you are selling CRM. I'm betting on the former prediction.

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  7. Excellent analysis once again Mr McMillan. A parallel data point: the work we've done on tasting room experience (mainly in Australia) suggests that, somewhat counterintuitively, there are benefits from being less accessible to drive-by traffic. Some of the Aus wineries are a long way away, and off the beaten track, so need to cultivate the "advance planning" traffic otherwise no one would show. These tend to be better customers than the drive-up type, which is obvious when you think about it (like all good insight should be!)
    Separately, we identified a particularly valuable segment of customers in our research (in terms of Customer Lifetime Value), but who are very high maintenance: locals who go 3-5 times a year to a given winery. On the plus side they act as ambassadors and/or unpaid recruitment agents, because they tend to bring new people into the brand as their guests; on the downside they tend to be more demanding, picky and in need of new stuff to excite them.
    For those interested look on our website for the free Tourism White Paper (in our Reports Shop section)

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    1. Richard, I'd love to read your Tourism White Paper, but am not familiar with your website. Can you provide the link here? Or email it to me at demographx@gmail.com ?

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    2. Richard - Thanks for the cogent thoughts straight from the COO of Wine Intelligence, UK. I appreciate that you have offered a free paper on Wine Tourism and will indeed go to your site and read it.

      It is counter-intuitive to think someone remote can have greater success versus someone on a well traveled thoroughfare, but I think the answer is in the saying that 'necessity is the mother of invention.' Those in the hinterlands can't take the migrating salmon approach to sales. They have to work for their customers. But those on well traveled roads who also direct the right clients to their facilities AND have strategies in place for directing them once on site .... those are the real winners in my mind.

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    3. For those looking for the paper Richard is discussing, you can download it from this URL: http://www.wineintelligence.com/australian-wine-tourism-a-unique-connection-with-consumers/

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  8. I think the reason customers are not secondary buying
    Is that the products in the tasting rooms, other than the wine, stink.

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    1. Rofer, I woke up this morning with a main-line sewer blockage so I have a different emotional reaction to stink at this moment. Moving away from that unfortunate event however, when I discuss "the second sale" what I am really talking about is the perceived value most place on getting the first sale (that is a good thing.) The most valuable sale though is the second sale versus a secondary purchase which I think you are referencing. The second sale is the most important sale for a winery, because someone has tried your wine probably because of successful marketing on the winery's part, they had a good experience, and they came back for more - preferably because you maintain a CRM database of past customers along with their tastes and contact information and were marketing to them.

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  9. As as small (ok Tiny) 2 weekend a month winery, we may be a bit different, but we do find that we have a stream of intentional visitors and a few who saw the signboard and turned up because of it. When we increased the size of our primary sign from 2x4 to 4x8 we did see a bump in traffic. Conversion is about 2/3 per person or maybe 80% by group, and we charge a nominal ($5) fee at the end if they don't choose to buy. Other wineries in our region are between Free and $10 at this point. We've just signed up with VinoVisit and will be tracking any appointments to see if they drive better traffic, previous experience with groupon scheduled appts with discount was positive.

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    1. Sheldon - I so appreciate you logging in. Thanks for the comments.

      Your experience is an interesting one. I am certain there are differences between your winery open weekends in a sparsely traveled area versus those of others. The price point of your wine I am guessing is in the 'affordable' range .... perhaps averages around $25 with some in the $40+ range and some in the less than $20 range? Those prices if I'm right are a part of the draw. I am guessing your wines are well made and quite a value for the price. I say that because I've talked to people this week in Napa who have used Groupon and had disastrous results attracting price versus value driven consumers who want to have an experience without paying anything. That said, if your wines aren't in the stratosphere as is found in Napa and Sonoma, Groupon might indeed be a good way to draw potential customers. It really gets down to understanding the persona of your specific ideal client and marketing to them. I also congratulate you for trying out VinoVisit which can be another viable way to drive visits (editor note: I have no pro/con bias in the company). You are indeed an enlightened proprietor!

