Many wineries have wine clubs. Far fewer invest in the tools, or take the time, to look at their wine club metrics and make improvements based on them.
This is a huge mistake. For one thing, DTC wine sales are on the rise; last year, DTC sales climbed 15%, and year over year are up 23%. They now account for 60% of wine revenue nationally (as we noted before). While this is great news, it also means that wineries not finding ways to improve their clubs will be left behind by the competition. Be honest: Are your DTC sales up 23%?
Another reason to look at metrics is churn. The average wine club subscriber keeps their subscription for 18-36 months, on average. Attrition rates vary wildly, but can run as high as 20% per year. That level of churn is incredibly costly. And yet, wineries who have been successful at using metrics to engage their customers have had subscription lifespans as long as 48 months.
In short, understanding the numbers behind your wine club gives you the ability to make strategic, data-powered decisions. Too many decision makers guess or assume that decisions they make for their businesses are the best course of action. Not only do you need accurate data, but you need to know which metrics you should be tracking. Doing so will empower you to forecast future needs, areas of potential growth, and opportunities for improvement– and start initiatives to address them.
Starting with These 3 Simple Wine Club Metrics
Though there are many metrics you can track, there are three main metrics, at three different scales, that will help club managers, as well as other winery departments, manage day to day operations, as well as helping to create a big picture strategy. Let’s take a look at the three scales of metrics:
- The Individual Level. This category includes some very important metrics that many professionals miss in their tracking programs. The length of club membership, what incremental sales are associated with each member, and the reason why members choose to terminate their membership all point to a concrete understanding of your customer. These provide a much better picture of your customer than the unfounded musings from staff about the customer experience, and can be used to launch loyalty programs or retention efforts. Also, knowing the overall lifetime value of your club members not only helps you to qualify the customer to push to that value higher, and also helps you make determination on tasting room staff commissions.
- The Club Level. This category includes tracking the attrition rate, the net turnover rate, change in club memberships (when customers move from, say, your Reds Only Club to a Mixed Wine Club, or 6 bottle to 12 bottle club) and percentage growth of each club. These are basic metrics that will help understand the overall health of your club as well as compare your club to industry standards. These metrics are also extremely handy when communicating to your vendors about packaging needs, fulfillment services and special gifting projects.
- The “Big Picture” Level. This is the category that shows how your club relates to the rest of your business. Knowing historically how much wine in total, and by skus, your club demands will make forecasting with your production department clear and also helps to set realistic release dates . Make sure to look at both the amount of wine sold and the percentage of DTC in comparison to the wholesale side of the business. The other decisions that this category will help with is forecasting your staffing needs. If your club is on a 5 or 10 year trajectory to double the percent of the company’s profits, it might be a perfect opportunity to adjust staffing to DTC.
Remember that the metrics are only as good as the accuracy of the data. As you create the tracking programs and what reports you will consistently run, be diligent in your records tracking so that your decisions are based on the most accurate data possible.