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By February 7, 2018 1 Comments Read More →

Engaging Consumers with Digital Tools in Today’s Experience Economy

By Dawn Dolan

In the late 90’s a book came out dealing with a subject that is gaining more and more importance in the wine industry. The authors, Joseph Pine and James Gilmore entitled the book The Experience Economy.  Their premise was novel nineteen years ago: Think about connecting with your customers through experiences to secure their loyalty. They said that goods and services were not enough to interest the consumer anymore. They believed that in the new economic era in which they found themselves, businesses must organize and offer extraordinary and memorable events for their customers.

Looking back, we can now clearly see that this prediction was right on the mark. The experience economy, one may argue, perhaps gained real traction as the Millennials took their place as earners in society, approximately fifteen years ago. Oft-cited as the group which looks for experiences, not goods, on which to spend their money, we in the wine industry can look at how we reach these experience-seekers with value-added offerings.

In an article in Forbes magazine (online), of November 24, 2015, contributor Daniel Newman stated, “As consumers, our interactions with brands are no different. We no longer simply make a purchase and walk away. Consumers seek—and often expect, whether we realize it or not—additional utility from the brands we patronize. We want to feel like they’re listening. We don’t just want the goods or services, but we want an experience to sweeten the deal. Welcome to the experience economy, where—as the Harvard Business Review so eloquently put it—”a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.”

Dave Moser of Terravant Wine Company, speaker at the DTC Symposium last month in Concord, CA, discussed the how-to’s of offering up an “experience” at your winery. Developing a cost-benefit analysis is the first step in determining if there is profitability in your proposed venture. His winery tour example included items such as the acquisition cost per visitor (include all costs of getting people to you, in this case the mostly on advertising, with some staffing costs and if you are providing transportation of any sort, etc.), fees charged, and the winery’s average conversion statistics for wine club sign up and purchases.  His example:

  • Acquisition Cost per Visitor: $30
  • Tasting Fee: $25                               
  • Tour Fee: $60
  • Average Bottle Price: $60
  • Average % of Visitors buying wine to take home: 60%
  • Average % of Visitors signing up for Wine Club: 10%
  • Wine club members stay 18 months; 4 shipments x 3 bottles per year.

Doing the calculation for the acquisition of 100 visitors with the draw of the tour, Moser in this example shows that the cost of spending money to bring those extra hundred visitors to your winery is far overshadowed by the revenue gained from those hundred people. A key component to this is the winery’s metrics. A winery must know their conversion rates in order to make these assumptions.

  • Cost to Acquire 100 visitors: 100 x $30 = $3,000
  • Revenue from Tour Fees (40%): 40 x $60 = $2,400                               
  • Revenue from Tasting Frees (60%): 60 x $25 = $1,500
  • Revenue from Take-home Wine = 60 x 1 bottle x $60 = $3,600
  • Revenue from Wine Club + 10 x 18 x $60 =$10,800

So, is this case, of the 100 people on whom the winery spent money to get to their location, 40 percent would take the tour, 60 percent would just do a tasting, generating fees from either choice. 60 would buy a bottle to take home, at an average price of $60, providing $3,600. And 10% of those first 100 would join the wine club, for an average purchase over their wine club life of 18 bottles, times a $60 bottle price average for a total of almost $11,000. So, for a one-time $3,000 expenditure, this winery generated $18,300 in revenue.

JCB Tasting Lounge

The expenditure part of the above equation bears discussion. Social media marketing was the bulk of the cost in the first example. The strategies and steps involved in gaining new clients through social media platforms, notably Facebook and Instagram are important, and learning their costs is integral to successful planning. Offering experiences can be a creative, original, and yet inexpensive strategy for a winery to create an experience that will increase the value of what they produce. But there is a cost. Do you have staff in place and dedicated to this venture? Part of the cost-benefit analysis includes not only the cost for online outreach, but for the staffing to create this outreach.

Successful marketing of your winery experience lies in finding what makes your particular offering unique, and touting those qualities in your social media marketing programs. Competing in a nation with over 9,000 wineries, the need to differentiate yourself in a large playing field is what can make or break your appeal to the public. In the DTC Symposium session, Reading Between the Digital Lines: Facebook and Instagram Ad Strategy, a further look at the steps to take was offered: Decide upon the marketing goals, show the consumer the brand, then actively demonstrate how the brand fits into your target consumer’s lifestyle through words, pictures and video.

Setting realistic and disciplined goals for your marketing strategy can feel sluggish, but fashioning a methodical approach to creating that brand perception, by establishing what panelists deemed a “deep-truth”, and creating brand loyalty through engaging with your clients takes time.  Breaking down the business of advertising on social media into four parts, the steps discussed offered potential consumers phases: awareness, consideration, purchase, and loyalty. Acknowledging that social media was an inexpensive way to reach an audience, the caution offered up was that only in the final phases was the goal purchase. The main goal of the levels is really engagement.

Facebook advertising offers the option for wineries to engage people who are like-minded consumers, who may not know the brand. Best, wineries with small marketing budgets can set a nominal monthly dollar amount and look for new clients with whom to engage. Larger wineries may make a larger investment, allocating money to both advertising and to expert advice on how to best use the many features that several social media marketing platforms can offer.

The overarching theme for winning with this type of marketing is to engage in authentic ways, such as utilizing user-generated content which “establishes legitimacy, creates advocates, and is more trustworthy,” and can engage clients emotionally. Using Instagram to create a hashtag following, offering live blog events, and giving behind the scenes access are examples noted, along with using Facebook Live to broadcast events, product releases, and more real-time, behind the scenes access all help to engage clients.

Boiling social media marketing down to a two words takeaway; engagement and authenticity provides the strongest keys to being successful with social media marketing programs, whether advertising your unique experience, or building brand awareness and loyalty.

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