Silicon Valley Bank Releases Must-Read Report

by Brad Asmus

Silicon Valley Bank (SVB) today released its annual State of the Wine Industry Forecast and Recommendations. The 25 page report, is available for free download at the SVB website and–more significantly–from their Facebook page.

I’m only providing a link to the report at SVB’s Facebook download location to encourage you to check out that social networking site if you haven’t already. That’s because one of the key findings of the report is that small wineries must come to grips with all of the tools of on-line marketing or face dire consequences.

Silicon Valley Bank knows the winery business like few others. They started a division to focus on the wine industry in 1994. They have over 350 current winery customers and have worked with hundreds more, big and small. Their knowledge of the industry is based on relationships that get them deep inside the books of many of America’s most successful wineries. Perhaps as important, they’ve been deep inside the books of numerous wineries that failed or flamed out–and the numbers tell the reasons why better than any winemaker’s sad narrative. In addition, Rob McMillian, author of the report head of the SVB wine practice, is widely known and highly respected in the industry. Believe me, people take his calls.

For the last several years the report has chronicled consolidation of the traditional distribution companies and warned that small wineries faced increasing difficulties finding access to distribution. This year, McMillan reports that the door to distribution for small wineries is all but closed.

After interviewing more than two dozen distributors in confidence, we discovered, not surprisingly, that the economy is taking a toll on their businesses and margins as well. In an effort to stabilize their own returns, most have taken rational actions to become more efficient. Noteworthy to the fine wine producer, they are eliminating less important brands, smaller brands, slower moving brands and those brands that deliver fewer nominal dollars to their business. Furthermore, we have not found any mature distributor willing to take on new brands or labels. These actions hit square in the center of the fine wine business.

svbbusmodelchart1

With 5,990 wineries competing for 18% of distributor space in wholesale channels, the small winery must go direct.

Elsewhere  the report notes that while wines below $35 are selling, but that wines between $50 and $125 are in a dead space. At that price point, only established brands with active followings are selling–and their seems to be no growth even for them. The report confirms the widely reported trend that wine consumers are trading down to lower priced, higher value wines, but then goes on to caution against percipitous price cutting.

So what is a small winery to do? Unlike most “state of the industry” reports, McMillan makes concrete. actionable suggestions. As he puts it,  “wineries need to get better at Internet dating.” He devotes a number of pages to the subject,  touching on Facebook and other social media, and even provides a list of vendors who offer pieces to solve the eMarketing puzzel, then provides a number of recommendations that will seem familiar to regular readers of SmallWineryMarketing.com.

  • Make sure in this economy that you aren’t just focused on tactics and responding to the problems of slower distribution or tasting room sales. Don’t miss the opportunity to make progress in developing or furthering a digital sales and marketing strategy.
  • Consider directing a portion of production to an e-Marketing agent.
  • When developing a digital plan, start at the foundation: Figure out which systems to use, how you’ll manage and leverage your data and information and how you intend to grow using the technology to support the actions. (Electrons don’t sell wine.)
  • Create a customer service plan that crosses all four direct consumer channels (tasting room, club, phone and e-commerce).
  • If you have been using an in-house Web platform, consider upgrading to use an e-commerce company that specializes in wine and can help direct your progress in the channel.
  • Consider shipping costs as a marketing opportunity. Avoid channel conflict with your retailers by posting higher prices and give free shipping.
  • In cost containment environment, analyze shipping rates with your shipping team or fulfillment partner to make sure you are getting what you and your customers want in service and cost.
  • Keep your customer relationship management database clean by scheduling twice a year phone conversations with your customers. It’s also an opportunity to reinforce your personal relationship with them and encourage higher purchases.

The recommendations are useful and needed. They come after McMillan makes a telling observation that should be a wake up call to winery owners:

We would love to be proven wrong, but with the sole exception of [insert your winery name here], we can’t point to a single wine production company that integrates anything close to a practical suite of electronic applications and social media tools available to execute a successful direct-to-consumer digigal sales strategy. With so many wineries losing distribution, one would think management teams would flock to these solutions, but it’s been slow in coming.

