Blog Post: 4/6/16 Laura Larson Founder, Virtual Vines
As I transition my two decades of strategic selling and business development from the global world of IT software and consulting services into the world of doing pretty much the same thing with wine, I see many parallels in the basic framework of business to customer relationships. In both market models a corporation can offer the best performing and most cost effective product and a winery can offer the best varietal, vintage and value, but if whoever is making the purchase decision does not relate to the buying experience they will consider alternate solutions. Understanding who is at the other end of your marketing efforts is absolutely paramount as you build the stepping stones essential to attract attention, establish trust and capture that ultimate and ongoing mutual commitment. There is one simple universal concept that stands tried and true with any seller-buyer relationship: People buy from People.
Now–what I do find different is how each business model addresses their approach to this concept. In the commercial world companies hire trained sales people to deliver their brand and sell their products. They set and share goals for mutual success and reward for performance. Wineries often hire hospitality trained people for these same types of positions. They are skilled at customer service and management however, oftentimes are not savvy at leveraging that expertise into actually selling wine. Additionally many are not included in or incented by the company business goals. As a result, many lack essential motivations and skills to transition a nice hospitality experience into a sale.
There have been some interesting statistics reported to illuminate this fact. WBJ’s 2014 and 2015 tasting room survey results reveal the lions’ share of DTC sales originate in the tasting room. Recently SF Luxury Marketing Council conducted a Mystery Shopping project among over 85 wineries in the Napa Sonoma region with the objective to measure the outcome of their visit via likelihood to buy, recommend or return.* The results revealed although many wineries performed well in overall guest experience, they underperformed most in areas of connecting with guests, closing sales and conversions to loyalty programs. Among the shoppers who rated their experience the highest, in most cases it was attributed to their connection with the host and the subsequent conversion of ~ 30% higher sales. These findings proved the growing need for wineries to invest in their most valuable resources who work on the front line. Not only are these staff members expected to deliver exceptional customer service, they are also pivotal to driving a significant portion of the DTC sales ecosystem through the tasting room and loyalty programs.
If you run a sample model using the ~30% impact on sales, the ROI is formidable.
The survey results showed the average wine sale was~ $88 vs ~$114 for the hosts with the most (or $26 more per visit) Multiply $26 x 6 tastings a day =$156 and then add 4 more tasting room hosts= $624 per day. If you took those numbers out by 7 days a week = $4368 and by 4 weeks a month =$17,472, the annual return comes out to ~$209,664 per year.
Since the tasting room and the staff who support it are responsible for driving the highest % of DTC sales and hold the keys which make the first and lasting impression on your customers, isn’t it worth it to regard these players as your “A Team” by investing in their (your) success? Ensuring they are integrated into the business and trained and compensated to align with the business goals are essential for the highest rate of return and employee retention.
Mutual Commitments = Perfect ingredients for a lasting partnership. If wineries expect guests to commit to become loyal customers, they need to commit to focus their sights on bestowing their best and brightest team assets to lead the charge.
*SF Luxury Marketing Council Mystery Shopping project and its results were assembled and presented by Colin McPhail/Vinfabula at their annual Winery Bootcamp event in Yountville, CA in March 2016. http://www.luxesf.com/