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  11. I have worked at small wineries and large in Napa. I received sales training with what I feel is the best....I also understand hospitality, what it means, what it is....most people that are only out to feel melons are easily converted to sales, this is not hard to do.....you figure out what they want and give it to them. Usually this is kindness and attention and understanding how to give a transcendent experience with wine....However, I love the customers that come ready to buy!

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    1. Creatures - Thanks for the comments and logging in. Sorry there isn't an editing function on Blogger. Its an inconvenience that is tolerable given the platform is free.

      You sound like you possess excellent sales skills. Indeed, the first step in sales is understanding a clients desires and wants. A good salesperson can overcome obstacles and improve the melon squeezer rate without a doubt!

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  12. Hi Rob,
    Fact Checker here. Great post on TR metrics, consumer behavior and very fine comments all around. Now, on the fishwheel analogy. 1) ain't no carp on the Yukon 2) in the example I found, ~84% of the fishwheel catch were salmon, and the rest of the catch was valued for various reasons (arrive before salmon, tasty on their own, etc.) Time for a new analogy. Just sayin'.

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    1. PinotGraves - Repeat after me ...."Rob is always right." Now ... isn't that freeing?

      I just knew someone would bust me on the junk fish comment. I confess that I didn't research the fish type but went from memory of a show I'd watched on the Discovery Channel. It is true however that salmon are what the natives are fishing and they have the highest value. Your point about the junk fish having value probably aligns with Creatures point above about good sales people being able to turn junk fish into salmon.

      I think I'll keep the analogy, remove the mention of carp, and please refer you to the first sentence in the post. I appreciate that you aren't carping about the prose at least.

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  13. Thanks Rob,

    Looking forward to seeing the full report, but wondering if you could clarify.

    Are you saying that these visitors don't purchase wine at any of the wineries they visit or is this an average conversion rate across all participating wineries? If it's the later, then shouldn't we be asking ourselves how to better direct consumers to wineries that fit their taste preferences and budget considerations?

    My guess is the conversion rates vary widely, based on the price point, the number of casual drive-by visitors, versus intentional visitors with scheduled appointments. Can you give us a sense of the difference on the high and low side?

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    1. Anon 10:16 - Thanks for the intelligent post. The answer is it is indeed the latter and that is the right question you pose. I am (well ... Lindsay and Bryan are) ... at this moment scouring the data from the survey and hopefully I will have some more insights on melon squeezers and tactics next week.

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  14. Rob - timely and insightful, as usual. I think the bifurcated approach (general tasting upon entry, reserve/private tastings "in back") makes the most sense for the larger wineries with some street presence. Key here is training the TR team on selection and customer management. Several wineries do this very well...

    One area of study that you or Tim ought to consider - what is the correlation between tasting room impact and brand presence/awareness/reputation? The age-old justification - we need a vibrant TR to attract customers and build our brand - ought to be verified somehow. I know, I know - the marketing dept always struggles to get any measurements out, "just trust us". But it would make a fine study...specifically, are there connections between TR traffic and brand awareness (that matter?). We know the direct correlation between TR traffic and Wine Club signups - how does this play out in long-term brand awareness and perception and ability to price appropriately...oh, the questions...


    Z

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    1. Anon 10:23 - You raise great questions but I don't know how to get at the answer with my copious free time and the gigantic research team who also do survey analysis in their copious free time. But to give a little more on the great question, do you have any ideas how one can measure brand presence/awareness/reputation using a statistically significant sample of wineries?

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  16. I can tell what has worked well in the Northeast for many years. A fairly priced tasting (no credit to future purchases), done by knowledgeable, likeable staff in a nice setting. If they like the wine, the tasting, the staff and the setting a lot of wine will be sold, over the course of a year. Many smaller wineries sell mainly at their tasting room and festivals. They can't afford to split the revenue pie. You show me a tasting room that isn't profitable and one, or more of these elements is missing or the product is just too darn expensive.

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    1. RUS - thanks for logging in. I repeat myself, but I really do prefer calling someone by a name instead of Anon.

