Do Small Wineries really need KPIs?

Continuous Improvement – preparing for the competitive storm

By Carl Giavanti and Aron Brajtman

If I had mentioned KPI’s eight years ago when I started doing marketing consulting, I would have been escorted out of the room, maybe even the AVA. That is not the case anymore.

Measuring your sales performance is critical, as much as we’d like to not believe it. Remember the “field of dream” days, when you could just make great wine and it would sell itself?  Until the great recession (2008-2009) timeframe you may have had this experience. We have fond memories of inventory depletions, really big Memorial Day and Labor Day weekends, and festivals and events where you sold a lot of wine. I remember many wineries saying they didn’t bother getting emails from consumers, nor doing a lot of marketing or tracking sales performance. KPIs? What?

Now we all know those days are long gone and wineries must run themselves like well oiled marketing machines to ensure their survival. I like to say that 50% of total staff time (including your own) needs to be spent on marketing – wholesale, retail, trade and DTC – whatever your channel mix.

Peter Drucker, business management guru once stated “If you can’t measure it, you can’t improve it”, which brings us to the point of this article – Key Performance Indicators.

Don’t think these business measurements apply to your winery? Unless you are a cult winery that is fully allocated with a substantial wait list, bear with me and continue reading.

KPIs are a way for wineries to define success and measure performance, and make progress toward your business goals. For most small producers, DTC goals are selling more wine, improving sales efficiency, acquiring and retaining customers, and retaining staff and improving morale.

This article is primarily concerned with improving DTC sales performance, because the pool of high-end high-frequency consumers is limited and there are many more wineries marketing to them than ever. Additionally, we know that consumers can be fickle. They support your brand and bring their friends around when the value they get from interacting with the winery exceeds the price they are asked to pay. This is a topical issue as we are seeing early signs that the “premiumization” trend is weakening, with the introduction of new marks and second labels at lower price points.

When I query winery owners and managers about tracking and using metrics, I find that most can give me basic sales data such as total revenue by month or compared to last year, percent of tasting room versus wine club sales, DTC compared to other channels, and statistical data such as number of club members, size of email list, number of social followers, etc. However, not everyone successfully tracks total number of tasting room visitors (new, repeat, paid, comp, club), referral sources (how they heard about you), and staff performance and labor metrics.

Once you are capturing all of this data you’re ready to turn it into actionable management information that will drive business results. If you are not great with spreadsheets, or current system does not provide performance tracking functionality, find one that does.

Here are some basic winery DTC sales measurements (KPIs) to implement:

  • Sales per employee: The higher the number in the tasting room indicates whether the staff focuses on supplying the customer with value and whether staff captures a portion of that value for the winery.
  • Conversion ratios: What percentage of visitors to the tasting room actually buy? What percentage join the wine club? What percentage leave their email for further communication?
  • Average order value (AOV): Average sale per tasting room visitor? Is the trend going up?
  • Average annual wine club sales per member? What is the average add-on percentage?
  • What is the Wine Club attrition rate annually?
  • What is average tenure? What measures are taken to retain loyal customers?

Tie your winery’s goals to these measurements and clearly communicate the importance to staff:

  • Post individual, team and winery goals
  • Review and make adjustments monthly
  • Share success, and highlight team members
  • Establish a bonus program to reward staff

Continuous Improvement is the mantra for small production wineries and the key to survival in this ultra competitive environment. Start now – Create goals, track data, establish KPIs, then measure, improve and Repeat!

I track wine industry benchmarks for these KPIs. Feel free to contact me if you’d like that data.

Finally, thanks to Aron Brajtman for initiating this article, providing the KPIs from an accountant point of view and reminding me that even wineries need to be run as businesses. If you found the KPIs helpful, the next step is to understand KFIs (Key Financial Indicators) such as Liquidity, Earnings Growth, Profitability, Activity, Efficiency and Leverage. If you’d like a copy of the winery Financial Metrics white paper by Aron, please email me request at cgiavanti@mindspring.com.

