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January 31, 2007 | WineDirect Admin

Inertia’s Direct-to-Trade Program Announces More States Available

Today, almost two months to the day after we made our first official public announcement, Inertia Beverage Group announced several more states that we are opening up for our groundbreaking Direct-to-Trade initiative.

You can find the article at Winebusiness.com and we’ll have it on the press section of our site when the press release is released to a general audience.

“Opening up” is hardly a technical term. Really what it means is we have completed our due diligence and made the proper arrangements to facilitate a winery beginning to sell directly into a given state to a retailer or a restaurateur. There’s more work that goes on behind the scenes, however, to get a winery prepared to do business.

But, I like to think of ourselves as infrastructure and marketing partners to help a winery navigate the maze of information and set-up required to allow them the ability to sell winery direct to a trade account.

So, when wineries see these sorts of notices in the trade press we hope it prompts a conversation about beginning to develop a trade strategy to complement what is already presumably in place—a consumer direct strategy.

Several more of these press releases will occur over the next couple of months as we fill out and formalize the relationships we anticipate having in many states.

One of the key things we have learned and continue to glean insight from is how people take in the Direct-to-Trade initiative via a press release or publicly available information; how the program is processed mentally by people, when they have their ‘a-ha’ moment and the point in time where they make it their own.

There is an element of a “wisdom of crowds” mentality where people are beginning to have brand ownership of the idea and the project. The romance period and affinity for the project tends to happen quickly, too. The most frequent response I get from all factions in the supply chain—wineries, distributors and retailers is, “Cool. Great idea. How can I be a part of it?”

This is certainly good as we expect that retailers interested in finding small, artisan wines that are not currently distributed in their state will seek out new and interesting wines that can be sourced with this complementary winery-direct program.

I mention complementary because our Direct-to-Trade initiative isn’t a replacement for or even a competitor to the existing three-tier system. It’s complementary, it’s an adjunct, and it is a way for a winery to access a market where they can’t secure a traditional distribution relationship or choose not to have one for any number of reasons production or marketing related.

A couple of people, mostly a few online wine denizens, have viewed the previous press release with its mention of partnering with distributors as “old wine in new bottles” couching their discussions with asides and three-tier bashing. There seems to be a lingering debate in the industry between parties in the three-tier value chain. I can tell you that, organizationally, we’re here to solve problems and not be philosophical arbitrators of age old challenges. We truly believe that we’re leading a revolution of change in creating a new channel for wineries.

That said, I have found the many small distributors that we are working with to be tremendous winery advocates that love the idea of a winery developing their brand in an incubator of sorts, while affording the winery the control that will help them lead their own business development. Of the dozens of distributor relationships that we have in place, all of them, to a person, see this as an exciting opportunity to be a part of a groundbreaking program that can assist everybody’s goal—making high-quality, small brand wine available to more people, at the places they are looking to buy them—retail and restaurants.

Old wine in new bottles? Hardly. More like, “Cool. Great Idea. How can I be a part of it?”

Jan 31, 2007 at 1:14 PM

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January 30, 2007 | WineDirect Admin

Direct Email Marketing: Anatomy of an Email

I recently came across an article in Dynamic Graphics magazine that dissected the anatomy of your typical Direct-to-Consumer email blast. Within this article were a few insights that were new to me, as well as some tried and true golden rules. Allow me to boil down a few points that I enjoyed reading.

The Subject Line: This is your topic, and it is as important as a headline in traditional print media such as a newspaper. This may be the only attention grabber for email recipients who are quick to delete messages they don’t immediately recognize as personal. Make it tasty, folks!
The Sender Line: Make sure to send from an address like info@address.com, rather than mike@address.com. This conveys a professional feel to the recipient.
Even though it sounds like an MC Hammer Single from the 90’s, “Can’t Read This” is actually a great way to avoid lost opportunities when recipients cannot read your email because of technological setbacks. In the event they are using a problematic viewer such as Hotmail, they will still see a textual link near the top of the email that will link to your site so the consumer can view your wine content in all its glory.
Above the Fold: Key content such as compelling imagery (always linked to a product or service of your winery, this isn’t only a beauty contest!) should always reside “above the fold”. This means the more important the information you would like to add to an email (or your site for that matter), the farther up on the page it should be. This guarantees that your viewers will not have to scroll to see items such as your wonderful wine specials, events, etc.