      Each region has its own practices. Those in VA are different from OR and from Napa. They have to be because while selling the same broad product, they have entirely different cost structures, terrior, and regional preferences. Your approach actually sounds a lot like that which is successfully employed in Oregon.

      Price as I said above does have some part in the discussion of tasting room success, but price alone isn't a component of success. Value is really the factor I think you are referring to and that is defined as equaling price+experience, divided by perceived quality. Said plainly, everyone wants a value but you can find values in Mercedes and fishhooks. ( I have fishing on the brain after PinotGraves comments above.)

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    2. One thing that does not get nearly enough attention is that people that are not "day tripping" very likely don't want to cart around wine for the rest of their trip. If the wine is stored in the back seat, it is subject to theft. If left in the trunk (if room), it can be cooked in one summer afternoon. I rarely buy, when not "day tripping". I'll note the wine and maybe ask who is distributing in my home state. The sale may show up a thousand miles away, but it's there.
      The question to ask is, is the whole winery operation working for you (profitable)? You can't worry about every little thing turning a profit. Most restaurants don't make much, if anything, from Monday to Thursday. If the weekends are busy, they are happy.

      RUS/Rus initials and nick name, big with parents for a few years in the 50s

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    3. Thanks again for the comments Rus. When you are tasting wine, consider the vast majority of wineries are small and family owned. They are forced to go direct to consumers because the distribution system in the US wont handle their needs, yet still lobbies hard to retain their constitutional choke-hold on wine. In most cases, you wont find the small producers wines out of state. But small wineries are also getting better managing the direct process. At this point, any tasting room with their head screwed on straight should be able to ship wines directly to your home so you don't have to take them on a plane or leave them in a car.

      To the point of profitability, the average winery makes about 7% profit before paying taxes. Its not much so clearly they don't worry about getting out every nickle from all their initiatives. What the industry does need to do, and there is movement - is come up with individualized metrics to measure their activities in the tasting room and determine the success rate (this blog post went with a failure rate but its the same thing inverted.). Retail strategies are improving slowly and thats a good thing for both the consumer and the winery.

      Thanks again for thoughtful comments.

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    4. Judging from the posts, I would assume quite a few of these wineries are bit larger, this tasting staff, that tasting staff, headcounts, etc. I went to a small local winery this weekend. Husband and wife manned the tasting room and son was shovelling snow. They had a handle on what was going on, they did every pour. I'd say if you're small, without distribution, you want your tasting priced to make economic sense. A review of a wineries Yelp posts can tell a lot.

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  17. This article generates lots of questions for me too. Before getting into a discussion of how we should interpret the results, I have questions about the questions. I am curious as to how many tasting rooms actually have an accurate way of assessing how many people leave without buying? In my experience, there is a lot of educated guessing. Even if you have a method of getting a headcount at the entrance (which many TRs do not), and you have your total transaction numbers from the register, you still have to take into account what percentage of your clients are couples. I’ve worked in tasting rooms where 80% of the guests are couples. Because two guests are represented by one transaction, if you sell to 60% of your total number of guests, you’ve actually achieved 100% conversion! So, with that in mind, maybe these results aren’t as bad as they appear.

    On the other hand, when there is no definitive method of counting heads in place, it’s also my experience that tasting room staff/managers over-estimate their conversions. Especially in larger and busier tasting rooms, guests who do not engage with staff at all often go uncounted. So maybe these numbers are really worse?

    One last thought on the reporting of the numbers – it’s my guess that the smaller the tasting room, the more accurate their reporting would be, simply because they have some many less people to count.

    Regarding the chart, I’d be interested to hear people’s thoughts on the range by region – particularly since Canada leads with most “melon squeezers” – and that’s where I work. Do we think this is more of a comment on tasting room experiences or customer expectations?

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    1. Elena - I appreciate that you have logged in to the community and really appreciate your interest in the way the data are arranged and interpreted.

