Sunday, September 16, 2012

Is your Direct Program Punky?

Do Ya Feel Lucky ... Punk?
As Dirty Harry said, "A man's got to know his limitations." I know mine. I also know the importance of client acquisition, retention, and state of the art technologies that are available to retail wine operations and current thinking on integrating experience and product in DtC trade. But I’m no expert.

In a recent blog about CRM, tasting room, and DtC, I took a run at the topic and within the post tried to shame one "unnamed" expert into guest blogging for me to give you some street-level information. That shamed person is M.J. Dale of KLH Consulting in Santa Rosa, CA and she is one of the sharpest people I've met in the wine business.

So in a departure from the norm, while I'm away in Argentina MJ has graciously accepted my invitation to guest-blog and will offer a two-part piece on Direct Sales. I've handed her the keys to the car and she will be moderating the discussion, offering expert advice, and policing the rowdies... so you just watch yourself! 

Since Mary Jo makes a fair wage, it’s worth your time to get some free consulting out of her with your questions on the topic. You only have to ask yourself one question before you comment though: Do I feel lucky? Well, do ya.... punk?

Trouble in Paradise

Across the wine country, there are whispers of trouble in Wine Club Paradise.  Do any of these trends sound familiar?
  • Average club tenure of shorter and shorter duration
  • Increasing cancellations year over year 
  • Slowing customer sign-ups, especially at the higher volume clubs 
  • Unexpected spikes in credit card declines, with fewer re-instates 
  • Wine club shipment needs drive the number and kinds of wines made each year

For far too long, our industry has used the “Wine Club” as a proxy for true customer relationships.  If a customer is in one of our wine clubs, then they are a top customer.  If not, well then, we send them a blast email offer (if we even collected their contact information) ...and hope for the best.

Over the last several years, the proliferation of wine clubs (thousands across almost every winery, countless media organizations and many high end retailers) means that consumers are barraged with options for wine shipments.  How is one winery, with only one or two brands expected to compete?

The answer is simple: wine clubs will continue to be of interest to consumers---but their main purpose can’t be viewed in purely mercenary terms.  A club is not there “just to increase sales volume” or get rid of extra inventory.  They provide a great opportunity to stay connected with your customers, but will only work well if treated thoughtfully--one tool among many needed to build lasting customer relationships.


       Sell the wine AND the Experience

       Excellent, not just adequate, customer service

The hospitality industry knows that superb service is everything to the customer’s brand perception; especially their first impression.  In the wine industry, we need to remember that most of us are really in the hospitality business, even if we are lucky enough to be selling a scarce luxury wine.  We must deliver a near flawless customer experience from the very first if we expect the customer to be “sold” for the long run.

       Great Wines   (OF COURSE!)

Quality is a given. Winemaking in this country and around the world has improved dramatically, at all price points.  The consumer’s expectations have risen as well.

       A Unique First Visit to the Winery Tasting Room or Website

Be honest, are you offering visitors something more than great wine that stands out from the thousands of other wineries? Are you known for an “edutainment session” or some other offering that truly transcends the everyday?

(Please take note: Concierges at luxury wine country resorts tell me that barrel tastings, blending seminars and vineyard tours are a dime a dozen. Even hot air balloon rides with a wine tasting are offered widely. Please send them unique offerings, well executed, so they can refer their best customers with confidence.)

For examples of wineries stepping out of the mainstream, look at Raymond Vineyards very different tasting room options. In the digital world, simple edutainment examples include Ridge Winery’s aerial vineyard tour and Buena Vista Winery’s historical timeline. Find ways to stand out from the crowd while remaining true to your brand essence.

EDITOR NOTE: There is more to come next Sunday. Hopefully some of these thoughts have whetted your whistle.  But why wait till next week when you can have it now? Go ahead. Be a spoiler. Ask away on any question regarding DtC, Tasting Room, CRM and client experience. MJ is working for free on the weekends!


  1. I am very familiar with two of the three "wineries stepping out of the mainstream" you mention with over the top fancy digs, and packaging etc.

    To the folks here in the trenches personally selling actual handmade, premium wine, we collectively laugh at those efforts.

