In the wine industry, we wax on an on about vineyard spacing, clonal selection, and sustainable farming programs. Then obsess over sorting lines, punch downs, yeast selection, fermentors and barrel regimes. We are calculated, mindful, and even dogmatic when it comes to our vines and wines. But when the time comes to build a business model, particularly as it relates to the marketing and demand creation side of things, we have a very small or non-existent budget, little time and even less interest.
This is like spending two days preparing a fancy French meal with the finest fresh ingredients and serving it on paper plates with Coors Light. Or writing an impassioned love letter to the object of your affection and dropping it into a mailbox without a stamp. None of this makes sense given all of the time and financial investment required to prepare the meal, write the letter or get a wine into bottle.
A recent survey by Sonoma State University's wine business researchers found that the number one strategic challenge facing wine businesses is "managing and building customer relationships and brand awareness." And the top two skills needed to prosper in the wine industry are marketing and strategic planning. Yet there are a surprising number of wine businesses operating without that third leg of the stool, and many wondering why it's so difficult to compete.
This is a self-fulfilling prophecy I've heard hundreds of times: "we don't have a marketing budget..." This mindset is a choice, and a very telling one at that, especially given what isn't being said: "...because we don't value marketing." Until there is investment and time set aside to build that third leg, it's going to continue to be a really tough market.
If you would like to generate more recognition and demand in 2015, be sure to prioritize your public relations strategy. Effectively serving the media to build your brand starts with developing and an action plan and associated budget.
Why plan for and invest in media relations?
Wines & Vines recently published "Predicting Wine Club Member Behavior," an article by Andrew Adams who advocates tracking member data. He quotes Sonoma State University's Dr. Stephen Cuellar, who has developed a survival analytics model to help wineries increase retention. Interesting indeed, especially for those of us who love the intersection of economics and psychology in the newer field, behavioral economics.
To truly know your club members, you must track data. Successful club managers know qualitative data such as wine preferences, communication preferences, interests, peeves and more. They also measure quantitative data such as averages for retention and attrition, dollars spent per member and shipment, and investment per member.
Data alone is not enough. A winery must put into place a regular system to analyze this data so that processes can be developed to grow and improve service. With the number of U.S. wineries now topping over 8,000, competition is fierce, so club design and service are critical differentiators.
The primary challenge for most small wineries after the financial hurdle of investment in software systems is time. A winery whose club manager is also making and/or charged with selling the wines will have a difficult time adding this to-do list to his plate. And even a dedicated club manager charged with growing her club may not have the skill set necessary to collect, analyze and use data. As the adage goes, "if you can't measure it, you can't manage it."
So how is a small winery to incorporate data tracking, analysis and marketing process given all the other challenges of running the business?
Research is an area where our company adds terrific value. We use regularly research as part of our four-phase process and specialize in designing and conducting customer surveys for client projects. Our research may be part of a bigger project -- for example, developing a growth strategy, which starts with understanding the current strengths and gaps. Or it might be limited to helping a client better understand the desires of his club member base. Last year, we conducted research before a client embarked on a label redesign, so we were able to gain feedback from their distributors and address stated issues before the graphic process began.
Research can be a cost effective way to establish service benchmarks, measure progress and help management make business decisions. If you're thinking about how to begin a project, give us a call to discuss. And for those who would like to try it internally, below you'll find some quick tips:
1. Make it personal. "Dear Friend" does not grab my attention, but "Dear Dixie" just might.
2. Increase trust and response rate with confidentiality. Allow respondents to remain anonymous.
3. Incentivize responses with a selection of prizes awarded to randomly selected respondents.
4. Make it short. No one has 30 minutes to answer in depth questions. Fewer than 10 is best if at all possible.
5. Make it clear. Your email invitation should clearly state purpose, time commitment, survey period, and follow up actions that will be taken.