      Each year when we create the survey, we go back and take comments that were made from the prior year, along with our own perceptions of where we could improve, then working with the AVA's through the USA, promote the survey to their memberships. In exchange for that, we give each AVA association that participated and had sufficient responses, their own customized charts for their specific regions. If there are too few responses, we normally leave the region out of the charts. We might include a region in one slide where there is a statistically significant response rate, but in others leave it out when there was a drop-off in the particular question asked. The response rates continue to improve and this year we will be able to send VA and NY their own charts. I pulled this chart the first day we looked at results and didn't clean it up. Canada I believe had fewer than 10 responses so probably is not an accurate reflection of the melon squeezer quotient up there.

      We are working as I type on the last question you posed about tasting room experiences and expectations and I hope that I can get something out on this blog for next week addressing those questions a bit.

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  18. ...great news, Rob ...yes, sometimes with the wandering, grazing public, it's like someone attending their great-aunt-twice-removed memorial luncheon...you know the type...'well, I've really only come for the food, I actually never knew her' ...yes, it's an embarrassment for the Wine Presenter, to have his product sipped and savoured to the depletion of stock on hand, and a drain on the pocket book too. Wineries spend fortune's to attend major Festivals, and even at the home-front at local Tastings...it's just a shame that some folks are too cheap, to even buy that 'new favourite' they've discovered...no, not even one bottle...I think this situation has to do with wine education, educating the public to appreciation through their purse, wallet...you know...patron your new favourite's ...do them the honour of acknowledging their fine labour and it's results...

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    1. Thanks Penny - The etymology of your name is interesting .... one who brings enlightenment. Another of my many interests is genealogy so names and their meanings are always a curiosity for me. You probably have very interesting ancestors! The McMillan;s I can assure you weren't so interesting when that name was coined.

      The fix for improving the success rate in tasting rooms is all the above and that includes the comments from all the posters here. We have a long way to go to merge the growing freedom with direct sales with business practices that include an evolving digital world. It is a lot of fun to be here for the ride and I hope the conversations here put a little light on the subject.

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  19. Hi Rob

    Interesting article as always. As you know, we do similar benchmarking of direct to customer sales in Australia, New Zealand and South Africa. A bigger issue is Australasia is groups of people who actively plan to use tasting rooms as a free booze stop. Hen’s parties are the worst. In South Africa, because many wineries are close to Stellenbosch University, you can figure what happens there.
    What we have found through our research is that winemakers who take visitors by appointment only and who hand sell their wines themselves can be up to 10 times as effective as the old style belly to the bar, bottles on a bench walk up tasting room experience. And they have no overhead.

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    1. Peter - thanks for the world view and for logging in. Really appreciate the industry colleagues from around the globe weighing in with their own thoughts. I'm guessing a University setting could prove problematic for a tasting room and even a $10 tasting fee might be a better use of money for a college student if that means they get a full flight tasting, a place to hang out with their chums, and especially if there are picnic tables - perhaps a place to continue the party. I'd be curious about the impact of texting on that phenomenon as over on this side, parties spring up seemingly out of nowhere with a group text. Interesting thoughts. Appreciate the login.

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  20. Some needlessly critical points about the author, and counter-arguments consumer focused comments about the the post can be found on the Wine Berserkers Forum: http://www.wineberserkers.com/forum/viewtopic.php?f=1&t=97312

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  21. Rob, while I think your overall message that wineries should focus more energy on targeting is a great point, I think you are using a statistic that has low correlation. How do you know melon squeezers are bad for business? Isn't word-of-mouth still one of the key means of driving awareness in wine? How do you know melon squeezers aren't sending more customers to the winery? Are you looking at lifetime value of customers are just their likeliness of buying anything on that visit?

    Marketing and converting direct customers is really, really important. But if I was running a tasting room, this is just one dozens of data points I would look at.

    Just as an illustrative example, what if you are a winery that attracts more out of town visitors? I.e. people who don't want to lug wine on airplanes or pay for shipping?

    Also, as mentioned above, the quality of the tasting room staff varies a lot. How do you know that isn't what causes the 35% drop rate?

    I think wineries need to do some deeper dives including qualitative interviews of visitors, that determine a realistic conversion rate for visitors. This should vary based on the tasting fee, the proximity to major traffic flows, the time of year, the number of staff on hand, the discounts available, the % of club members... then should to use targeting and staff training to beat that goal.