    We all know they spent millions on those facilities (and others under their corporate umbrella) in order to mass market AVERAGE WINE, much of it merely leftovers from the former owners.

    Many of their products are exactly the same inside across brands, where the bottles are sold at wildly different price points, with fancy packaging being the only difference. One features a recently deceased dog in the brand name, yet you still see phony pictures of it in their marketing.

    It may be successful, but it's all fake, and the folks sweating to make the real thing, sell it personally, and stand behind it, view it with contempt.

    Our clubs are growing wildly, because of the PRODUCT, which is rare, handmade and authentic, and does not need helicopters and movie sets for individuals to taste it, and want to be part of the process.

    1. Thanks for your comments. Glad your product based strategy and wine clubs are doing so well!
      MJ Dale
      KLH Consulting

  2. I think one of the biggest problems with many wine clubs these days is that they do not treat their members as their best customers. They auto ship them stuff they may not want; they oftentimes ship them wines that are 'overstock' or can't move any other way; and many are simply too inflexible.

    I had someone come in to my tasting room recently and relayed the following story:

    They had just joined another wine club in town, and then the wife lost her job. They contacted the winery to let them know that and to cancel their membership, but were told 'sorry, but you are still committed to the next two shipments.'

    How's that for 'customer service' . . .

    Life happens, and we as business owners need to understand and respect that, just as we need to understand and respect our valued customers.


    Larry Schaffer
    tercero wines

    1. Understanding, selling, marketing and serving each customer as an individual is a key component to DTC success. Sounds like this is a case of a policy getting in the way of compassion.

      That said--there is a reported increase in "gaming the system" by a small number of consumers who visit the wine country, sign up for clubs to get the discounts and then cancel right away. Clearly communicating terms at sign up will help reduce this abuse later on.

      Pf course we can't build processes, policies and systems to protect against every circumstance. At the end of the day there is no substitute for good judgment!

      Thanks for your comments,
      MJ Dale
      KLH Consulting

  3. Frankly I'm quite tired of hearing about these "problems" over and over from various wineries:

    -Average club tenure of shorter and shorter duration
    -Increasing cancellations year over year
    -Slowing customer sign-ups-credit card declines
    -Wine club shipment needs drive wines made each year

    It proves the ones who complain really don't understand how to adapt to the new paradigms and directions in Direct to Consumer sales. Nor do they understand what it means to have a meaningful relationship with customers that produces the core blood of survival and growth: Sales.

    There is a simple solution that each of our clients benefit from day after day, month after month, year after year: CALL YOUR CUSTOMERS and talk to them. Forget about spending time on Facebook, Twitter, etc. With VERY few exceptions, it doesn't work. The reality is that those tools may great for your ego, but they don't sell wine. Reach out and call your customers and TALK TO THEM. If you don’t have time to do it, hire someone that can as there are plenty of folks out there who know how to talk to customers and sell wine.

    Here are some stats that some people have a hard time believing. Believe them – we sell DTC for Constellation, Treasury, Jackson Family and dozens of other wineries, and they demand accurate data which we provide and they validate. We have dropped WC attrition rates by OVER 50% for most of our customers. Expired credit card rates have dropped by over 70%, and dramatically lengthened the time members stay in the club. This last bit is a tough one to fully measure because members are staying in the clubs so long now that measuring drop-off rates becomes difficult... As an added bonus, while you talk to your customers you get to figure out what wines really resonate with them. What they want more of, what they want to buy time after time. This gives you a REAL measure of what wines you should be planning for in the future.

    As if this isn't enough ammunition, consider this: Telephone sales reps OUTSELL tasting rooms, email offers and online websites more often than not. Why would you NOT pick up the phone and call your customers? If you don’t have the time to do this, hire someone who can and has actually done it before. Your survival over the next few years may well depend on it.

    Jeff Stevenson
    CEO, VinoPRO

    1. Jeff:
      You are right. A phone call campaign, as part of an overall, well orchestrated DTC Action Plan can be a very effective tool for increasing sales.

      Well said, thanks for your insights.

      MJ Dale
      KLH Consulting

  4. I'm just a customer who has joined and left a number of wine clubs. From my perspective, as unique as it may be, I can tell you that I'm far more likely to join a wine club if:

    1. I like the wine (obviously - this is actually the easiest criteria to achieve);
    2. I like the person I'm dealing with in the tasting room - by that I mean they are upbeat and make the experience interesting and fun; and
    3. Pricing and discounts (much less important than the first two).