That’s all for this installment. Stay tuned for next time as we get to know Direct-to-Consumer emails in even more detail!

Jan 30, 2007 at 1:16 PM

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January 26, 2007 | WineDirect Admin

Unified Presentation

On Tuesday I was fortunate enough to speak on a panel at the Unified Symposium regarding direct sales. Here was the panel:

Moderator:
Bethany Browning, Delicato Family Vineyards, California

Speakers:
Jennifer Becker, Ensemble Marketing Group, California
Greg Christoff, The Winetasting Network, California
Jim Gordon, Wines & Vines, California
Steve Gross, Wine Institute, California
Paul Mabray, Inertia Beverage Group, California

I was lucky to be included with a great set of speakers.

The overall message was how much should you spend in time and resources to have an off-premise consumer direct program. I also spoke about not only investing money and time, but planning and measurement tools so that you can gauge your success and execute in an organized fashion. We are going to be posting these planning and measurement tools on our new site (another post - coming soon) for free so you can use them to help your success.

However, I wanted to post a few of the more relevant slides for your perusal. Here is a PPT (Unified 07) with most of the slides, contact me if you want our survey on the setup and ongoing costs of off-premise consumer direct.

What I found most frustrating is that people continue to tie tasting room and off-premise (phone, club, ecommerce, direct communications) sales together despite them being very different types of channels with very different skill sets. Additionally, since they associate them, they do not devote the minimum time (18.5 days) to do all the off-premise tasks because the tasting room has to focus on what is directly in front of them. Thus the mediocre results - no effort, not time, no money.
What was also interesting was the financial reward we are associating with our direct sales professionals. In the recent wine business salary survey you’ll see that there was no position mentioned for consumer direct managers and for wineclub managers, the salaries were not great. I asked my wife, a recruiter, how much the average pay for a great consumer direct manager is OUTSIDE the wine industry and it was much more. Again - you have to spend money to make money. However, the burden is on the future consumer direct managers of the world to gain that same level of knowledge and planning and impact on the bottom line in order to command that higher price.

Another item we came across in our interviews was the ridiculous notion of compliance being a variable cost and punishing wineries (see my compliance rant). Every winery we spoke to was very bitter. I say just ignore the states that are very difficult and increase your customer service in states that are easier to reach. Fight tooth and nail against people not helping you build your business and unfair regulations. There is more upheaval in the laws than ever and it won’t settle for a bit. Until then focus It is the Pareto Principle - 20% of your states probably do 80% of your business - focus there. Otherwise you are spending unnecessary time and risk to be compliant against Draconian rules.

I also pointed out the key places wineries lose money when approaching consumer direct sales. Here are the 4 most frequent problem areas:

Disparate Databases

MOST IMPORTANT LOSS - NO CUSTOMER INSIGHT resulting in lost opportunities for sales
Compliance being measured after the fact can cost you customer transactions
Compliance having to be culled into one source and aggregated
On average, a winery loses 18% of consumer direct its time in trying to hobble together databases for information analysis and for compliance reporting
Accounting resources regarding credit card reconciliation and taxation

SOLUTION - Place all off-premise sales in one unified database

Data hygiene

Wine club

Bad addresses
Credit cards (expired or not available)

E-commerce and marketing

Bad emails

CRM

Your tool is NOT collecting enough information (granular purchasing patterns, demographics): every piece of lost data is losing you future revenue

SOLUTION - Institute telemarketing/communications program for “data scrubbing.” Ensure that your software allows customers to self service cleaning data via the web. Unified Database for off-premise sales. Analyze your system, buy a new one if you are not capturing enough information.