(emphasis added)

It’s no surprise, then, that SVB expects to see a wave of consolidations and outright failures among wineries that are poorly capitalized, in the wrong segment, or not prepared to deal with the effects of the current recession and its aftermath. If you’ve been focusing on the day-to-day in hopes that the whole thing will blow over, it’s time to take a more realistic approach. This report will help you do that. There is a wealth of interesting, current data and lots of informed wisdom. Ignore it at your peril.

May 4, 2009 1 Comments

Website breakdown!

by Brad Asmus

SmallWineryMarketing was off line for several days due to problems encountered during an upgrade. I’m telling you, there is nothing worse than being your own IT department when stuff really goes wrong. The troubles you encounter always seem to be just a little too technical to fix easily. Instead, you’ve got to dig into technical manuals and FAQ’s that read like gibberish the first 20 times through. Finally, you come to that “aha! moment”, and realize that the problem was pretty simple all along–just not for me.

I’ve always been a fairly technical guy, I like the challenge, and I’ve got the time. If I didn’t meet all three of those requirements, I’d pay for help in a heartbeat.

April 28, 2009 0 Comments

Beyond critter labels?

by Brad Asmus

We all know about the success of critter labels. It turns out that labels featuring images of animals, especially if they are cute or uniquely rendered, stand out on a shelf and are memorable. There are so many of them in the marketplace, that they may no longer be working.

The folks at Baron Images wonder if their vintage pinup art might be the next wave. They’re looking for a winemaker to try out the concept and sent me a bunch of images to show around. I couldn’t resist.

There was a time when the TTB would have rejected labels with images like these out of hand. But they’re relatively chaste, given current societal standards, and certainly evocative of a simpler time. Who knows, you might slip them through. I’ve already got a tagline for the one with the redhead on the banister.

March 14, 2009 0 Comments

Details, details: insurance for winery e-commerce

by James Hilbrant

You wouldn’t think of selling wine at your winery without adequate liability insurance. But what about selling your wine via the Internet? Are you aware of the full range of new liabilities that the Internet presents–and are you covered?

Almost without us noticing, wine businesses have become data management operations. We collect production data, manage inventories, plan our budgets and manage our finances using computers and in the process create vast seas of data. We use the internet to communicate with customers and suppliers via web sites, newsletters, email, and social media.

Did you ever stop to think what would happen if a malicious computer virus took hold and wiped out all your data? What would it cost you to recover?

What if a hacker broke into your system and stole your wine club member’s credit card information? What if you make a mistake on your website and post information that is incorrect, misleading or—at least in someone’s eyes—discriminatory? Could you mitigate the problems and absorb the financial losses?

Not worried yet? Consider the Fair and Accurate Credit Transactions Act or FACTA, a set of federal regulations intended to protect consumers from identity theft. The Act contains a provision that requires any entity with a “covered account” to have a written plan to detect breaches of consumer data. Depending on how much business you do on line and the damage to customers whose data gets stolen, not having a compliant written plan can turn a big problem into a major disaster.

Or lets say you’re a winery in Minnesota and suffer a data breach. Did you know that Minnesota’s Plastic Card Security Act requires breached companies to reimburse card issuing financial institutions for the costs associated with providing “damaged” cardholders with the notification of the breach, cancellation and re-issuance of cards, closing and reopening accounts, stop payments refunds for unauthorized transactions charged to their accounts.

Luckily, there is insurance. General Liability, Property and Crime policies are the traditional protection. Unfortunately, such policies were not designed to provide coverage for the full range of data related liabilities. In response, Cyber Liability and Internet/Network Risk insurance policies have been developed. Coverage can include:

  • First Party Coverage that protects
    • information assets,
    • business interruption,
    • cyber extoration,
    • expenses related to crisis management
    • identity theft.
  • Third party coverages such as:
    • professional services including errors, omissions,
    • content and media liability
    • network security, and privacy.

    • Plans and deductibles are normally custom tailored to meet the insured’s exposures.   Limits are available from $100,000. per claim to more then $5.0MM per claim and deductibles as low as $500. per claim.  Policy premiums are very affordable and in certain policy forms included as standard coverage features. 

    If you haven’t spoken to your insurance representative about the new threats involved with e-commerce and the networked computing environment, you should. And if he or she doesn’t seem to know much about cyber liability or think it’s a very big deal, keep looking until you find a representative who does.

