Tactics For Wine Producers to Rise Above the Retail Price War
According to IBISWorld, online liquor sales in Australia have been steadily growing – so what does this mean for wine producers?
For the 2015-2016 financial year, online revenue is expected to land at $344 million, contributing 3.5% of the total Australian liquor retail sales – an annualised growth of 10.9% over the last 5 years, in comparison to 3.2% overall revenue growth, across all channels. (1)
The growth of the online shopping channel combined with the insight that almost 80% of Australian wine buyers are comfortable using the internet to buy wine could be good news for producers – however the reality is that the vast majority of online sales are through supermarket giants Woolworths and Coles. (2)
In their 2015 Financial Report, Woolworths reported an increase in revenue across their consumer wine channels (Dan Murphy’s, BWS, The Wine Quarter and on-premise) of 4.2% and with the launch of their new loyalty program that has already attracted 900,000 members, they’re only going to get more aggressive. (3)
To retain the loyalty of current cellar door direct customers and to attract new customers, producers will have to find ways to differentiate themselves from the purely transactional retail experience by working to build an emotional connection with customers – that sticks.
Below are some broad ideas / considerations for wine producers to explore across key moments in the customer lifecycle journey.
- Partner with local complementary producers to create a unique online event that celebrates the region e.g. 3 day online market fair that offers a range of products with great prices, free delivery, regional news etc.
- Consider a physical event that brings people to the area e.g. entertainment (music, outdoor movie, comedy), dining experience, cultural event, education, regional produce market, art exhibition, kids event, workshop tour (wine, food, arts) etc.
- Build a cost-effective marketing strategy to drive awareness and visitors (physical or online), where participating partners share the costs
- Consider the following marketing channels:
- Leverage owned customer and prospect database and assets (eDM, website, on-site, social, partner alliances)
- Leverage local complementary producer channels (customer database, eDMs, websites, on site, social etc.)
- Friends and family offer to locals and neighbouring communities and customers
- Partnering with relevant regional and metropolitan organisations/businesses with customer databases e.g. Tourism
- Digital media e.g. SEM, display, lead generation sites, social, eDMs
- Relevant print media e.g. local couriers, newspapers
Converting Cellar Door Visitors to Customers
- Use the unique environment of the Cellar Door to connect with visitors and customers by giving them authentic experiences they remember and share with others – think outside the square e.g. vote on a new wine label, contribute to the making of a wine, write a review, take a tour, get a picture with the wine maker, share a food match, buy a picnic hamper and sit in the winery etc.
- Encourage an ongoing conversation by inviting visitors to share their contact details – consider the value exchange (what’s really in it for them?)
- Encourage visitors to take a little piece of the winery away with them. This could be an enticing offer presented in a unique way, a physical/mini tasting kit, a relevant competition entry, a ‘showbag’ that features a taste of the region etc.
Building Long-Lasting Relationships
- Design a communication program around the customer lifecycle to engage customers in ways that are most appropriate for them
- Within this program identify key moments in the relationship that could warrant a special personal contact and also where major obstacles are likely to be. Examples are:
- After they visited the winery – thank you, short survey (progressive profiling)
- When they made their first purchase – thank you and educate / reiterate customer benefits
- When they made their second purchase – thank you, surprise & delight/reward
- Customer anniversaries – happy anniversary, surprise & delight/reward
- When you haven’t heard from them for 3-6 months – we miss you, exclusive offer/voucher to reactivate
- Across the contact program, segment your customer base and increase the relevance of the communication for them e.g.
- Cellar door visitor (non purchaser)
- New purchasing customer
- Regular delivery customer
- Active (purchased in the last 6 months)
- Semi active (purchased in the 7-12 months)
- Non active (purchased the last 13 months+)
- Analyse the behaviour from different segments and test different messages/offers to grow the engagement and ROI from each segment. Examples of tailored offers are:
- Voucher incentive
- Value-add e.g. Bakers’ Dozen, free gift etc.
- Conditional 2+ case offers
- Loyalty rewards
- Reserve next vintage
- Access to exclusive wines / small parcels
- Free delivery
- Customer-only events
- Also develop an in-depth understanding of the overall customer purchase and engagement behaviour across every communication wave. Utilise test and learn opportunities to optimise the performance of the communications program over time. Understand strengths around offers, customer segments, seasonality, newsletter features, social engagement etc.
- Consider a program, to reward customers for their loyalty
Bringing lost customers back
- Establish systems to notice when a customer who has been active, lapses. Continuously test messages and offers to try and reactivate these ‘at risk’ customers. This could be simple recognition vs. an offer tailored to their purchase behaviour (e.g. aged reds) vs. a discount voucher.
Done well, an authentic engagement program can enrich the experiences that customers have with the region, the brand, the people and the product and has the potential to get producers out of the retail price war by giving them an opportunity to build deeper customer relationships that last.
- http://www.ibisworld.com.au/industry/online-beer-wine-and-liquor-sales.html (1)
- http://www.ibisworld.com.au/industry/default.aspx?indid=398 (1)
- http://www.abc.net.au/news/2015-07-15/online-wine-sales-outstrip-cellar-door/6621516 (2)
- http://www.woolworthslimited.com.au/icms_docs/182381_Annual_Report_2015.pdf (3)