Fulfillment

Integration

Not having your off-premise tools integrated with fulfillment houses will cause problems with data integrity, customer service, and lost orders.

Pricing strategy

Not creating a blended average will reduce sales in key markets and possibly have you overlook opportunities to recoup cost. One of the top catalysts for increasing sales via the web is Free or Flat priced shipping (subsidized).

SOLUTION - Make sure your off-premise direct sales tools (phone (and daily), e-commerce, and club tools) are integrated with your fulfillment partner. Work closely with your fulfillment partner to develop a blended pricing strategy.

Customer service

Self serving tools for customers to find order information
Segmenting your customers to find customers with a higher propensity for reorder
Rewarding all customers for increased reorder
Proactive communication

SOLUTION - Create marketing and communications programs for all direct initiatives. Ensure timely responses to customers and strong segmentation techniques.

Feel free to email me with any questions.

Jan 26, 2007 at 1:22 PM

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January 19, 2007 | WineDirect Admin

How to Start a Wine Club

I read an article recently from Food and Wine Magazine about starting a wine club (monthly wine party) with your friends. I would like to share some of the points that stood out and also include some ideas that we kick around here at Inertia. Our philosophy of work hard, play hard in the wine industry usually involves a bottle (or two) of the purple stuff.

The Invite: Your choice in participants should reflect the goals that you have for the club. For example, if your goal is to expand upon your existing knowledge of wines and wine regions around the world, it is important to invite people into your new wine club who have a similar level of knowledge/appreciation for wine. If this is purely a social gathering with your close friends, which can sometimes be more fun, then the more diverse the knowledge and appreciation of wine, the better.

Theme: Wine Club themes can be based on specific varietals, wine appellations/regions, and even price points (most bang for your buck for under $20). This last category is my favorite, and usually impacts your wallet the least, as it is a good idea to keep the target price relatively low to allow everyone to participate. A great place to find great wines at affordable prices is the Top 100 Best Buys section of the Wine Enthusiast. I also recommend selecting wine regions from around the world which makes the selection for dinner easy as well. Establishing the theme for the wine club gathering is critical to furthering everyone’s knowledge of wines and helps to keep things on a level playing field.

Tasting Notes: Another great idea is to have the guests email the name of the wine they are bringing ahead of time so you can provide tasting notes for each wine. Allow some room for your guests to write down comments on each wine - this will also help everyone to remember which wines they like after drinking 5-6 glasses (or more) throughout the night. One of our strategic partners, SmartsCo (recently featured in an AMEX commercial) makes a game called Wine Party that provides all of the components to make your event a success…just add wine.

Venue: Wine Clubs do not have to be confined to someone’s home. In fact, taking the party on the road keeps the event centralized and makes it easier to hail a cab. A restaurant I went to recently would make the perfect venue for your next Wine Club gathering - the restaurant is called The Kitchen and is located in Sacramento. As the name suggests, the dinner is conducted around a kitchen setting in which everyone gets to directly participate in the preparation of the food. Bring your own wine (corkage is $25 per bottle) and you’ll be able to enjoy the wines with some of the best food in Northern California. Seating is limited to the 5 or 6 tables that they have in the restaurant, and with only one seating per night, it makes for an intimate experience.

We will be hosting a few wine club parties of our own this year and hopefully our winery partners will join in the fun. What could be more fun than Computer geeks coming together with Wine geeks?

Jan 19, 2007 at 1:54 PM

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January 11, 2007 | WineDirect Admin

Re: Lose Weight Now! For Free!!!