    James Hilbrant is an insurance professional at Winery Care specializing in the wine business.

    March 4, 2009 0 Comments

    To the burn pile or the bank?

    by Brad Asmus

    It’s raining hard in Pleasant Valley and the pruning crew in the pinot vineyard across the way is huddled under the eves of a winery building. They’ve got about half of the vineyard done and the long canes that held last years grapes are lying on the ground between rows. When the crew finishes pruning, they’ll gather up the cuttings, make a big pile and burn them. It will be money going up in smoke.

    Eight year old wreath on wine country tool shed.

    Eight year old wreath on wine country tool shed.

    Grapevine cuttings make great wreaths. They have a rustic, wine country look that appeals to many and they last for years, even outdoors. Decorators love them, especially the big, thick wreaths that make a real statement. They’re easy to make; someone with quick hands can twist up three or four big ones in an hour. And they retail for anywhere from $20 to $100 or more, depending on size.

    Christmas is, of course, the easiest time to sell them, but they actually move all year long. Just ask the folks at the Napa Valley Grapevine Wreath Company They make a year-round business out of it. They’re real artists of the grapevine who weave the stuff into peace signs, bottle carriers, and a variety of baskets in addition to wreaths.

    Vine cuttings are at their most workable when freshly cut, but they stay workable for weeks and soaking them in water makes them pliable again even after months. If you keep a pile around, you can put your work crew to making wreaths on days when you would otherwise have to send them home. And when the holidays come around again, you’ll be able to generate income from something that would otherwise just go up in smoke.

    January 26, 2009 0 Comments

    It’s planning time again

    by Brad Asmus

    One useful definition of marketing is that it consists of the programmed usage of all the forms of communications that contribute to the development of brand identity in the consumer’s mind. This definition encourages us to think of everything from advertising, to email, to newsletters, web sites, social media activities, press relations, tastings, and tasting room experience separately, and to calculate and plan how each of them contribute to the brand image we wish to portray.

    When marketers at small wineries list all of the forms of communication available and compare that to the resources of time and money available to work on them, the task seems daunting. It’s hard enough to get the quarterly newsletter out, much less be effective with all these other channels. Which is why planning your marketing program is so important.

    This is the right time of year to review—or develop—your marketing activity plan or marketing calendar for 2009. The idea is to systematically review all of the forms of communication that you engage in (or should be engaging in) and determine which you will work on and when. Remember, you can’t do it all, but you can do a few things well. If you focus on a few activities, do them well and repeat them consistently over time, you’ll get a lot more benefit than by taking an unplanned, scatter shot approach.

    Bromide alert: You’ve heard these before, but they’re true:
    If you fail to plan, you’re planning to fail.
    Plan the work, work the plan.

    I’ve prepared a very simple Excel spreadsheet that can help you begin the planning process. It lists many of the communication activities/channels you might consider down one axis, and months of the year across the other. You can begin by placing a check mark in the month column corresponding to the activities you know you’re going to do. You can add activities, of course, and add activity details as I’ve done under the Restaurant Visits item by listing Restaurant 1 and Restaurant 2. When you’ve got all the activities on the table, begin to enter dates. These can be start dates or do-by dates; it’s your plan, make it work for you. The idea, though, is to be real about what you can actually accomplish given the amount of work you have to do. Let me repeat, you can’t do everything, it’s a lot better to do a few things well.

    Whether you use my spreadsheet, build upon your plan from last year, or use some other system entirely, the goal is to end up with a clear, actionable plan that you and the other stakeholders at your small winery can refer to and all know for certain what marketing activities you are going to engage in, when.

    January 8, 2009 0 Comments

    Caring for new wine club members

    by Brad Asmus

    During a recent long weekend in Paso Robles I visited a bunch of great wineries, bought several cases of wine and joined six different wine clubs. Enough time has passed that I can talk about how well those clubs have done at following up.

    Four of the six clubs sent me thank you “packages” of varying complexity. One was a simple hand written note. It struck me as warm, and genuine.

    Others sent me form letters, some with my name merged into them, and some with hand written signatures. They were informative and pleasant and appreciated.