    Otherwise, you can find another statistic that tells a different story.

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    1. Nomad -
      Thanks so much for weighing in and as important, for logging in.

      You are discussing the lifetime value of a customer and the value of building a brand through word of mouth PR. Both of those are higher level goals versus what we are talking about here which is a subset of those goals.

      Let me offer a story as a guide. One year my favorite relatives came to visit me. I grew up with them but hadn't seen them since high school. Anxious to show them a good time, I asked what kind of wine they liked. I was bummed to hear them say the loved pink wine, because I had no pink wine in my cellar. I quickly ran out the back door to Safeway and brought back a mag of Sutter Home White Zinfandel and served that with Asian sweet and sour apps.

      Relating that to wineries, if I were making expensive Bordeaux, my favorite relatives wouldn't have liked what I made. In the same way, if wineries don't discover to attract the right people to their wineries, they will end up with negative consumer comments on multiple digital platforms.

      I think attracting the right prospects to a winery will in fact build a brand and they will recommend the winery to their friends. I believe that kind of marketing will increase the lifetime value of a client.

      As a final comment, Direct to Consumer efforts have improved the ability of wineries to ship directly to most states now. There are vendors like ShipCompliant who can help with keeping shipments legal. Visitors to a winery should be able to have the wine they enjoy shipped back to their home now. They don't have to carry it on a plane. Of course its not a universal comment because there are still dry states, but wineries should at this point invested in solving that situation for their customers.

      Thanks again for some great perspectives and with that, its time for me to go offline and look at the back of my eyelids for a time.

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    2. I agree Rob but I just fear that wineries run out to solve this one problem - i.e. they think that decreasing the % of melon squeezers will have a major impact on their business.

      If I am a winery on Napa's Highway 23, I am less worried about this than if I am a winery high on Spring Mountain. The wineries on the main drags need to customize their experience for the fact they will have a lot of drive-by non-shoppers. Think about what V Sattui has done to make their tasting room effective. If I am Honig, high on Spring Mountain, I don't want a high % of melon squeezers because that indicates I either have the wrong customers or am delivering a bad experience since they clearly sought me out.

      It's a question of context for me. I would not immediately worry about 50% melon squeezers though I would definitely want to understand why that is the case.

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    3. Nomad - I don't think wineries will focus soley on improving success rates. There are a bunch of other metrics like sales/visitor which hopefully they are spending time tracking. Your last point is what is important for me: Measure outcomes and understand how initiatives in the tasting room and marketing DtC are impacting changes in those metrics.

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  22. Given 90% of wine tasting rooms that are open without appointment, make no attempt at having an actual accurate visitor count the base numbers are at best suspect. If you are appointment only you have better data because you have fewer visitors who prior to arrival provide at least how many are visiting. Compared to other retail operators wine tasting room metrics are not really metrics but at best estimates. If DTC is that important to winery success (and it is) then at some point accurate baseline data will be used. At the moment the "Metrics" are about 1/3 conjecture, 1/3 accurate but non detailed data and 1/3 estimates based on cash register rings or WAG.

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    1. Anon 7:37 - thanks for the comments. Appreciate your perspectives and agree with you generally at a high level. That said, regarding your first comment - 90% etc ... that is factually wrong, but I think you are using the comment as generalized statement about the accuracy versus the real numbers of wineries that are collecting the data, because later in your post you come up with another guess that 100% of wineries collect the information either accurately or through some other means. I doubt you can back up that assertion with any facts as I don't believe there has been a concerted effort or study to measure changes in the trends of customer counts in tasting rooms Its probably a good question to ask in the next survey though.

      What is true - and where I agree with your high level comment, is there is no universal way to measure visitor counts. That said, by our observations most wineries now are getting better at finding ways to measure many things including visitor counts. Some wineries use sample data from clicker counts against sales information to come to an estimate, some use floor mat counts and infrared beam counters, salon style operations have easy access to good information with tasting fees as you mention, and some of the larger tasting rooms are able to use a feed from security cameras combind with embedded counter software that can intrepret the signal. The selection of any device and protocol depends on the size and type of retail room, and accuracy ranges from pretty good guess to nearly perfect which is again consistent with your generalized comments.

