Secrets of a Successful Tasting Room - Highlights from SVB 2013 Survey

Secrets of a Successful Tasting Room – Highlights from SVB 2013 Survey

Last week Silicon Valley Bank’s wine division founder, Rob McMillan, along with Cyril Penn of Wine Business Monthly, Brian Baker of Chateau Montelena and Ahin Thomas of the Vintners’ Alliance, conducted a live videocast: Secrets of a Successful Tasting Room- 2013 Survey Results. We tuned in and were not surprised to find that we have blogged about many of these topics already. Here are a few highlights:

Wine Clubs

1. 85% of all wineries have wine clubs. If you don’t have a wine club, you are missing sales. It may be time for you to start your own.

2. 65% of the wineries who have wine clubs do not give their customer ANY choices, i.e. not whether it’s a red or white; standard or premium level; no choice on anything. Really? Give your customers choices. We all want choices. With choices, sales are higher and membership is longer.

3. Average length of wine club memberships is 28 months and the average number of shipments per year is 2. Your goal is to keep your members more than 24 months. At that point, the initial cost of marketing is recouped. Ancillary sales are created and those are valuable. Figure out your marketing spend and determine the value of keeping that customer to you.

4. 89% of all wine club memberships originate through the tasting room. and the conversion rate of visitors to club members ranged from 3% to 9%. Your tasting room is a business. Treat it that way.

5. Top 3 reasons why people say they left a wine club:

– Because they didn’t like the wine (but they liked it in the tasting room, right?)
– Paid too much for the wine (If they can find it for less in the grocery – not good!)
– Shipping costs (Are the shipping costs making your wine over priced?)

6. Impact of Marketing on Club Retention:

3% of the control group (receiving no marketing) kept their membership active for 22 months (emails; invitations to events; phone calls; announcements, Facebook requests, etc). 30% of those receiving marketing had an average membership length of 38 months.

And wineries reported they make 20-40% more in revenue in ancillary sales to club members.

What does this all mean?

– Keep your customers engaged. Create a community for them with your brand through events, telesales, advance notices, discounts, a blog, Facebook page, twitter, etc.

– Group your members into different subsets. Within these groups, you can work with them differently. Some may be more interested in getting advance notice of your premium reserve. Others may be more excited about a dinner you throw, while others may be thrilled with Free Shipping that month. As we all are driven and moved to action in different ways, so are your winery customers.

– Market consistently. Do something daily, whether it’s a blog, twitter, writing 10 emails to your top customers or calling 20 people with an update on your new release. And keep your members’ contact information updated!

Managing Your Tasting Room

1. Are you hiring the right people? Brian Baker touched on these points

– Hire the right person at the right time. Is that who you need at this
– Does he/she have personality? That spark that is engaging with customers.
– Can he/she sell? That’s the bottom line.

The most likely reason employees don’t work out is because they don’t fit into the culture or jive with the other employees. But if you have had 2-3 interviews and 2-3 people interviewing them, this kind of turnover gets much lower.

2. Are your guests greeted with they walk in? Do you have a greeter on the weekends? They can help manage the flow during peak times.

3. Only 60% of the wineries know who their visitors are, i.e their demographics, where they are coming from, what kind of wine they tend to like, If you are getting a lot of women over 55 years old coming in from another city, why? Do they have friends? How did they find out about you? Know your market and then you can market to them.

4. Charging Tasting Fees. 77% of all wineries charge tasting fees now. Of those only 68% reimburse the tasting fee if the customer buys. The idea being if they don’t buy any wine, then at least overhead was covered. However, as we’ve discussed before – this is not a “pro” customer approach. Remember, you are trying to create a fun experience for them. This is not exactly a great start in creating that wonderful experience before asking them to join your wine club. Pour up!

5. Manage your Tasting Room as a supply chain. Since 89% of all club sign ups come through here and for small wineries, this is where you sell most of your wine, the tasting room is its own business. We had a great blog about this a couple of years ago too.

6. 5% of the people want to hear about the “acid and dirt.” The rest of your guests want an experience – to be touched by your wine.
Note: Luxury Goods are Perceived Value + Experience/Price. Drive home the experience.

7. Get the basics down. Everyone on your staff needs to be able to tell your brand story and your tasting room staff should be able to sell your wine!

8. Social Media. Get those basics down first – brand story and selling. Then you can expand. An good website will tell your story. Social Media can build a community. Choose one and do it well. Focus on it. Blog or post updates daily. Dedicate time to this. Take it seriously. Once you have one down, then you can expand to another platform.

9. How do you listen to customers? What are they saying about you?

– Monitor Yelp, TripAdvisor, etc. Look for reviews that fall below 3 stars.
– Try to respond as much as you can, but be sure to respond to those who have a lot of followers, i.e. who carry “social clout” and are read by many.
– Read every Facebook and Twitter post. Respond and analyze your sentiment scores.

Tasting Room Staff

1. 10% of all wineries surveyed do not give employees discounts on their wine. Owners, these people are your ambassadors. They go to friends’ homes and like to share the wine they enjoy with others. Help them do that for you! (Little story: Robert Mondavi used to give his employees a “wine allowance” so they would be helping market his wine.)

2. A few other benefits reviewed:
– 35% offer a health insurance plan
– 39% offer paid vacation
– 30% have a paid sick days

Note, if you want great people employees in your winery, and especially if you’re in a competitive market, benefits need to be considered. I know most small wineries probably can afford some of these perks, but they are worth considering.

3. Survey your customers annually. Ask them about the customer service they have received over the past year. Then tie this feedback to employee bonuses. Note: Most wineries do not reach out to customers for feedback, much less track it.

See our related blog: Hiring the Right People for Your Winery

As a small winery, do you have a Wine Club? Are you keeping it enticing and fun for your members? Are you beating the average attrition rate in membership? Are you tying your customer’s satisfaction back to employee bonuses? Are you making the first impression on your customers when they visit your winery? Lots of good information here, but it’s worth nothing if you don’t stop to evaluate your own business.

Here’s to Living the Good Life! Salut!

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June 5, 2013 — By: Bill Skrapits