-Dixie Huey, Proprietor
All businesses that stay in business achieve milestones. Since starting Trellis Wine Consulting three and a half years ago, I've been on a fast-paced learning path filled with them -- some more cheerful and inspiring than others. The first milestones that come to mind include incorporating and registering a mark, getting my first client, getting my first big client, receiving a client's heart-felt thank you note (and wow did that mean so much), achieving a big win for a client, outsourcing some services to enable growth and focus, most recently, hiring a talented colleague and of course, celebrating each anniversary.
Owners and operators in the wine and spirits business go through many of the same milestones. Plus the first harvest, first bottling, achieving press recognition and distribution, hitting the "black" zone of profitability and so much more. The industry tends to celebrate the big numerical milestones (5, 10, 20, etc.) with fanfare around the anniversary including press releases and parties, which are a well-deserved reward for a job well done and thank you to customers.
Where some brands may fall short is using these anniversary milestones as a catalyst for growth. Why not think about the strategy for next 10 years while celebrating the last 10?
I am currently in the middle of an engaging research project for a supplier who is using a milestone as an opportunity to consider the company's next steps. For them I designed a research survey of key stakeholders including internal team, distributor managers, and trade. Each survey group requires a multi-step process beginning with survey creation and refinement, followed by list development, interviews, coding, analysis and reporting. The final report will include a full SWOT analysis (strengths, weaknesses, opportunities and threats) and strategic recommendations for growth.
We are studying strategic possibilities, portfolio changes, industry trends, brand awareness, business practices, competitors and more. For my client, gaining this knowledge will accomplish the following:
* create interest and buy-in given management's need for and desire to change to position the company for growth
* confidentially gather a range of diverse perspectives on the issues facing the company
* provide an organized format for all to voice creative solutions and an opportunity to analyze business and industry trends
* let customers and partners know that their insight is valued and considered -- this is a wonderful way to thank them intrinsically
* serve as a vehicle to reach and interact with the media -- our professional critics
So far, I've provided preliminary reports on the internal and distributor management audiences; my next step is to code and analyze over 500 trade survey response sets -- it's a huge number and double our assertive goals. And I know it will be full of knowledge for my client and me.
Taking time to pause and consider goals and direction for the future is critically important for any successful business, especially in our industry, where the competition is fierce.
In my next post, I'll discuss best practices for survey design and present a case study to demonstrate how data can be used to position a brand for success.
This year I've completed a number of market research surveys for Stoller Vineyards. When the project began I surveyed the wine club and brand managers to get feedback on topics ranging from wine quality, pricing and value to brand communication and sales materials. We also studied visitor experience and perceptions. I then used this feedback to develop a SWOT analysis and the 2010 marketing strategy, which means it is considered for brand messaging in ads, media relations and social media, as well as how we develop consumer and trade programs. In other words, it is used on a daily basis.
Today I finished analyzing another survey of Stoller club members regarding events and soon I will begin a series of surveys for a new client, Chehalem. Market research is a pursuit I enjoy, but more importantly, it is very valuable to wine businesses. Don Morgan of GMA Research, a fellow speaker at the June Southern Oregon wine marketing conference, puts it best: "Positioning is what brands aspire to... market perception is reality." He also noted that the most critical market research question is whether or not your customers or clients would recommend you.
As a marketing strategist, my role is to survey market perception, build or re-build positioning (and reality) based on this feedback. Too many consultants have a tendency to come in and change everything without a true basis for their recommendations. While not every decision should be made with a survey set -- best practices do exis, this approach can be financially wasteful and ignores what the current organizational strengths. A good marketer should seek to understand before she seeks to improve.
PS - I do also practice what I preach. In a recent survey of all of my past and current clients, here's what I learned:
* 100% would recommend Trellis Wine Consulting either "very highly" (57%) or "highly"
* 86% rated my service's quality, integrity and professionalism "excellent" -- for value I received "excellent" on 57% of responses
a* the two most important factors in selecting my company were its wine focus and the ability to work directly with me (versus an account executive) -- no one rated location in Portland or my references as important
I also learned more about my strengths and challenges on the open-ended questions. This feedback is very helpful to me as I continue to grow my business and plan for the future. One of the challenges of being an independent service provider is that unless I ask for feedback, I don't get it!
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