    One winery included a high-graphics-value membership card much like the ones that Safeway and other big food markets give you as part of their affinity programs with a card for your wallet and another smaller one that you can put on your key chain. I thought it was cool, though I won’t be carrying either.

    As a wine marketer I was disappointed that each of the four neglected to include the most basic element of every direct marketing communication: an offer.

    Always make an offer!

    When a customer joins your wine club, they have given you the OK to stay in touch. It’s a privilege not often granted by consumers who already get too much mail and email, too many text messages and phone calls, too many offers to buy stuff. It’s not a privilege you want to abuse, either by overuse, or by

    Who doesn't love a wine club shipment?

    Who doesn't love a wine club shipment?

    under utilization. Neglecting to include an offer is a huge under utilization of the communication. Full utilization is an offer of real value to the customer and an income opportunity for you.

    Every time you communicate with your wine club members, it is a direct sales communication. The reason you send a thank you note isn’t because you’re nice folks who appreciate the gesture that your new club member has made (although that is very likely true). You are sending the note to try to bind the customer more tightly to you so that they won’t cancel before the first shipment goes out. Subsequent communications are aimed at keeping customers from quitting. The communications may include heart-felt sentiments, but they all have one goal in mind, selling more wine.

    There are two rules for direct sales communications:
    1. Make an offer
    2. Sell the offer (I’ll go into this one another time).

    Emphasize club value

    Every one of the four wine clubs would have gotten me more involved with them and had me seeing the wine club as a real value if they had made me an offer. A winery that had great data collection could have looked at what I’d purchased at the winery and offered me more of that wine at a special “welcome to the club” discount. Others could have included a limited-time coupon that offered me another 5% or 10% of discount over and above the normal club discount level as a “thank you for joining” gift. With a little thought you can come up with dozens of ways to offer the new club member like me a sales opportunity that says, “our club really has value, so you should remain a member.”

    There is a complicated method for figuring out how much it costs to get a new customer to make their first purchase, and how much it costs to get them to make additional purchases. Without going into the details, the rule of thumb is that it costs six times as much to make get first sale. The lesson, then, is that you should concentrate on additional sales because you make more money on them. Start that process with the very first communication, and do it in a way that enhances the perceived value of club membership, even if I don’t take you up on the offer.

    Best practices:

    Send new wine club members a thank you package that includes an offer that enhances the perceived value of the club for the member and presents an additional income opportunity for you.

    In every subsequent wine club communication, make your members an offer with real value that they can’t get elsewhere, and then sell the offer.

    Final note: Two of the clubs completely missed the boat by not even acknowledging the deal we’ve entered into. Naturally, I’m thinking about canceling.

    November 7, 2008 1 Comments

    WordPress Upgrade Got Me Down!

    by Brad Asmus

    I’m a big fan of WordPress, both as a blog manager and as a content management system. I’ve recommended to many small winery clients that they base their Websites on WordPress and had no reason to regret that–until last night. That’s when I began the process of upgrading this site and, for many hours, lost connectivity with the site’s content. Worse, I’d lost the ability to login to the site to fix the problem.

    Happily, I found the fix at the WordPress.org forum dealing with installation problems. The fix was not at all intuitive. I’d have suffered for many more hours and had to hire help if this fix hadn’t been suggested. If you ever have the same problem, try this:

    Clear cache and cookies

    Attempt FTP access to site files. If you have that, do the following:

    1. via ftp rename “wp-content” > “plugins” to “1.plugins”
    2. create new dir “plugins”
    3. login to wp (which now worked for me)
    4. via ftp remove empty “plugins” created in step 2
    5. and rename “1.plugins” back to “plugins”

    Incredibly, this solved the problem. What a relief!

    November 7, 2008 0 Comments

    Lessons from Paso Robles Tasting Rooms

    by Brad Asmus

    Friends and I just returned from a great wine tasting weekend in Paso Robles. It was the Harvest Wine Weekend, heavily promoted by the Paso Robles Wine Alliance, so it wasn’t un-crowded, but the weather was fine, the country was beautiful, and the vibe was excellent.

