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  March 3, 2015
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WISE Bites   Tasting Room Forum
Incentive Compensation Programs    Food and Wine Pairing
Often we are asked about incentives for winery tasting room staff and best practices for implementing a compensation program. An incentive compensation program (ICP) is a tool used to motivate and compensate a sales professional to meet goals or metrics – during a specific period of time – to help achieve business goals. When well designed, an ICP should pay for itself. Based on the many conversations and our research, here are five tips for designing a program that works.

 
1. Reward the Right Things – Tie incentive compensation to key performance aspects of the tasting room professional’s job.

  • A quality ICP should focus your tasting-room team members on the full "DTC triple score" (wine sales, wine club sales and contact data capture).
  • For the best results, we encourage having a blend of individual performance (so super stars are motivated to stay) as well as team performance incentives (to avoid sales sharks).
  • If the ICP is paid out based on team performance, be sure to always post individual performance as well to motivate (and attract more of) the super stars. Winners want to see their name at the top of the leader board. People who are not comfortable being held accountable for sales will not like this at all, and that is OK. They will go find another job that is a better fit.
 

Delicious food

When it comes to food and wine pairing, stale crackers are NOT the way to go. Some wineries offer full-blown, sit-down, three-course meals, while others serve bits of chocolate or cheese. Regardless of the scale, the purpose of adding food to a wine tasting is to achieve the feeling of 1 + 1 = 3. To achieve this, the food must make the wine taste better to the majority of consumers.

For the most positive and memorable experience, you must carefully choose (and get consensus from a panel of tasters) the pairings and train your direct-to-consumer sales staff about the right combinations and how to present them.

Not too long ago I did a wine pairing with several products from Fabrique Delices. The company, established in 1985, creates primarily meat-based products including pâté and saucissons. In France we are used to enjoying white and red wines with all sorts of pâtés and, in particular, red wines with saucissons. (continued below).

 

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"WISE Bites" continued.   "Tasting Room Forum" continued.
2. Link pay to results – Base incentives on measurable, quantifiable results. Establish performance goals that are attainable with hard work, but not too easily achieved. There should be a challenge.
  • It’s good to have an umbrella portion paid annually based on the success of all DTC channels (TR, events, club, phone and web) to promote the importance of the TR team’s critical role in selling wine club memberships and gathering more names to fuel the online and phone channels. (Basically to reward everyone for playing well together.)
  • Dollars paid per club member should create goal congruence by escalating by club, based by price point. For example, if a three-bottle club pays $15, then the six-bottle club should pay $30, and the 12-bottle club should pay $60 per new member. We’ve seen dollars paid per new club member from as low as $10 to as high as $120, depending on the club.

 

3. Establish Milestones – Measure your winery’s recent performance and establish relevant goals for improvement.

  • Measure what matters, post performance visually, teach what the numbers mean and celebrate successes as you go. A great book on the power of this approach – called Open-Book Management – is The Great Game of Business, written by Jack Stack. A wonderful guide to measuring and sharing numbers that matter.
  • In addition to total sales, total new club members and total names captured, be sure to also talk about conversion rates and average order size metrics. This will allow those who work part-time to still measure their success and have pride about their own performance vs. group progress.
  • Agree on one book of record (usually the winery POS system), which should be available to all team members so that they can see how they are doing on a given day, week, month.

4. Focus on the long term – Since the wine club is typically the most consistent, largest revenue stream, getting and keeping club members is extremely important. Additionally, continuing to grow your mailing list /database of your customers is equally important for long-term growth of the business.