I constantly have to send test emails to my personal mail accounts to make sure that the email displays correctly across all platforms and email clients and every so often I find the emails to be in the “Spam” or “Junk Mail” folder. To see the email I would have to go into my “Junk Mail” folder, locate the email amongst hundreds of spam mails and try to find which link to click to see the contents. I don’t think customers want to go through this dreadful process to be able to see what deals our clients have to offer, it is so much easier to just click on the “Delete Spam Mail” button without ever checking it. What is a good email blast if customers will never look at these emails.

Spam filters usually use a “point system” to determine what to be filtered. Basically the filters go through an email and add points to any suspicious phrases. Once an email’s points go over a limit, the email is filtered out and left in the “Spam” folder.

Here are a few things to avoid that are known to add to your “Spam points”:

1.Excessive use of quotation marks, dollar signs and exclamation points.
2.All capital letters – This is not only hard to read, it’s also like shouting at your recipients.
3.Use of red text – This is also hard to read, it is also a well-known spam tactic.
4.Excessive use of “Click Here”, “50% Off!”, etc. – Try to avoid these call to actions, instead try to use more descriptive words.
5.Misleading Subject Lines – Such as “Re:” to make your emails look like a reply.
I will also include of list of commonly used phrases that are known to cause emails to be filtered out:

Free! 50% off!
Click Here Opportunity
Call now! Compare
Subscribe Removes
Collect Discount!
Amazing You’re a Winner!
“Hidden” Satisfaction Guaranteed
Information you requested “Stop” or “Stops”
Search Engine Listings Act Now!
Offer All New
One time All Natural
As Seen On… Order Now
Buy Direct Please Read
Don’t Delete Save up to
Time limited Special Promotion
Guarantee, Guaranteed Visit our web site
Great offer While Supplies last
Give it away, Giving it away Why pay more?
Join millions

Hopefully this is helpful for your future email blasts!

Jan 11, 2007 at 2:00 PM

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January 8, 2007 | WineDirect Admin

REThink: Your Customer Lifetime Value

We know that most of you agree that your company should be customer-focused. Have you analyzed your database to measure your customer-focused activities? Can you answer the questions you need to know:

How much is a Direct-Sale customer worth?
How much should I invest in customer acquisition?
What is the lifetime value of my customer?

The ‘Customer-Worth’ Equation
The “lifetime value” (or LTV) of a customer can be used as a marketing metric. This metric can help your winery understand how much a customer is worth in dollar terms, and therefore how much you should be willing to spend to acquire new customers and/or how much to spend on keeping existing customers.

The LTV of a customer is determined by subtracting the amount of money spent to acquire the customer from the total dollar amount that customer will spend at your business throughout the course of their spending lifetime.

Value
After measuring customer value, the next step is to manage customer value. Wineries with experience in e-commerce find ways to maximize sales and minimize expense by evaluating purchase trend data and finding new and interesting ways to segment their customers. With the increasing availability of customer-based information, as well as sophisticated Customer Relationship Management (CRM) software and analytics tools, wineries can rank their customers by long-term profitability. In today’s world, segmentation and one-to-one marketing are no longer based on demographics or customer preferences alone, but are paired with an assessment of customer profitability. Your customers, through their actions, can tell you which route is the most profitable to take.

New customer acquisition vs. maintaining current customers:
Because growth is critical for most wineries, consistent gains in customers, market share, and revenue are typically the yardsticks for success. But, it doesn’t make sense to spend more than the ‘customer-value’ to acquire a customer. (This is where we help you to rethink your methods of acquisition). The focus should be on gaining more customers, but on acquiring the right customers—those with the greatest LTV—to focus your energy on profitable growth. This includes maintaining the relationship you already have with your existing loyal customer base. Why spend the money to acquire the right customer if you don’t put the time and effort into the retention of that relationship. So, the fine line between when to keep a customer and when to cut them lose, broadens a bit with intuitive customer data. Use it to your advantage, and collect and analyze that information for your maximum benefit and maximum profit!

Remember, direct is the best way to Communicate with, Acquire, and Retain your customers.

Jan 8, 2007 at 2:03 PM

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