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Susan DeMatei
 
June 21, 2012 | Analytics, Social Media Marketing | Susan DeMatei

THE DREAM OF DATA – WHY THE WINE INDUSTRY IS STUCK IN A NIGHTMARE

I was struck at the Ship Compliant conference last Thursday how lucky we are in the wine industry to have such [We all dream of knowing our wine customer better] a high caliber of focused, vertical channel technology partners.  When I was direct marketing other verticals, (cars, semiconductors, PCs, cellular service,) we didn’t have the luxury of technology built around our business from the ground up.  You bought a solution and then spent thousands of man-hours and consultants customizing it for you.  (Which was good, now that I think of it, because it kept me employed).

Selling wine directly is complicated, to be sure.  Besides other vices, (think guns or cigarettes,) I can’t think of another industry with more regulations, state idiosyncrasies or just straight taboos on how to promote, ship, price, distribute or brand a product.  And, since table wine consumption in the U.S. has grown every year since its uninterrupted climb began in 1994  it makes sense that technology companies would pounce upon a growing niche market where they can reduce some of the barriers and provide value.

We all see the ultimate end of the proverbial technology rainbow; synchronized databases where we have a 360 degree view of our customer, and every time we bump into them in any channel we start the conversation, or respond warmly, with personal, insightful, and relevant discussion.


The awareness and commitment is there by us, the marketers.  Consider the following statistics on IT and analytics investment by marketing organizations in the US.

So we’re investing in it, but the Wine Industry is tragically unhappy in this area.  In the study conducted by the Stanford Graduate School of Business, Napa Valley Vintners and MKF Group, data collection was the #1 frustration of all wineries, regardless of systems, size or tenure in attempting DTC sales.  The main challenges sited were system integration and outdated systems, with the quality of the systems rated equally bad for customized out-of-the box versus purchased from our vertical channel partners.

So, if we have the will and the way, why are we so unhappy?  Why aren’t we complimenting Wine Club member Bob (who we know has a LTV of $7,687) on his new cellar at his home in Florida and asking him how he’s handling his extensive magnum collection on Twitter?


I submit it is a combination of the following:

Lack of Senior Understanding/Support

Most of the winery executives came through the three-tier system – as they should since it is 89% of the volume and 98% of sales of the industry.  But the four P’s of Trade Marketing are hella different than that of DTC, and to explain to a CMO, CEO or CIO what is needed for distribution, packaging, pricing and promotions in our little corner of the world often falls on deaf ears.  So, essentially, to completely parallel marketing for 2% of sales, sometimes isn’t viable.   And, couple that with the fact that DTC is hard stuff, which takes time and systems and long turn around, versus a quick pallet sale at Costco.  If management doesn’t understand the stress it puts on your organization and back you all the way, it is difficult to integrate into a company’s culture.

Scattered staffing and difficult P&L management.

Name another company that may be comprised of 5 people with agricultural background, one accounting/business person, a handful of party/planners/entertainers, a few remote on-the-road sales people and maybe an admin.  To be successful at each job, everyone at a winery needs to be unique and focused on his or her, weird, fragmented world.  If the above is true, and everyone needs to be on the CRM bandwagon – this is easier said than done.

Our partners have scalability problems as well. 

Besides our friends at Ship Compliant, I can’t think of another vendor that doesn’t have to compete in our small pond.  It is difficult technically, not to mention fiscally unfeasible to integrate with every possible combination for the 3 wineries that may have that need.  We like the choices, but unless we all synchronize and consolidate, we have to deal with the capitalist world we live in.

Poor training and documentation. 

There is really no excuse for this one except that folks in the wine industry wear many hats and it slips through the cracks.  But a requirements phase, where you get agreement on what you need, and then habitual and repeated training, a manual or documentation and clear support is crucial to any adoption of a data collection system.

I’m sure there are more now, and just soon as we resolve one of the above another challenge will present itself (like, capturing new channels like social media anyone?)

But that’s what makes this job interesting.  Just be happy that at the end of they day you’re surrounded by good wine to soothe your frustrations.  Cheers!

1CMO Council 2011: State of Marketing. Amounts shown in US dollars.

2Maverick Research: Marketing Is the New IT-Buying Powerhouse. Gartner, October 2011.

3IBM Management Development Institute

4Christine Moorman, “Spending on marketing analytics.” CMO Insights. March 2012.

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