How to Generate More Revenue from Your Non-Wine Club Members?
We’ve had so much change as an industry, that great questions are being asked that weren’t focused on before. Probably the most common I’m hearing is ‘how do we get more revenue from our non-club list?’ It’s precisely the type of question that you should be asking – and one that I’ll try to answer for you today.
If you are an optimist, you’ll know that this type of change is good. Specifically, the DTC wine business fundamentals are being turned over by all wineries despite former successes. It’s this type of introspection that is required and will lead to a healthier industry.
If you read no further – your non club members are buying heavier than usual. Chatterbox has seen AOVs rise – non club campaigns since July 2020, are seeing an increase in *AOV 18-20% while wine clubs are seeing a slight down tick in average order value. It’s a noisy channel right now – follow the money, it’s in your non club member bucket.
For the first time – ever, or at least in my tenure at Chatterbox, non-wine club qualified members outperformed the wine club members on average order value by 12%. In sales, average order value is the equivalent to slugging percentage in baseball. Historically, wine club members got on base the most – they also went along the most as well.
During the COVID era, non-club members are buying bigger than expected.
Wine club members still converted at a higher rate than the non-wine club members; but that gap is closer than ever. The message to sales managers – it’s time to talk to everyone you deem qualified; not just the lowest hanging wine club members.
This is over the last 120 days and a sample size of 20+ ultra-premium wineries.
The question must be asked – is the club model going to be challenged with so much economic uncertainty? There’s little data to suggest tasting room visits are going to help narrow the gap with fresh club members over the next 12 months. From what we are seeing, a prime opportunity will be to invest in segmenting and automating customer journeys as soon as they leave your tasting room. For existing members, the formula we are providing should generate higher quality revenue from your DTC customer database.
We advise using a 60/40 split to define effort – 60% to the club and 40% to non club. There’s gold in there, but it’s going to take some work. And it isn’t jumping in the pan on its own.
The Incredibly Positive Effect – Higher Margin Customers
What’s better — predictable or higher margin? Predictable for leadership; but margin is more satisfying for those generating and supporting sales. Not all customers want to join a club; but that doesn’t make them less valuable to your organization.
They receive less perks in exchange for lower expectations of their participation. Ultimately, their transactions are placed at higher margin; lower discounts, freebies and time consumed servicing their accounts.
Really Simple Segments
One message for all doesn’t work for anymore; the bar was raised several years ago with preference based dynamic content. For today, let’s start with breaking down your list into marketable segments:
Qualified Vs. Unqualified
All data isn’t equal. Recency, frequency and total spend (RFM) define a customer’s value to you. In this exercise, determining qualified vs unqualified will help you define the promotion a customer receives and when they receive your offers.
At Chatterbox, qualified customers have purchased in the last 18 months and spent a minimum of $500. It’s a benchmark that we’ve used for a decade and holds up very well today for this type of segmentation. It’s a great starting point, use it as guidance for your own segmentation strategy.
Unqualified members have aged out, stopped drinking wine, have too much in their cellar or are now on a fixed income and stopped spending on wine. They may buy wine from you again, but if after 24 – 36 months they haven’t transacted, you can let them go. It’s over – find a new show.
How to Segment Your DTC Data
All Non-Club Member Segments:
- Segment wine club members from non-wine club members.
- Then, sort your non club member list by date of last purchase.
- 18 months recent (you can go out 24)
- Then sort that list by those who have spent >$500 and <$500
- Those who have purchased more than $500 in the last 18 months are your Qualified Non Club Members.
- Depending on list size segment:
- Top 100 Qualified
- Top 500 Qualified
- Top 1000 Qualified
- Optional Segments
- Red and/or White
- By Varietal
- By Vineyard
- Compliant or Non Compliant States
Messaging by Segment
Your top 100 non club members are more valuable than you know. They buy frequently, they are ambassadors of your brand and you make a higher margin on their purchases. From an ecommerce perspective (or telesales) their anticipated conversion rate and AOV are as high or higher than those of the club. They only purchased less frequently.
Call them personally – follow up with an email. Make the time to talk to them; they will lead to more customers and big purchases.
The Next 400
Chatterbox calls them all. But if you aren’t staffed to do so; write a text only email and personalize it. No HTML – call the openers, non-purchasers. If you are busy; you don’t always respond after the first action. A follow up call will help – resend to the non-openers.
Price the wines just above (+5-10%) wine club discount – take the chance to upsell into the club for the added discount. You’ll get 3 out of 10.
The Remaining 500
My preference is to send them an HTML email with standard discount + shipping incentive for threshold met. Say, order 12 bottles for inclusive ground shipping. Add a banner ad in the email asking if they’d like a deeper discount. Send them to the wine club sign up page.
Call the openers with multiple opens and follow 5 days later with a “last call” note.
The process may seem labor intensive, but once the segments are done and loaded into your email marketing software, the production will become way easier. And truthfully, if you want the margins – this is what it’s going to take.
Final: Push V Pull
For years, it’s been easy – way too easy. Wines have been pulled under the veil of exclusivity. That time is over. Competition for consumer dollars is at a fever pitch and they are surrounded by great wine buys. Online retailers who have to do the work are reaping the rewards.
In closing, don’t get hung up on just your wine club. Redefine loyalty – as it doesn’t mean you have to join to be a devotee. Look over your list and push yourself to find new ways to keep them coming back.
It’s worth way more than the health of your wine club, it’s about the health of your business as a whole.