Do's and Don'ts for DtC

Speaker offers practical tips to increase wine sales

by Paul Franson
The Napa-Sonoma chapter of Women for WineSense gathered Nov. 3 to discuss direct-to-consumer sales.
St. Helena, Calif.—With distributors and retailers consolidating at a record pace, smaller and newer wineries are becoming more and more dependent on selling wines directly to their customers. Even medium and large wineries are pursuing direct sales as more profitable alternative to selling through the three-tier system and accepting its hefty markups.

Unfortunately, direct-to-consumer (DtC) technology and practices are evolving rapidly, and many wineries still have not perfected their strategies and tactics.

To jumpstart these wineries’ efforts, Women for WineSense of Napa and Sonoma counties held a seminar Nov. 3 at Merryvale Vineyards in St. Helena. The instructor was Sandra Hess, founder of DTC Wine Workshops, who has extensive experience in both sales and high-tech commerce. She helps wineries implement and optimize DtC.

Her theme was “Do’s and Don’ts of DTC,” and Hess provided enough practical ideas that she assured listeners they would take home at least a few they could use immediately. She wasn’t exaggerating.

Why DtC matters
Hess began with a reminder of the importance of DtC: 4 million cases were sold direct in 2014, an increase of 15.5% over 2013. That represents $1.8 billion in revenue, a number expected to exceed $2 billion this year.

“Wineries were skeptical that DtC would be important at first, but that’s changed,” Hess noted. She attributes this growth in importance largely to the aggressive campaign by Free the Grapes!, the Wine Institute and others to allow wineries in California to ship wine to 43 states—and counting.

Delivery services also have added refrigerated vans to protect the wines during shipment.

DtC sales are potentially much more profitable than the three-tier system, though they do incur costs such as improved tasting rooms and technologies as well as better training for staff. They also provide much better information about customers. “What you learn lets you make better decisions.”

To optimize DtC sales, however, Hess reminds wineries that they need the best technology combined with the best processes. Technology alone may not help if winery staff isn’t trained to use it properly.

She mentioned the following among the best technology: reservation management software, tablets to collect opt-in data from visitors, point-of-sale software, customer relationship/wine club management and compliance and shipping management.

Obviously, a website that allows e-commerce is vital; these days, it must recognize and adapt to smart phone, tablets and laptop or desktop computers. “Thirty percent of all U.S. e-commerce is on mobile devices,” she claimed

“Your website must be fun and easy to use—and updated regularly, too—so club members see new content. They love to hear from your winemaker and see what other members are doing.”

“You tasting room staff needs to know all about your relationship with customers so they can interest with them meaningfully any time they visit the winery.”

She especially emphasizes having mobile data collection so staff can interact with customers all over the property—not just in front of a wine bar that may get backed up at busy times. Today’s technology allows you to quickly swipe a credit card and driver’s license, and then get an email to populate a database.

The ideal process is for the customer—or future club member—to deal with an individual, including getting his or her email or phone number to make orders or reservations. That person should follow up by phone, text or email after visits, too. Some high-end wineries find wealthy people won’t use email but prefer text (SMS), while baby boomers like email.

Hess is a great believer in paying special attention to your top 30% of customers—though they can change rapidly. These aren’t just the ones who spend the most, but those who are active on social media and can mention your winery and wine.

You can even use the right fulfillment software to extend the tasting-room experience to wine delivery with customized wrapping and messages. She said that customers are 25% more likely to reorder if the wine arrives when expected.

After the general thoughts, Hess posted a list of proven techniques:

Optimize the tasting room experience: Silicon Valley Bank found that 75% of wineries have wine clubs, and 90% of club members sign up in a tasting room. But it still costs five times as much to recruit a new member than to retain an old one.

Offer bundles of popular items: Make it easy to leave a tasting room with wines.

Offer elevated tasting experience by reservation:
Seated tastings by reservation average $392 in sales per person versus $75 at a stand-up bar, according to Silicon Valley Bank's May 2015 Tasting Room Survey.

Don’t use high pressure to sign up people, as they may just cancel quickly: It might be better to create such a nice experience the first time that they return, the ideal time to sign them up. In fact, people spend 67% more on their second visit.

Make the most of the off-season: Invite nearby customers occasionally for exclusive experiences in “off times.”

Explain shipping costs upfront, not at the end of the process: Avoid shopping cart abandonment or lost customers. Offer deals like $1 shipping (not “free” in California) to encourage buying a case or half-case instead of a bottle or two.

Notable mentions: Add customer and media reviews to product descriptions.

Customize promotion to customer preferences or details:
Don’t send an email about white wines if the customer only drinks red. Note his or her birthday or anniversary with greetings or special offers.

Members are No. 1: Never offer discounts on “flash” sites or elsewhere that are better than those wine club members get.

Use text for shipping or delivery dates
Most club members love to get phone calls from “their” winery. Hess recommends contacting them—sometimes by phone—at least three or four times a year. But let them opt in for contact.

Don’t overload visitors with newsletters. They get too many from other organizations. Let them choose if they want them.

Fans like short videos from the winemaker talking about wines—without a sales pitch. Hess said that you could get three five-minute professional videos made for $3,500 to $5,000.

Hess also emphasized the importance of concise and meaningful summary reports from your various technologies. Watching trends can help improve sales or counteract negative trends.

Finally, monitor mentions on social media, and respond and forward but watch the laws: Both the TTB and ABC regard winery postings on social media as advertising. And don’t respond to nice postings by sending the poster a sales pitch. That’s a bit blatant.

Hess has posted a number of case studies about DTC at wineries at dtcwineworkshops.com.

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