There has never been a better time in history to sell wine direct to the consumer. The recent Silicon Valley Bank (SVB) “Secrets of a Successful Tasting Room” report, released in conjunction with a live video stream by Rob McMillan and guests discussing the report, details interesting trends. One key takeaway for me was the fact that advanced reservations or sit down tastings resulted in an average sale of $235 verses $70 for walk-ins at the tasting room bar. I am a huge advocate of mapping out the guest experience and maximizing space by offering two to three tasting experiences whenever possible. VIP club member lounges and large group tasting tables or rooms create an environment for loyal customers and first time visitors to truly connect with the brand and the experience. This connection results in not only higher average sales but more importantly long-term and loyal customers who represent a significant increase over the course of 3-5 years.
One of the downward trends reported in the SVB report is that average club churn is now at 18% on average and 21.3% in Napa Valley. Why? In talking to wineries that we support throughout the nation, competition is more fierce than ever. With 7,762 wineries in the US and 3,364 located in California alone, consumers have more choice than ever when it comes to wine clubs and loyalty programs. Be on the lookout for the full report coming in July by Wine Business Monthly.
See the full video replay of the SVB panel discussing the Tasting Room Survey HERE.
Some good news: Today’s report from Wines & Vines revealed that all key industry metrics for April are positive, and DTC sales are up 17%.
“DtC shipments in April followed a seasonal trend of declining from March levels, but total shipments were still up 17% this past month compared to April 2014. Shipments in April totaled $184 million, and the 12-month total of $1.9 billion was 15% higher than the previous 12-months. Chardonnay is the leading white varietal in the DtC channel as well. In the past 12 months, shipments of the varietal accounted for nearly $150 million in value, which is three times more than all shipments of the second-most popular varietal, Sauvignon Blanc. Chardonnay is more dominant in DtC sales than off-premise, and the average bottle price is $31 compared to $21.50 for Sauvignon Blanc.”*
How can wineries stand out in the crowd? Here are three recommendations:
1. Shop your winery (in person and online), and then shop three others offering similar price points, varietals and tasting experiences. Conduct a series of brainstorming sessions with your management team to understand what is working and what isn’t at your winery. Then, conduct a survey with both your club members and general customers. Develop top five questions for each segment. We help wineries take surveys that haven’t worked and revamp with the most effective top five questions to get the answers needed to make meaningful change. Once the survey process has been completed, identify your TOP THREE initiatives for making positive changes for the next 30-60 days, and develop an action plan for each.
2. Use data analytics NOW to learn from your history and make fact based decisions about how to best move forward. Ensure that your management team is clear around all data segments that make up a true direct to consumer profile. It’s not just transactional data from in-person sales and your online store that needs to be analyzed, but also email open rates against subject lines as well as time of day/week sent. Google Analytics provides great reports to review website visitor traffic and to help you understand what online visitors want from your site. Are they visiting the online store first, or clicking on the reservations page to connect with you in person? How long are first-time verses repeat visitors staying on your site? It takes 4-5 minutes at best to shop your online store and complete a transaction. If you aren’t seeing an average visit lasting at least 3 minutes, there is a problem. The DTC Consultant Network is a team of 16 specialists, helping wineries leverage data to make strategic decisions and execute effective sales plans.
3. Understand where people are connecting from. Do the 10 states listed in the Google Analytics report top visitors correlate with your transactional data in the tasting room, or is there a big difference? If so, how are you marketing to those visitors from states who aren’t buying in-person or online? What are the age ranges of your current customers? What are their interests, and is your winery offering tasting experiences they are interested in? Using social analytics from Facebook and Twitter, as well as conversion rate information and wine club cancellation reasons and notes, will help the stake-holders identify the trends that positively and negatively impact your direct sales efforts. Compare your data to industry averages.
I hope that these three tips will help you and your management team begin a conversation about how to make effective, long-term improvements. DTC Wine Workshops offers proven solutions to grow direct wine sales and retain loyal customers through a series of online web education, in-person workshop sessions for large groups, DTC strategic plan set-up and execution as well as project based engagements to assist staff stretched too thin.