Sunday, September 28, 2014

Should You Enforce Your Wine Club Contract?

 
On occasion I get suggestions about something on which to blog. I really appreciate the ideas and use them when I can. This past week I got an email from a follower who suggested I post on their experience with a disgruntled wine club member. The review they got in YELP is a good place to start:
"The wine club is a total scam! I only wanted the wines that weren't in stores so I was told I had to join their club. I didn't want to but I got a discount on the wine. Once I got my first shipment which had all the wines I wanted, I just cancelled the club. Then the as*****s charged my credit card without even telling me! I was like, WTF? and was told by some bitchy tasting room person that I signed a contract that said I had to give back the discounts if I didn't take both shipments! Like who reads contracts? And just because I quit their winery, they didn't send me concert tickets they said they would."

ACME Winery


For the second week in a row I'm asked to anonymize the winery. So we officially have a trend keeping the semi-innocent anonymous to protect the wicked. But in this case, there are some things I can tell you about this winery to give you a flavor of their business model and their side of the situation:
  • They are 100% direct to consumer - nothing is sold wholesale
  • They sell less than 7,000 cases
  • Their average wine sells for $60 per bottle up to almost $400 per bottle
  • Half of their wines are completely allocated and in very high demand - selling for double the retail room price on the secondary market.
  • Their wine club contract requires a one-year commitment and if cancelled in the first year, the discounts have to be repaid to the winery. That part reminds me a little but like the old CD clubs.
  • They include concert tickets for new wine club sign ups but in this case the shipment was made and the customer quit before tickets could be sent.
 

Business Would Be Fine Except for the Employees and Customers

 
So how do you handle a consumer like this who games your wine club agreement? My response is to change your system.

Over the years I've talked to numerous wineries who tried to sell a wine in lower demand in exchange for a consumer getting their hands on an allocated or high scoring wine that was in high demand.

To my thinking in brand building, you really want to make wines that are in demand, and build demand for all your SKUs. Getting a consumer to take a wine they don't really want doesn't build demand for that wine. It may even have a negative impact on how your overall brand is perceived.

Think of this analogy: You find a really awesome pair of custom made Italian shoes in your size, but to get them from the manufacturer, you have to buy a second pair of shoes that are ugly and don't fit.

If you are the buyer, you give zero value to the ugly shoes that don't fit. That means for you to feel like you received fair value for the purchase, you had to feel the price you paid for the package of shoes would be fair either with or without the second pair of shoes.

To go a step further, you may feel that the second pair of shoes has negative value because you now have to go find someone who likes the style of the second pair and has the right size foot. That's going to cost time and effort. If you are making those shoes, what you really want to do is identify a consumer who values ugly shoes in that size. ( .... hope that didn't take analogy too far ... )
 

Is the Contract Legal?

 
I can totally relate to this frustrated winery owner. I didn't mention it, but they did in fact send the concert tickets to the consumer too. So they totally lived up to their side of the deal and got hammered in a review for their trouble. Was their contract legal? Could they charge back the customers credit card for the discounts?

A wine club contract can be a legally binding agreement but that's really a red herring. The practical reality is if you are talking about contract rights to a wine consumer, you are well past building your brand and off topic.

I'll probably get kicked out of the Bankers Union for saying this, but I don't think contracts matter that much. You can have a legal right to something, but in the end what really matters is how you do business, no matter what a contract says.
 
If a social media review is unfair, shake it off. You wont please everyone. Some people are just unhappy and carry a chip on their shoulder. But negative truthful reviews are an opportunity to check on how your business is done and improve. Is compensation motivating the right things? In this case, is the tasting room staff messaging the club program effectively so their are no surprises.
 

Responding To YELP Reviews

 
I feel as though the question of what to do with a negative YELP review has been discussed sufficiently in the blogosphere, but the short treatment is: 1) You can respond as a business owner to a negative review. 2) You can't have a review removed unless the post was a violation of YELP's user agreement but good luck with that. 3) You have no right to have your brand removed from YELP. 4) Don't pay a company who says they can remove negative reviews. They can't.
 
If the reviewer seems crazy, ignore it but if the reviewer sounds reasonable respond to it and show you really do care about providing good service. Interestingly though, for some unknown reason most wineries I checked this week don't respond to reviews at all. You can also encourage people to write reviews which will push the negative review from the front page at least.
 
Finally - thanks to the anonymous winery for suggesting the topic. Hopefully they will get some good thoughts from the community.
 
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What are your thoughts about wine club contracts? What advice can you offer this winery regarding their approach? Do you have any similar customer service stories to share and if so, how did you handle it"
 
Please join this site at the top right of this page for updates and new posts, sign in and offer your perspectives for the benefit of the community.
 

