We have all read the news this week and are well-aware of the effects of COVID-19 on the economy. As a DTC Manager, you may be feeling a bit of panic with the possibility of a weekend of cancelations ahead. We wanted to offer you some ideas to help offset the lower traffic in tasting rooms.
While the virus is a serious situation and we are not proposing to downplay it, we do suggest that all is not doom and gloom. “A crisis is a terrible thing to waste” Pail Romer, Economist. We have seen from recent crises, there are sectors that grow during economic downturns: cosmetics (small pleasures) and alcohol. After the last recession (2008) luxury goods bounced back faster, growing 10% just two years later while the rest of the economy was still recovering, but the depth and recovery experiences varied dramatically across our industry.
How can we try to find the silver linings during this crisis and make the most of the situation where we can?
Tasting Room Practices to Keep Everyone Safe
If we still have open tasting rooms, let’s be proactive and communicate with our customers/guests that ‘wine country is open’ and let them know all the best practices we already have in place highlighting any other measures you may have added to ensure everyone’s safety. We may take our protocols for granted, but sharing exactly what we’re doing will help ease concerns of potential visitors.
When people are visiting our tasting room, there are things we can do to minimize the spread of the virus. If two guests want to share a tasting, offer them a half-pour in two glasses instead of sharing a glass. Make sure to wipe down the tables with disinfecting wipes after each tasting. Make sure your staff is washing their hands regularly as they serve others. Offer breadsticks or crackers individually instead of in a common container for multiple people to grab.
The most effective way to offset lower traffic in a tasting room is to sell more wine to the people who are there, raising your Average Order Value (AOV). Just adding one bottle to each purchase can make a huge difference. Here is an example:
- Let’s say your average bottle cost is $45 and your average order is 3 bottles, giving you an average order value of $135.
- If you see 30 people a day, this is average daily revenue of $4,050.
- If your visitation drops to 20 people a day, the daily revenue drops to $2,700.
- But, if we sell these 20 people an additional bottle at $45, this is $3,600 daily revenue. If we were to add two bottles to each order, this is $4,500 in daily revenue.
One way to help increase this ‘added bottle’ is a temporary incentive plan that will motivate your staff to sell more wine. Figure out what your average order value is and set a goal to add a certain number of bottles or a certain dollar amount to each order. Give the staff some strategies for this, like “I know you really enjoyed the 2018 Sauvignon Blanc. We will be moving to the next vintage soon. Would you like to add a couple of bottles to your order so you can enjoy this vintage longer?” Another strategy is to fill the bag, “You have four bottles, would you like me to add a couple of bottles of the Napa Cabernet to fill the bag?”
Along with spiffs to increase your AOV, ensure your incentive compensation program has goal congruence. This will generate more revenue, more bottom line. You can also assess your labor expenses and covert as much as possible to a variable cost (part-time tasting room staff) and outsource non-critical functions.
If we reinforce the benefits of the private experiences we offer (less social gathering/social distance), focus on the local guests (those who are in easy travel distance to wine country since they’re not flying off to Europe now), and offer club members to ‘share’ their member benefits with local friends, we can make the most of what traffic we are getting into our tasting rooms.
What if the tasting rooms have to be closed? There are other ways to generate revenue.
Leverage Phone and Ecommerce Sales
People may not want to leave home, but they do want to drink! Don’t forget about other DTC Sales channels such as phone and e-commerce. Phone sales could mean having a wine club coordinator call a few top members each day to see if they need any wine. Or, a bigger, more coordinated phone campaign could help raise the total revenue. We should be focusing on core, loyal customers (it’s less expensive than getting new ones), and beyond just our wine club members. We can also focus on our Top 50, 100, 500 with account management-type attention. (This is the 80:20 rule – roughly 80% of the effects come from 20% of the causes, so focus on the 20% that will get you the best results.)
WISE is also changing the way we do business by offering video-conferencing for our courses and doing a lot more phone-sales training. We all need to leverage the assets we have in our business to ride out the storm.
Find ways to connect with customers/guests online through e-commerce and social media to promote ‘long-distance’ relationships to keep the community feeling connected. Drinking wine and social interactions go hand-in-hand, so let’s find ways to do that… with at least six feet of social distance. Ecommerce sales are also a great way to drive sales. If you don’t regularly email your database, now is the time to start! Emails should have a clear call to action with photography; less text is better. Include an offer to incentivize purchase. Our friends at WineGlass Marketing report that shipping offers regularly outperform discounts.
Accept Wine Club Cancellations Graciously
We are hearing about an increase in the number of people citing economic issues when canceling their wine club. Remember that people are feeling panicked both by the idea of a pandemic and as they watch the stock market. Be gracious when people cancel and make it easy for them. This will pass and you want them to think of your brand favorably. We can be more proactive with member holds and focus on credit card declines. And, do a come-back campaign after the news has subsided and the markets normalize.
We have survived fires, floods, and power outages. This, too, shall pass, and we will get back to normal. But while we are in the midst of the crisis, let’s use our best sales practices to keep our revenue from falling behind. And think, how many of these ideas are good to do anyway, even if we were not preparing for the next recession? All of them.