      My own experience is that the overwhelming majority of wineries with tasting rooms are now counting visitors one way or another, but clearly like many other metrics in tasting room analytics there is significant room for improvemnt.

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    2. A free software was launched last year that is used by large companies like Pepsi Cola. The software employs a facial recognition program to identify age, sex, and race of people (but not "identity") in malls in front of digital bill boards. The billboards then serve an advertisement that is appropriate for that person. They will gladly provide the software that can do the same for a tasting room (it also eliminates counting staff as visitors).When I ask the cost they said it was free as long as they got to aggregate the data (ala Google). They would send you an email at the end of each day with the total visitor count with appropriate demo's. I am unaware of any tasting room using this or any other facial recognition software. All it requires a digital video camera and an internet connection. Many retailers and banks use similar software to measure and improve their business.

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  23. Are the "by appointment" wineries considering 1 bottle sold to a group appointment as 100% sales? I agree with a previous poster that to marginalize those that do not buy on every visit and even to label these folks as mellon squeezers is offensive and not good business. They have taken the time to visit your business, so unless they are clearly intoxicated and unruly (in which case they would not be served anyway), then they must all be treated as potential purchasers of your product. Customers can tell if your attitude is elitist. But I guess the business model of some wineries is to be elitist. I thought wine was an inclusive thing, not an exclusive club..

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    1. Thanks for the comments Anon 12:06. You sound like many of the consumer focused comments on the WineBerserkers thread who are debating the term coined and the value of tasting fees. Its actually a pretty good read with some very thoughtful posts.

      Relative to the term, it was used against a story for entertainment value. Some consumers might feel insulted by it, but the point of this post was to get a discussion going about metrics used in tasting rooms and activities and strategies used for improving the conversion rate of visitors to customers.

      Otherwise, I think everyone in the wine business agrees with your comment vis-a-vis hospitality instead of elitism. When a consumer comes into a tasting room, if they aren't welcomed the winery will fail.

      My belief here is that wineries have to do a better job of reaching their target consumers BEFORE they get in the car versus taking the salmon trap approach. With that targeting of consumers, you will end up with better conversion rates and happier customers.

      Your other point about overserved customers and my story using a fictional Uncle Ned really represents a minor but real subset of wine consumers. Some consumers decide they will use the hospitality of a tasting room as their own personal wine bar and bring their friends for a wine tasting party, but that is a minor but consistent problem for tasting room staffs.

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  24. Great blog - I think you inspired me to write one of my own next week in reaction. In working with dozens of wineries on this what I've seen is control, or metrics are the deciding factor. I would submit that the quality of traffic that you're seeing is only part of the problem.

    Metrics on profitable traffic channels are important. Agreed: It makes sense that those by appointment are doing the best as they're controlling the top of the funnel traffic and those with the Library Tasting signs are casting a larger net. Tasting rooms should be tracking online offers, partnerships, two for one tasting coupons or other things in the market place to ensure what is working and what is just causing them to pour wine for free.

    But, metrics and tracking success doesn't stop when people get in the door. Within the tasting experience is where you look at your conversion metrics, pour ratios and even break it down by tasting room employee. Some employees/offers/situations will do better at converting certain types of customers. It is your opportunity to refine and hone the experience to get the maximum returns in coordination with the types of traffic you're driving externally.

    And, if this sounds daunting, in case after case I've seen that simply setting up tracking and monitoring it publicly increases conversions all the way down - visitor to taster to buyer. There is something about knowing you're being tracked that keeps everyone's eyes on the prize.

    As a data nerd I'm really looking forward to the report, and wish I was a winery that could have contributed to see the full report!

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    1. All I can say is .... a woman after my own nerdly heart. Thanks for the comments Susan. I'm hopefull I'll be able to get round two of this out Sunday and show how style of a tasting room impacts success rates.

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    2. *sigh* You had me at "success rates".

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