    This isn’t a wine review blog, or I’d tell you about the great Syrah’s we tasted at Denner, about the Chateau Margene Reserve Cabernet that blew my socks off, and about the terrific Jack’s Creek Pinot that is the exception to the idea that Paso Robles is too hot for that grape. I’d rave especially about the way Paso winemakers like Larry Gomez at Via Vega or Scott Hawley at Jada like to blend odd varieties (did you know that Tannat has the most anti oxidants of any wine grape?) and come up with wonderfully complex wines.

    This is a wine marketing blog, so I’m going to talk instead about tasting room experiences. As I said, it was the Harvest Wine Weekend, so many of the tasting rooms we visited were crowded. Some were prepared, others weren’t. The ones that weren’t didn’t harvest the full benefit of the work that the Wine Country Alliance had done to bring visitors to town. Some just didn’t sell as much wine as they could have. Others turned off potential customers and set themselves up for word-of-bad mouth.

    As wine marketers, you need to analyze your tasting room experience in the same way you analyze your wine. The beginning, middle and finish of the experience are equally important.

    Beginning:

    Order out of chaos
    Everywhere we went, there was good signage, ample parking and grounds that were as clean and pleasant as the various physical layouts allowed. At most of the tasting rooms, we were greeted promptly and added to the ranks of people tasting as quickly as possible.

    At one of the most crowded rooms, we were met by a woman serving as hostess who greeted us, apologized for the crowd, and asked us for our patience until space opened up at the bar. When space opened, she ushered up groups that had been waiting longer and kept track of us until it was our turn. The vibe was good and we were happy.

    At another similarly crowded tasting room we were left to our own devices, which meant standing around awkwardly for about 10 minutes and finally elbowing our way to the bar as others did their best to get there ahead of us. Some people stood around for a few moments, then left. Vibe, not so good.

    Best practice    : Think about what it will be like for visitors when they arrive.  A friendly word of welcome goes a long way to putting visitors at ease and inclining them to wait their turn to taste when it’s crowded. If necessary, assign someone to act as greeter and traffic cop.

    Overflow
    I was surprised by how few of the tasting rooms were set up to handle overflow crowds. While many of them had long tasting bars—some straight, some curved, some that seemed to loop off into the far distance—only one was set up to establish additional tasting stations when the crowds got really big. At that tasting room we watched as a fellow quickly cleared stacks of winery logo sweatshirts off a table, brought out cases of glasses, set out tasting menus and began pouring samples for nearly a dozen people who hadn’t been able to get to the main bar. A few minutes later another display table had been converted to tasting and another half dozen potential buyers were taken care of.

    The best variation on this theme took place at one of the smallest tasting rooms we visited. When we walked up to the door in the metal winery building, we could see that we were never going to fit inside. And from the happy chatter, we could tell that this was a winery worth tasting. It seems, though, that the folks at the winery had been anticipating this. A fellow quickly approached, greeted us and pointing to a picnic table standing outside near an immaculately clean Carlsen Associates barrel press, asked if we would like to taste there. It turned out to be the wine maker and his attention over the next half hour made true fans of our entire group and the numerous folks just arriving who decided to join us rather than the press inside.

    Best practice: Think about what to do when you’ve got too many people for your primary tasting facility to handle. Setting up your tasting room so that display tables can do double duty is a great strategy. But don’t neglect other areas of your facility. At one of the more crowded tasting rooms we visited a deck just outside the door could easily have accommodated the overflow crowd.

    Middle:

    Tasting menus
    Most of the tasting rooms we visited had tasting menus. Only a few had enough to go around. When the tasting menu is longer than just a few items, it’s easy to become confused about what it is you’re drinking. And when the tasting room staff is busy, it’s hard to get details about the various wines. Tasting menus should be designed to help, and there should be enough that every visitor can see one—and take it home if they like.

    Best practive: Produce your tasting menus in a way that makes it economical to have one available for each visitor. Design them with the idea that visitors will take them home, which means that you should include details about ordering by phone, your website address and, if space allows, wine club information. Have them do double duty as order forms.
    Staff up
    In some of the crowded tasting rooms, everything was orderly and enjoyable. In others, overworked staff struggled to keep up and to maintain composure. The difference was the number of people on duty.

    Best practice: Over staff for events and busy times. Being understaffed leads to bad impressions.