CARL GIAVANTI is Winery Publicist with a DTC Marketing background. He’s completing his 8th year of winery consulting. Carl has been involved in business marketing and public relations for over 25-years; originally in technology, digital marketing and project management, and now as a winery media relations consultant.  Clients are or have been in Napa Valley, Willamette Valley, and the Columbia Gorge.  (www.CarlGiavantiConsulting.com/Media).

ARON BRAJTMAN is a CPA and the owner of a CPA firm that deals uniquely in supplementing the operational skills and talents of entrepreneurs with accounting and finance strategy. Aron has over 30 years of experience providing accounting and business solutions to small and mid-sized businesses and nonprofit institutions. He is located in a fast growing wine region in Canada known as Prince Edward County where he provides services to local wineries and other businesses. http://www.abrajtman.com/

 

 

 

 

 

 

 

Mobile Marketing is a Mindset

It’s also a Wine Marketing Strategy

Note: This article originally appeared in Vineyard & Winery Management Magazine, July-August 2016. Below you will find an introduction and excerpt. A complete .PDF copy of the article is available upon request.

It’s time to be mobile (which is to say, nimble). The marketing tactics that worked for you in the past may not be effective going forward. Don’t let the pace of technology pass you by. Yes, you’re the “publisher” of your brand stories and your wines, but consumers are the “editors” as well as the buyers you need to connect with the most — and on their terms. Amy Gross, founder of the Wine4.Me wine app, which creates unique taste profiles to match users to their favorite types of wines, offers this insight: “The wineries that meet their customers in the digital space will be the ones that thrive.” You can add “survive” to that as well.

What is being Mobile?
The acceptance of and interest in doing more on mobile devices is extremely high and growing faster than we can imagine. We’re all becoming extensions of our phones and tablets, and so should your winery’s business. In 2014, we reached the “tipping point,” where there were more mobile phones in the world than people. It’s simply grown from there. Mobile marketing is a mindset that every winery needs
to adopt because your competition already has. Being mobile also means getting untethered. Get away from the cash register or point of sale system. Get out from behind the tasting bar. Be among and interact with your customers.

Be Mobile Responsive

“Mobile responsive” is a clever term that acknowledges we live in a multi-device world, including desktops, laptops, tablets and phones with different operating systems and screen sizes. Therefore, the design of your website needs to respond to the device on which it’s displayed. But being mobile responsive also includes recognizing how people respond while on their mobile devices. For example, people are more likely to reply faster to direct messages and texting, rather than traditional e-mail, because they’re checking their mobiles all the time and messaging is immediate.

Top 10 Tips to Implement Now

You can email me at cgiavanti@mindspring.com to receive a .PDF copy of the entire article including the “Top 10 Tips” as it appeared in the July – August 2016 issue of Vineyard & Winery Management Magazine.

CONTENT Drives Winery Recognition; Now More Than Ever

Leveraging all three types of content is critical for small producers

Let’s face it; brand building was easier 20 years ago. Small production wineries today are in an extremely competitive environment. There are close to 9,000 wineries and growing in the U.S. alone. International brands are flooding our markets with good quality and aggressively priced imports. Add to that the consolidation of U.S. distributors, and you have lots of boutique wineries desperately seeking attention and representation from far fewer distributors. Twenty years ago it was not uncommon to be 100% allocated to wholesalers. Today, this is not a realistic model. Here are some wine market facts to consider:

  • 1995 – 2,600 Wineries and 3,000 Distributors*
  • 2008 – The Great Recession starts. Distributors consolidate their books and themselves, and focus on larger, well-known brands
  • 2015 – 8,800 Wineries and 700 Distributors*
  • Today – Distributors work hard selling major brands, and are not necessarily looking for small producers with premium-priced wines
  • Today – five or six national beverage distributors control 65% of all wines wholesaled nationally
  • Today – Large retailers have monopoly power. Retailers with private labels are proliferating and call the shots (Total Wine, Trader Joe’s, Costco)
  • Today – There are fewer print publications with paid staff journalists and wine columns to discovery and report your winery story, and review your wines
  • Today – Wine journalism as a whole is moving from print to a digital medium. How will these outlets generate revenue? They will be looking to you for advertising and/or sponsorship dollars
  • Today – Online wine writers continue to proliferate. Which ones are in your strategic markets? How many are credible and have impact?
  • Today – Wine publications are starting to screen your wines in advance of permitting submissions due to sheer volume alone
  • Today – Wine publications may want you to pay for high scores with label placement and ads in their print and online editions
  • Today – It’s a pay-to-play world and getting consumer mindshare and media recognition can be difficult and expensive
  • Today – Wine consumers are overwhelmed with the sea of wine available
  • But – All is not lost! Please read on!