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Saturday, September 20, 2014

What to do When You find YOU are the Problem

The Reward of Struggle

"What is worth savoring that isn't worth toil.
Is gain satisfying without cost?
Without darkness can we explain light?
Our teacher is pain, our brother the fight.
Our effort is gain but our pride the price.
No bliss in bereavement but strength through the test.
Reward through trial: That is wisdom expressed." - Unknown author
 
<~~~~~~~~~~~~~~~~~~~~~~~~~~~~||||~~~~~~~~~~~~~~~~~~~~~~~~~~>
 
Poetry? No this isn't Deep Thoughts by Jack Handy but I have a management philosophy supported with  recent story to share that I hope inspires you in a way that might dramatically improve your business. 
 
While the Napa quake was more than a bummer for many, it produced some really interesting positive results such as creeks that started flowing in the middle of a three year drought
 
Another positive from the quake and the work I did talking to wineries to determine a damage estimate: I've now heard four separate stories about wineries who found something during the clean up - and one CEO in particular who found something he had lost for some time in the clutter and din of repetitive work. He found his well-intended efforts were to blame for the problems his winery faced.

Saturday, September 13, 2014

The Crazy Path to Get Federal Aid for Napa

 
 
I had a request from an industry friend who asked me to talk on this blog about the thought process I went through last week - agreeing to something that was crazy, and outlining my philosophy that trumped common sense. It's a little uncomfortable for me but I'll give it a try and hope you find something positive in the thoughts and updates on the process at the end.
 

Thursday, September 4, 2014

Can You Help Me With A Damage Estimate for Napa?

 
I've been asked to help calculate a damage estimate of the losses of the Napa Wine Business Community which will then be used to support the request for Federal Assistance to President Obama. [articleWhile I have several sources of information available to make good estimates, I'd like to be as inclusive as possible. Can you help and send me your best guess on your loss estimates?
 
The timeline is crazy tight. I've been asked to have the estimate completed by Friday evening  - so doing this now would be good. (I'm sorry) I promise I'll not use the information for anything other than this purpose and will not use names in any document I prepare.
 
This isn't a commercial endeavor. We're trying to help and we are donating all our time and resources in that effort. Please send your basic guestimates to my work email: rmcmillan@svb.com and include the business name in something resembling the following format if possible.
 
 
Please make your industry colleagues aware of this need by forwarding this post on social media.
 
Thanks again for your help - Rob

Monday, September 1, 2014

Should You Push Brand PR in a Natural Disaster?

The answer to the title this week is: It depends on how its done because the stakes are raised and if you screw up the message, there's a larger opportunity to end up with scrambled egg on your face.
 
This past week has been pretty hectic for me and all my neighbors who live near Hess Winery. Early Sunday morning I woke to my fiancée screaming in my ear and the bed jumping like ping pong balls in a bingo parlor. Pitch black since there was no moon, I jumped up but couldn't find shoes or a flashlight. No matter, I had to move alacritously to see if my mom was alive in the back 40. With nothing to illuminate my path, I slid barefooted through all my shattered Riedel stemware - brail style, then maneuvered my way through the maze of furniture which had moved around like Tetris blocks.
 

Saturday, August 23, 2014

Oversupply and a Bubble Forming. Now What?

Somewhere early in the year 2000 my mother-in-law was moving things out of a vacation home in Mariposa CA. I volunteered my help. So together with Anthony; a young and fit assistant from the Starving Students Movers we started lumping furniture. During a coffee break where we enjoyed delicious Starbucks Latte, Anthony started sharing his stock investment strategy. Wait...what? Investment strategy? (Disclaimer: I'm invested in Starbucks at this moment.)
Anthony couldn't have been much more than 21 and it turns out he really was a student - a student taking a videotape course in "How To Retire BeforeYou're Thirty" and was day trading. He explained his trading philosophy: high growth Internet stocks. He had amassed a small fortune already and he did it all with credit cards and margin debt.
I started to wonder if I was missing out and perhaps being too cautious with my own investments. After a little more thought on my drive home, I called my broker and cashed completely out of the market. With the Tech Crash hitting just weeks later, I had discovered a new technical indicator that would define my investing strategy from then on. I called it, "the Starving Students Bubble Indicator (SSBI):
"When a Starving Student gives you stock tips, get the hell out of the market because it’s overbought."

Sunday, August 17, 2014

Do Tasting Rooms Take Away Sales from Distributors?

Procter & Gamble has long been respected for it's integrated product development, integration of acquisitions, and brand marketing. Consider the number of iconic brands they hold like Ivory soap, Pampers diapers, Duracell batteries, Gillette razors, Tampax feminine care products, Crest toothpaste, Tide detergent, and the list goes well beyond that. P&G has more billion dollar brands than any company in the world ... but they don't sell wine. If P&G sold wine people would be running to their mailboxes for free samples and the TTB would not be happy about that.