Predicting Wine Club Member Behavior
Keeping good track of customer data can help wineries retain club members and find new ones
That was the key message from direct-to-consumer sales experts at a forum Thursday evening at Sonoma State University. Understanding more about your existing customers can also help you target new wine buyers as well.
Dr. Steven Cuellar, an economics professor who studies consumer behavior in the wine industry, said he’s developed an analytical model that he thinks the industry could use to understand club behavior and eventually optimize member lifetime and value.
He said trying to get a statistical handle on wine club attrition is exceptionally challenging because of the nature of the data. One issue is that new members and existing members have to be “censored” from the data, leaving only those who drop out of clubs. “Think of it as if you’re a doctor, and the only people you observe are those who have died,” he said.
Using ‘survival analytics’ for wine clubs
Consequently, Cuellar said he turned to very specific type of statistical analysis used by the medical field and known as survival analytics. The approach is used to evaluate the effectiveness of treatment by tracking the survival rates of a certain group of people all diagnosed with the same disease.
Using a similar approach for wine clubs, Cuellar monitored new club members over time for a handful of small wineries. He then pegged the probability of these members remaining in the club versus the length of the club membership in months.
He said he generally found membership exhibited a sharp decline after a few months, followed by a flattening of the curve. With such an analysis of its own club, he said, a winery could begin to better understand the behavior of its customers. For example: Do most consumers tend to drop out of the club after a certain amount of time, or when they’ve accumulated a specific amount of wine?
A winery could also go back and see if a specific offer, marketing event or high score from a critic helped them retain club members longer. Conversely, a winery could identify the common timeframes at which members typically drop out of a club and then use that information to launch retention campaigns. “This is my idea for a methodology to gauge and test wine club membership behavior,” he said.
In a follow-up email, Cuellar said because he’s tested his model on just a few wineries he couldn’t provide an “average” or benchmark to which wineries could compare their own numbers. He said he has had some preliminary discussions using data from eWinery Solutions’ more than 600 winery clients to create a report for the industry.
‘The data is in your hands’
A few audience members asked about retaining their existing wine club members. To do so, you need to know who they are and patterns in their behavior, said Richard Kline, founder and CEO of eWinery Solutions, who was one of the speakers at the forum.
Kline said a club manager should be tracking members to see what typically precedes someone dropping out of a wine club. Such hints could include when club members haven’t visited the winery for six months or haven’t made any recent purchases. When a manager sees such warning signs, that should prompt him or her to make a call or send out a special email offer and try to retain those customers. “You can predict the future by looking at the past,” he said. “The data is in your hands.”
He said club managers should also be looking at the characteristics of their new members for proactive marketing. “You’ve got to have an open mind to go find those patterns,” he said.
Kline said wineries should be acquiring info about their customers through their tasting room, website, social media and periodic surveys. Such information is crucial to building and maintaining customer relationships.
Joining Kline at the forum was Ahin Thomas, co-founder and president of Vintners Alliance, which manages and builds ecommerce for its winery clients. Thomas and Kline both mentioned companies that help other businesses with customer-relations management.
Rapleaf will take a company’s email list and, using public data, find as much information about each person as possible. It will then run that data through algorithms and validate it for 90% accuracy. Xobni (that’s inbox spelt backwards) will comb through your email to find everyone you’ve contacted to build a “smart” email list that draws on public information such as social media feeds. The free app Rapportive works with Gmail to load information from a person’s profile on LinkedIn, Twitter and other networks right into the user’s inbox. A recent Gmail redesign, however, reportedly impairs the plug-in’s functionality.
Thomas said the consumer that purchases wine through a club or direct from the website is a rare breed and something to be coveted. “It’s really hard to find them, and when you do, you don’t want to let them go,” he said.
To that end, Thomas said Vintners Alliance has specialized in “retargeting” its clients’ advertising. Take, for example, a woman who enjoys wines by Chappellet Winery, a Napa Valley producer that’s also a Vintners Alliance client. That woman may be on Chappellet’s website thinking about buying wine. Later, she visits The New York Times website. Waiting for her on the new page is an ad for Chappellet.
Thomas said new buyers that find wineries online tend to buy more wine more often, but wineries—either through help from firms like Vintners Alliance and eWinery Solutions or by themselves—need to maintain those consumer relations.