Today’s challenging marketplace requires small wineries to take control of your own destiny – both DTC Marketing and Wine Media Outreach are the key. Distributors are (for the most part) not going to help you “build your brand” unless there is a quick ROI and minimal risk. It is essential for small producers to tell their own stories, and get their brands and wines to market and be recognized by consumers. I talk specifics on how to get coverage for your brand in this article: Winery PR in a Pay-to-Play World.

All of this brings me to the point of this article—the critical importance of Content. Let’s review the three types of marketing content: owned, paid and earned content.

Owned Content is what you’ve created and actually own—your website, social media platforms, winery blog and news, photos, videos, etc. Paid Content is exposure you purchase—advertising, label placement, etc. And finally, Earned Content is the most important if you want to expand your reach beyond the subscribers and followers you already have and are already marketing to.

Earned Content or Earned Media are third party endorsements by wine writers or other media outlets —media coverage for your brand that results in accolades like feature articles, media mentions, wine reviews and scores. This is also why brand building through media outreach is imperative, as there are too many wineries for writers to discover unless you are being proactive. Can you still be a wine media darling just by making exceptionally good wine? Maybe, but don’t count on it. Put a media program in place to ensure your news and Your Voice is heard.

This area of Earned Content or Earned Media is important because it contributes to the library of content your winery can use in its marketing efforts. Wine is still an esoteric luxury purchase for many consumers, and they rely on expert opinions to support their buying decisions. Links to articles, podcasts, and video interviews about your brand are great marketing content. Share your scores, medals and other achievements in your general interest and wine club newsletters, and on social media. These are the bragging rights that you’ve earned, and that makes a huge difference in today’s wine world. On the flip side, garnering media attention but not doing anything with it, such as mentioning and linking to it on your website, blog and social media pages, is a terrible waste of a precious resource.

Despite our new 21st Century challenges, these are actually sunny days for the premium wines category. Get your Marketing and PR game on now, and bank enough Earned Media content to help you weather the more difficult times to come.

*Source: SVB 2015 State of the Wine Industry

CARL GIAVANTI has been involved in business marketing and public relations for over 25-years; originally in technology, digital marketing and project management, and now as a winery media relations consultant. Carl started by focusing on DTC Marketing for wineries 7 years ago, and formed a Winery PR Consultancy over 4 years ago (www.CarlGiavantiConsulting.com/Media). Clients are or have been in Napa Valley, the Carneros, Willamette Valley, and the Columbia Gorge.

What is your Tasting Room Strategy?

Tasting Rooms are critical to your survival

Here are the facts, according to a Silicon Valley Bank presentation I recently attended, on the “2015 State of the Wine Industry” – In 1995 there were 2,000 wineries and 3,000 distributors in the U.S. Those seem like pretty good odds for getting your wines into someone’s book, right? Today we are faced with an entirely different reality. 7,000 wineries are entering 2015 in search of just 700 distributors. What does that tell you if you are a small production winery?

While entering new markets is certainly feasible, it has now become more difficult due to the consolidation of wholesalers nationally, and focus on volume based brands. This indicates the need to focus on the Direct to Consumer (DTC) sales channel. And at the strategic core of every DTC program is… The Tasting Room. When I write Marketing and Action Plans for winery clients I always start with a brand discussion, followed by the real estate. Do you have a tasting room, or plan to? Is absolutely every aspect of the room a reflection of your brand strategy? It doesn’t have to be expensive, but it does need to be memorable.