    I'm more likely to continue in a wine club if my return visits to the tasting room are a good experience. I don't need balloon rides but a spontaneous "let me show you" this or that aspect of the winery or winemaking operation always grabs me. What "transcends" the ordinary experience is talking to someone in the tasting room who cares enough that they want me to understand what makes their wine special. It might be the history of the winery, an aspect of the production, or almost anything. I like to talk to people who are knowledgeable about the winery and the wines and obviously care about them. There's nothing worse than encountering someone who is "going through the motions" (or reciting tasting notes from memory and doesn't even make eye contact in the process). In my opinion, the importance of the personality of the personnel in the tasting room cannot be overstated. Sorry for butting in on this conversation among professionals.

  5. Gracias MJ por escribe en el Blog, y mi compadres de los bodegas por ustedes comentarios.

    I'm practicing my Spanish in Mendoza. Its midnight now, and just finished dinner. Dinner starts at 8:00 pm here. I'm good with that as long as I can get up at 10:00. Not sure how they do that here.

    Its spring in Mendoza. The wines are incredible. The facilities are not as new as what I see in the US, the vines don't have the nice smoothed and water resistant poles at the end of vine rows. Irrigation is often by the old style irrigation I grew up with in the US where water was directed into the vineyards, versus the drip irrigation we see in the US. But back to the wines .... incredible is all I can say. And the values at 1/5th of the US dollar .... I'm in heaven. Its like getting a $50 cabernet for $10.

    Thanks again MJ Dale for the observations and for everyone's comments in my absence. Keep up the dialogue and good discussion. I look forward to Part II of MJ Dale's perspectives as well as the forums members debate.

    Ciao-Ciao from Mendoza

  6. Yes we too consider our club members before anyone else. They get the best wines. We dont raise prices until after the members get theirs, we advertise 3 bottles for 49.95 but more often than not they get 4 bottles and sometimes even 5 bottles for 49.95, and... we listen to their wants and often repeat favorites. We also understand life and 99% of the time do not hold people to the contract. I have been told that people leave others to become members with us. It must be working !

  7. I hope that my dog Tate was not the object of malignment. He is indeed dead(unfortunately)and the picture on the label is fake in that is is a drawing by a dear friend did for me off a picture because Tate was unavailable to pose because of the aforementioned problem of him being dead!. Also, I am real and I do sweat(you would not have wanted to be next to me down in LA yesterday where I was competing with the legion of negociant hired guns) I do have two labels because some restaurant people prefer having a label that is not available to the general public so they cant tell the wine is marked up 500% over 30 days
    while I hope for 50% over 2.5 years(grow, make,store,sell). My target is to make a profit by year 16 which is what I was told is more accurate than the "start with a large.." axiom. We are very close to achieving that goal. Just don't kick my deaddog(which is what my wife wanted to name the brand) Tate. As we say on our label, "While he wasn't a particularly good dog, he was a great dog." Good luck to all, cheers, Mike TateDog/Wanless Wines

    1. Tonight I will drink a toast in honor of Tate, a great dog. Thanks for your comments Mike

  8. I am inclined to follow this model from the above poster:

    1. I like the wine (obviously - this is actually the easiest criteria to achieve);
    2. I like the person I'm dealing with in the tasting room - by that I mean they are upbeat and make the experience interesting and fun.
    3. Pricing and discounts (much less important than the first two).

    Line two often times trump everything else. I have a lot of TR experience selling clubs. When I did, I'd sell 7-9 a day and 80-100 a month working only four days a week. Retention? No problem. I had customers create a fan club about me. When I left that winery, they followed me to the next, and are still members here for 6 years now--all of them. I go to their weddings; they invite me to football games etc.

    What does this all mean? Am I tooting my own horn? No, now as a club manager it's obvious how important that personal relationship is. How do you do this? Just as another poster stated--building your personal relationships over the phone, email correspondence and especially when they come to your winery.

    All of the rest is fluff. Your winery will be judged by the people that interact with your customers.


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