    Miscellaneous middle note: I like it a whole lot better when the person pouring says something like, “This is our blend of Cabernet, Malbec and Cabernet Franc. Let me pour you some, then tell me how you like it,” instead of, “This is our blend. It’s very full, with notes of tobacco, road kill and candy corn.” The former leads to more discussion and helps you direct the taster to wines’ they’ll like. The latter goes nowhere.
    Finish:

    Make the sale sail
    I was amazed at how hard it was, and how long it took, to buy wine at many of the wineries we visited. The transactions often took as long as 20 minutes. In most cases, this meant that the person pouring took 20 minutes away from the tasting bar while they took down the order, found the bottles, cased them up, then (sometimes after a wait while another staffer used it) rang the sale into a point-of-sale device, and finally, ran the credit card. When it takes that long, the buyer becomes frustrated, and in some cases that I observed, angry. Meanwhile, the folks at the tasting bar are feeling neglected, even dissed.

    The best run operation (and it wasn’t the biggest) had the duties split. They asked customers to write their orders down on the tasting menu/order form. That was handed off to someone who grabbed the bottles and packaged them appropriately. After the actual order was checked against the form with the customer, the form was handed to a cashier who handled the cash or credit card. If it was a big order, yet another person helped the customer get the wine to the car. As Sting and Mark Knopfler once said, “that’s the way you do it.”

    Best practice: Dedicate staff to the sales portion of the tasting room experience. They’ll get comfortable with their roles and be able to help customers complete their transactions quickly and painlessly.  The customer will go home with your wine and good memories and you’ll get the maximum revenue and leave a positive impression with each visitor.

    October 21, 2008 7 Comments

    Telemarketing to your customers can pay off big

    by Brad Asmus

    Mark Parton was lying on his couch in Chicago several months after a Sonoma vacation, when the phone rang. Armida Winery was calling. Mark had joined their wine club during his visit and was happy to get the call.

    “I thought it was really nice that they called me. It sort of made me feel like I was part of the winery.” Parton said during a recent interview. “I also bought wine they were offering on special.”Call For Wine Logo

    After that, Parton, who had run telemarketing call centers for consumer direct sales of technology items, began wondering why the five other wine clubs he’d joined didn’t call. Sensing an opportunity, Parton and his wife were soon packing up their car and moving to California wine country.

    Today, Parton’s five-year-old telemarketing company, Call For Wine, has a customer list that has grown to 15 wineries. His operation has moved from the kitchen table to offices with space for 30 telesales reps. Business is so good that he’s been forced to put a stop to taking on more customers until after the first of the year in order to assure that call quality remains high.

    Why the success? It’s simple; telemarketing works. It works especially well in the wine market place where customers are eager to establish and extend a personal relationship with the winery. With telemarketing, wineries can reach out to their customers and refresh, and enhance that relationship in a more personal way than through email, websites or direct mail.

    “This is the most fun I’ve had in the telemarketing business because customers are happy to get the call,” said Parton. “Sometimes we’ll call and offer a special and people will say, ‘well, I don’t want to buy right now, but don’t take me off your list. I want to hear from you again.’ Telemarketers never hear that.”

    Reach out actively

    Telemarketing is an active, outbound communication. As with direct mail and email, telemarketing is a way for marketers to reach out to customers. Web sites, blogs, and even the winery tasting room, by contrast, are inbound or passive communications that require the customer to initiate the dialog. With telemarketing, the marketer can set sales goals and actively work to achieve them.

    Initially, many winery owners don’t think highly of telemarketing, if they think of it at all. But for the most part they’re thinking of those unwanted calls that come at dinner-time from financial institutions and others who are calling at random or from a purchased list of unsuspecting “targets.”

    What Parton’s Call For Wine does, though, is quite different. They only call prospects who have given their phone number to the client winery and are at least tentatively willing to receive the calls. If a prospect objects to the call, they are dealt with politely, put on a do-not-call list, and never called again.

    Callers are trained to know the client winery’s story, to be familiar with the winemaker and other principals and to know the client’ wineries wines. They get to know the wineries through twice quarterly “field trips” to client wineries. There they get to experience tasting rooms, tours and any on-site promotions in the same way that customers do. They also get to meet winery staff and develop relationships with they so that they can pick up on the “vibe” of the winery and transmit it during their calls.