Is there a better place to create brand ambassadors than your tasting room? Having one affects your ability to sell wine, grow and profit from loyalty programs, and derive new subscribers and followers to market to. So the strategy is to drive traffic to your tasting room, and use engaging and authentic service to sell wine. From a sales and marketing perspective, there are only three things that you and your tasting room must excel at every day:

1) Selling Wine (66% close rate is your benchmark)

2) Selling Wine Club (10% should be your goal)

3) Getting Emails for your newsletter (I think 80% of visitors is a reasonable target)

It falls to winery owners and managers to ensure staff understands that along with the myriad of other duties, that job #1 is to create brand ambassadors. The way to do that is to out-service your competition. So, glass polishing can wait. Service first!

On the subject of “Service Talks“, and wine descriptions walk… hire staff that are a reflection of your winery brand, that you are proud to have as representatives. It’s not enough to have an earnest friends volunteer to help if they can’t ask for wine and club orders, and don’t provide exceptional customer service. Whoever presents your wines will become the face of your winery, and experiences they provide will persist indefinitely. Hire people who are natural hospitality types and Invest in their wine education. I have a few winery clients that run wonderful tasting room operations; and some have wanted to affirm public perception. We use surveys to get anonymous feedback from visitors and club members; and also hire “Secret Shoppers” and provide a script of questions, responses and talking points to engage tasting room staff. The results go to the old saw “be careful what you ask for”. We can all stand to improve our operations, right?

So, why are Tasting Rooms so important to consumers? It is no longer enough to sell great wine! Save technical details for the small percent of visitors who ask. I tell my clients in no uncertain fashion “Stop Selling Products”; “Start Telling Stories”. People expect to interact and engage with your brand, so your tasting room should have visual displays that are consistent with your brand identify; Visitors also want to have memorable “Experiences“. And the best way to do that is with well thought out questions about their interests and wine knowledge; and in a controlled environment – your tasting room. If you really think about it, don’t we all want to discover that special and reliable place we can always go and bring our friends and “where everyone knows your name” (think “Cheers!” Wine Bar)?

Why not allow guests to choose what type of experience they’d like? There has been a very positive trend toward offering different “Guest Experiences” at your winery tasting room; to have personal hands on interactions of their choice. Examples of this might include 1) Classic standing tasting bar 2) Open seated and served tasting 3) Reserved seating wine and food pairing experience 4) private space for wine club members 5) Guided educational vineyard tours 6) separate space for club members 7) Outdoor Patio or Picnic tables. Options 2-7 have proven to both increase average sales per visit, and new wine club signups. The point is to get away from the tasting bar and people moving.

Let’s face it, these days people have too much information available and so many choices; of who to patronize and which brands to introduce to their friends. First impressions are more critical than ever, and we are tasked with being accessible and authentic in all of our interactions. This highlights the need for consistency of messaging and high-touch high-energy service provided across all your marketing platforms starting with Tasting Room. Deliver good memories and people will take home memorabilia (your wines!). Although this is cliché’, it’s worth stating anyway. It’s the second sale that matters, isn’t it?

How do you know if you are successful? Tracking Metrics and Conversion rates against goals. Tracking new daily visitors, buyers, sales, club signups, email subscribers and how they heard of you is a must; Compare your results to industry benchmarks, calculate your conversion rates, and adjust the goals and incentives of your tasting room staff monthly. You will improve your sales conversions by tracking user preferences and history – so use your POS or invest in a CRM to record, segment and target customer preferences; or at least use your EMS (email system) to track notes, history and interactions.

Other TR best practices – offer strong industry discounts (25-30%) to other tasting room – they are your best referral source; when it’s busy send staff out to network and see what other tasting rooms are doing; have staff do daily Facebook posts in your winery’s voice with the mood and a photo of the day; send email thank you notes to all significant daily buyers (you got their email correct)? Ask them to follow on your social platforms; add them to your EMS (email marketing system), and setup auto-generated offers in one week; always send hand written thank you cards to new wine club members; Tweet daily tasting lineups or promos using common hashtags. Oh, and if you’re not doing this already, please visually acknowledge me within 7-10 seconds when I walk in your door.

What is Your Voice?

PR is Social

Storytelling is PR

Your Voice is Storytelling

What is Your Voice?

