Projecting revenue for your wine club
This is something that can both positively and negatively affect your business. There are 4 things that you must think about when projecting your clubs revenue or better yet, truly understanding the value of your club. Most wineries fall into a trap of thinking their wine club revenue is simply the number of members times the cost of the shipment. If that is all you are looking at, then you are simply letting money fall through your hands. Here are the keys to focus on:
- View your club shipment as a sample program and focus on getting your club members to repurchase what you just gave them an opportunity to taste.
- Know your average decline rate for your club runs and keep it under 10%. Well run wine clubs have a decline rate of under 10 percent. If you find that you are running a higher percentage than that, then you have some cleaning to do. Implement a de-activation plan for those club members that are simply sitting on your list and never purchased, let alone received your last club shipments. If you don’t do this, we guarantee you will have a difficult time planning for your year’s financials.
- Have a repurchase plan and execute on it 2 weeks after your shipment has been sent. This will remind your members to purchase the wonderful wine they just consumed. More often than not wineries condition their clients to simply wait for the wine their shipped and every once in a while consume it. Successful wine clubs condition their club members to consume the shipment they receive so that they know how many bottles/cases they should repurchase.
- Know the % of club members that are repurchasing and continue to find ways to increase their order. By watching this percentage you will see what your club members like and don’t like. (Very valuable information)
When you put all of this together you get:
((# of club members – 10% decline rate) x package price) + (# of club members x 20%) x Ave purchase price)) = Total Club Value
CLUB ACTIVE NUMBER x CLUB REPURCHASE = Total Club Value