    Perhaps more important than the training, the telesales reps that Parton hires are wine fans. They can talk wine in a knowledgeable and enthusiastic way with targets. Calls often more resemble pleasant gabfests between wine lovers than the more traditional high pressure sales calls.

    How it works

    Call For Wine’s business model is to act as the inside sales staff for client wineries. When customers receive a call, caller ID shows the winery’s name and area code. Telemarketing reps introduce themselves as being from the winery’s customer relations staff and they work through scripts approved by the winery.

    According to Parton, the most important element for success is the winery’s customer list. The list needs to have about 8,000 names and more is better. The list should include all of the winery’s customers, not just club members.

    Parton and his team call through a new client’s rough list over the course of a month or two. They’ll establish a Do-Not-Call list for those who don’t want to be contacted again and segregate phone numbers that don’t work for a later update. Customers who are contactable are scheduled for contact two or three times a year.

    Club members vs non-club members

    Most wineries think their wine club is their best source for additional sales. Parton has found, though, that in terms of revenue, volume and frequency of sales, calls to non-club members do just about as well as to members. Programs that only call wine club members are leaving lots of revenue on the table.

    “One of our biggest challenges,” said Parton, “is getting winery owners to see how telephone contacts enhance the relationship between winHappy telemarketing customerery and customer. Often, they’re leery of telemarketing and worry that customers won’t like it. Our experience is just the opposite. People are happy to get a call from the winery and to talk about wine. And they buy!”

    15% and better margins
    “I was really skeptical at first, based on my own experience with calls at home from credit card companies,” said Lesley Russell of St. Supery Vineyards and Winery, who began using Call For Wine in 2005. “but we’ve received no complaints from day 1” According to Russell, St. Supery’s telemarketing sales have grown from nothing to 15% of their consumer direct sales. She also points out that the gross margin from telesales is slightly higher than for other direct channels.

    Another model, similar success
    Provino is another outfit that specializes in telemarketing wines. It’s business model is different from Call For Wine’s, but it’s experience shows that telemarketing works. Provino, which started business in April of 2008, seeks out and buys what they call, “project wines.” often from smaller producers, that Provino believes offer particular value. They then offer them for sale to their own list of clients and prospects.

    Provino’s list is developed by obtaining names and numbers from list brokers that are able to serve up prospects who meet specific criteria. Examples of criteria might be lawyers in major metropolitan areas of the 26 open access states who report more than $1 million in income and subscribe to one or more food and wine magazines.

    Like Call For Wine, Provino finds that wine drinkers are happy to get the call and talk about wine. “What we’re doing is relationship based,” said Rich Brucker, Vice President of Sales and Marketing at Provino. “We want to find out what our customers enjoy. Then, when we see something they might like, we call them. We tailor our offerings to the customer’s tastes as we learn them. We’re in it for the long term. And it’s working really well.”

    Don’t miss out
    One of the cardinal rules of marketing is to communicate with your customers in the way they prefer to be contacted.  According to Bryan St. Amant of VinterActive, research has shown that some 15% of those who fill out “contact me” forms at wineries prefer to be contacted by phone. Wineries that don’t telemarket are missing out on substantial potential revenue and ignoring a channel of communication that is very persona, compelling and, at least for some, preferred.

    Best practices:

    • Build your contact list at every opportunity. Make it easy for customers to give you their information at the winery, on your website and at tastings and other promotional events. Make sure customers have the option of giving you their phone number.

    • Call your entire customer list, including non-wine club members, two to three times a year.

    • Make specific offers during these calls that are unique for their price or product offering and do it in ways that make it easy for the customer to say yes.

    • Consider using an outside agency like Call For Wine. Effective telesales require a whole set of marketing and management skills that few wineries have available.

    • If you do use an outside agency, Lesley Russell suggests that wineries establish a compensation agreement that is scalable enough to deal with high level success.

    • If you don’t have a big enough list for an outside agency, it’s worth trying it yourself. You’ll make money as you learn more about your customers and you’ll cement long term relationships.

    October 2, 2008 0 Comments

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