  • Club: Best practice is to pay team members individually for wine club sign-ups (and allow/plan for sharing), then have a kicker that everyone benefits from (i.e., everyone gets another $1 or $2 per member sold all month) by when monthly new club membership goals are exceeded. This promotes great camaraderie and support among team members.
  • Club: We are starting to see additional winery incentives based on tenure – or other total wine club membership goals – as well as to motivate TR staff to continue to treat club members as VIPs when they visit the winery.
  • Contact Data: We’ve seen wineries pay anywhere from 10 cents per name to $1 per name. Web sales metrics will calculate the average value / email name for each winery. Those will give you some guidelines of what makes sense for you brand.
  • Contact Data: Start by having a data-capture contest with wine prizes. Engage the team in finding many different ways to effectively capture more names.
  • Contact Data: Once you move the needle (raise your contact data conversion rates), you’ll establish your “new normal.” Then you can roll into an individual ICP program, structured similar to club ICP but with a smaller incentive per name.

5. Tie it All Together – By tying incentive compensation to desired performance, you can identify, motivate and retain your most valuable employees.

  • There should be no limit (ceiling) to the ICP. The best sales people think in terms of “you don’t limit my compensation, and I won’t limit your sales.” Effective sales ICP are structured so they are self-financing. Meaning you are not paying out much (if anything) until the budget has been exceeded. It is the incremental sales that should fund the ICP.
  • If you have multiple locations, hopefully you can establish the same structure across all properties, although the dollar amount paid per new member will vary based on the different club price points. When you pay (immediately or at time of one or more shipments) and penalties for early drop outs (if any) should be consistent.
We are seeing more and more wineries implementing ICPs beyond wine club sign-ups. Don’t be afraid of this performance-based culture change. When managed wisely it really works and will pay for itself – implementing a well thought out ICP can be rewarding on many levels.



Source: WISE Academy,
www.wineindustrysaleseducation.com

 

How about some foie gras with a late-harvest Riesling, or a dry saucisson with Grenache? The experience stays in your mind for a long time, and I am ecstatic about having reacquainted my brain and tastebuds with the magical experience. Cheeses are also wonderful and easy to serve in a tasting room environment—and remember that many cheeses may taste better with white wines. I would line up my wines and all sorts of cheeses, pâtés and saucissons and pick a few that meet the 1 + 1 = 3 criteria. In addition, visitors love to buy these products and receive them in club member shipments…

The 'magic phrase' for your wines
Have you (and your staff) met with your winemaker and learned the “magic phrase” that describes each wine being sold in your tasting room and to club members? Not all phrases appeal to all people, and Sales 101 teaches us that “Know your audience!” is critical before you start rambling about the benefits of a “meaty” Syrah to a vegetarian. To be prepared, build questions into your 10-second welcome speech, such as, "Have you had a Chardonnay before?" "What style do you prefer?" Matt Kramer of the Wine Spectator breaks it down here.

U.S. wine market leads the world
An article from Bloomberg reviews the trends in U.S. wine consumption and its impact on the world. Read more here.

Wine consumer trends
Paul Franson writes a very comprehensive article about the state of the U.S. wine consumer and the differences between generations. Is beer becoming a worthy challenger to wine? Read it all in Wines & Vines.

Wine message for the iGeneration
Celebrated wine writer Steve Heimoff, considers new data from the Wine Market Council.

VinoVisit launches app for feedback
VinoVisit launches a new winery tasting room application.

Wine Industry Metrics
January 2015 numbers are now available from Wines & Vines.

A 20-liter “Petainer” for tasting rooms
Read all about it at Wine Business Monthly

Regional News
Arizona: From the Palate Press, here is an update about Arizona wineries.
Delaware: Delaware just wrapped up its annual wine month. To celebrate, here are four wineries from Delaware: Fenwick Wine Cellars, Harvest Ridge Winery, Nassau Valley Vineyards, Pizzadili Winery.
Finger Lakes: Finger Lakes wineries appeal to the New York governor regarding the planned storage of propane and butane near Seneca Lake… 
Missouri: From the Springfield News-Leader, wineries are popping up all over southern Missouri.
Syracuse, N.Y.: The Eastern Winery Exposition is happening March 16-19, 2015. 


Cheers,
JB

Please send suggestions to trf@winesandvines.com.


Jacques Brix is vice president and director of sales, West Coast, for Wines & Vines. This column is based on his personal experiences at winery tasting rooms and events.

 

 
     

 

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