Aren’t all of us publicists and promoters… either on behalf of our own business and personal interests, our clients or something else we believe in?

In traditional approaches to marketing and advertising, ad agencies and other marketing firms produce messaging that is distributed to print publications, on TV, billboards and other media. These types of promotions are still relevant but losing effectiveness because they are impersonal and less targeted to specific audiences.

While these traditional methods of marketing should still be part of a balanced plan, Digital and Social Media allows for live interactions, responses, comments, customer feedback and sharing… in short real time engagement. Is it any surprise that we are experiencing a major shift in marketing and communications strategies?

These online channels have gained mind share and will continue to surpass mass media because they are more customized and targeted and encourage a brand’s voice and personal point of view. What we are seeing is a move from mass marketing to relationship marketing. Your unique story can be told in a very cost effective way, and people want to know. So what is your story? What is your point of view?

What do you have to say that will resonate? How do you make your story stand out? What will people remember?

Try telling different stories to consumers; different pitches to the media; produce distinctive creative for your online advertizing. Be memorable. We all want to, need to have a unique voice. What is Your Voice?

Why Email Marketing?

Everyone has one. Some have many. Email addresses are a type of currency. They cost nothing to give out, but their value to the recipient is “priceless”… well not quite, but very valuable. In fact, after your existing customers, getting emails from prospective future customers is your most valuable asset.

Why discuss email marketing at all? There are so many other marketing subjects of interest i.e. Loyalty clubs, social media, mobile marketing, winery PR. Year end planning is a good time to get back to the basics, and email is one of the primary branches of the content tree, leading to many other points of connection with consumers. I still meet people who are just getting started with social media, mobile devices and other tech, but I know for a fact that just about everyone has an email address.

The value of email is to facilitate communications and build brand loyalty. It is likely that some form of social media will replace email communications in the future. Evidence of this is generational. My mother who is in her 80’s doesn’t have email and can’t be bothered. My niece who is 15 may have an email address, but has only given me her phone number for texting.

All of this brings me to the point of this article. Email Marketing is a proven driver of actions you want your current and prospective customers to take. It’s inexpensive and you can segment and target your audience specific to their interests and track the results. If your winery has a tasting room, this is what you’ll want to promote and where you’ll want to connect with people. If you don’t, you’ll communicate by driving them to your website and hope to transact business there. If you are one of my email subscribers and read this article in my next newsletter, I’ll suggest that you “click here to read more”, which takes you out to this blog post where the balance of this article resides. I want you to read the conclusion of this article on my website, which is my point here. You can’t sell wine (or consulting) with newsletters and social media, but you can create calls to action that take your customers where you can sell wine, either in person or on your website.

Content has become as important as the media through which it is conveyed. And targeted content even more so. Segment your email lists and deliver content relevant to specific group interests. Shipping promos for out of state subscribers, and local events for those in state are good examples.

Newsletters are just one of many ways you can build customers and followers. It is critically important that your newsletter is integrated with your advertising, and social media and displays well on mobile devices and is easy to share. Conversely, you can create integration and build your emails lists with signup forms on your website and your social networks.

I see so many newsletters with content that seems very noisy and spammy with lots of pitches and sales promos. I get that, but your newsletter needs to appear educational. Use the 80/20 rule (Educate/Promote) and you’ll be fine. People will appreciate it, and when you do offer special deals they’ll take notice. Newsletter marketing can boost sales and the effect is immediate.

Why Customer Relationship Management Systems Matter

Like the author, I used to work in corporate technology and systems, and now help small wineries with sales and marketing and occasionally blog about it. This is a very well thought out article and should point the way for many wineries. Marketing segmentation and access to consumer data create competitive advantage. The issues I deal with when consulting very small producers are system scaleability, proprietary platforms, maintaining interfaces with other applications and 3rd party vendors, training and of course cost of ownership. Cloud based systems offer low cost but potential issues with transaction response time and data security. I’d be very interested in hearing from other winery business analysts regarding their selection processes and experience with specific winery CRM systems. Here is the article: http://p.ost.im/p/e4GHY6