Sunday, September 23, 2012

How Will You Keep Up With Changes In DtC?

MJ Dale, KLH Consulting
This is part II of a piece on DtC by that most awesome of awesome women, Mary Jo Dale of KLH Consulting in Santa Rosa. (Check out the link attached to her name if you want to see what I mean by her awesomeness.)

Yes, you came to the right place. This is SVB on Wine, but as you know from last week, "A man has got to know his limitations," and MJ is leaps and bounds smarter than me when it comes to Direct Sales, CRM, Club Management, and current technology supporting all of that. Every time I hear her talk, I come away with something new. You have an opportunity to ask all the questions you want and not get charged her $5,000 an hour rate. (You just wasted $176 reading this.)

Enjoy Part II of Trouble in Paradise.


       Give customers choice---especially higher end customers.

Consumers have choice in almost every other transaction in life, so why not in their wine shipments? The power of choice is important, even if the customer elects to never exercise this choice.Yes this increases complexity, but with a sound operational strategy and robust behind the scenes technology it is possible. At a minimum, be sure to offer customization to your very best, higher value customers.

      Price wine fairly to longer term customers.

Of course we don’t want to compete on price, especially if we have invested a lot in the wine experience. That said, consumers are digitally connected all the time. They know they are being gouged when wines in their shipment are easily available somewhere else for less. This destroys direct relationships quickly. Take the extra time in product planning each year to make sure that most of the wines sold direct are unique and that your pricing strategy is thoughtful across wholesale partners and every direct channel

      Delight the customer, one shipment at a time. 

Each shipment is an opportunity to connect with your customers tangibly—are you taking advantage of what goes in the box? Everyone sends wine and a newsletter; leverage this customer touch further by delighting your customers with some small surprise they can look forward to each time. Consider a food wine pairing wheel featuring your wines, over sized picture postcards portraying your vineyards in the current season, random “golden tickets” which, if found in the box by a customer, entitles them to a private dinner with the winemaker. The options are limitless—choose ideas that are core to your brand and differentiate you from all the other wine club offerings out there.

      Know Your Customers

The customer list is one of a winery’s most important financial assets; just as important as the vineyards or the wine inventory. Why then do most of us treat the customer list as a mere communication and contact tool? Why do we forget to ask the customer what THEY want? 
  • Collect and securely store customer information from interactions online, in the tasting room or at events—even those customers that don’t join the club. 
  • Annually, do an RFM (Recency, Frequency and Monetary) analysis of the entire customer base. 
  • Once you know the present “value” of your customers, you can create basic value tiers and change your marketing investment and sales/service strategy accordingly. 
  • Consider investigating the potential value of your customers so that you can also put actions in place to discover and nurture these hidden relationships. Use this knowledge to find new customers that match the profile of your most valuable customers. 
  • Survey your customers to see what they want and don’t want from the wine club. The answers might surprise you.

Build an integrated DTC Action Plan across People, Process and Technology

Is your winery guilty of launching just in time DTC offers or last minute wine club shipment planning? Are customer communications always a fire drill? Are you always fighting with your technology systems to achieve your goals? 
  • Plan your DTC actions and offers across all channels for the year—make sure that product and pricing and offers are well aligned across every customer touch point. Customers are smart—they sense the chaos when the message and the wines delivered are not in harmony.
  • Set goals for each channel and every program—then translate into goals for each of the people on your team. Measure their success. Use the results to help prioritize your efforts for the next year. When your initiatives and players are tied to both financial success and customer success (attracting, retaining and selling more to customers) — DTC is better aligned with the overall business of wine. This will ensure better support from your leadership----and additional investment when needed.
  • Make sure your technology supports, but does not dictate, your customer strategy. Given the many technology players present in the wine industry today (and even within each winery) this can be challenging—but very possible. Start by better leveraging the current systems and adopting a plan to evolve your technology capabilities over time.

The wine club product is alive and well—if managed artfully. The real opportunity for our industry, however, lies well beyond the wine club. Differentiate your offering, coordinate DTC people, process and technology across channels and focus on your customer at all stages of the relationship. The sales will follow---both inside and outside the club.

EDITOR NOTE: Please fire away and MJ ... she can take it. Ask her the hard questions. You will be the better for considering her points and digging a little deeper with her.


  1. RE: pricing wine fairly. I understand your point, not wanting to gouge our wine club members, that makes brings to question the use of wholesale channels for the purpose of increasing exposure of your brand and eventually increasing DTC traffic toward your brand (wether it be online or in a tasting room). So I wonder, and my question to you MJ is, What are your thoughts on wholesale channles with respect to a small 4000cs producer? Does being present in local and bay area wine shops/restaurants actually result in increased DTC traffic? and if so is it neccessary to track those successes?...and if so What do you consider to be the best way to measure those successes? thanks.

  2. Very good question Jennifer:

    The answer will vary by winery, brand essence, price point and volume/scarcity. At 4000 cases, most of your sales should be direct to the consumer to ensure profitability for your winery. In addition, I would supplement this strategy with a very strategic use of wholesale partners--positioning your wine only in channels where you will get maximum exposure to your target customer.

    In other words, avoid the wine list where your brand is overwhelmed with thousands of other wines unless you are somehow featured prominently or the restaurant is so well know you will benefit from the halo effect. Likewise the wineshop where your wines languish at the back of the store; seek to place your wine with purveyors that know you and your wine and can share the story with customers.

    What many DTC enthusiasts often forget is that wholesale partners serve the very same customer our DTC plans are targeting. Meeting the needs of the consumer is what is important--and for most brands consumers, even very high end consumers of scarce fine wine typically buy these wines through direct and indirect channels. Successfully managing both channels, therefore, is best for the customer AND the bottom line.

    Tracking customer sales through the wholesale channel still remains a challenge in our industry as well as many other industries. Several thoughts:

    --Sponsor joint events with key wholesale partners inviting their customers and yours, helping both of you determine specific customers that love your wine. Just make sure you add information from customers you meet back into your customer database after the event!

    --Simply ask your best DTC customers where they buy wine in restaurants and wine shops to help decide where to focus your efforts (and find more customers just like your best customers)

    --Be sure to colloborate with your partners to learn what you can about end sales to individual customers. Access TradePulse or BDN data to better measure depletions. (If you use a sales partner to represent you in the wholesale channel they can often share these reports with you).

    As long as your overall strategy is well orchestrated--a strategic wholesale presence will benefit DTC sales; a strong DTC program will also benefit your wholesale partners.

  3. $5000 an hour.. Give me a break. Tell us something we don't already know

    1. Thanks anonymous--$5000 an hour is just what we charge Rob for advice, not industry clients.


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