Data from the first half of 2019 shows that conversions may be trending lower, but that doesn’t mean you can’t increase total sales.
Mike Giese, of San Luis Obispo’s Tolosa Winery, recently noticed an interesting—and vaguely concerning—trend in regard to visitors to the winery’s tasting room.
“We’re still seeing a solid number of guests, but they’re generally buying less wine while they’re here,” Giese says. “The type of customers we’re seeing has changed; they see visiting Tolosa as something to do while they’re on vacation, not necessarily because they’re serious about buying wine. So, though our foot traffic is up, most of these customers aren’t making purchases.”
Tolosa Winery isn’t alone. Though the decrease in purchase conversions might not be entirely due to the growing number of “recreational tasters”, wineries in several Northern California wine regions are experiencing a similar shift , though the trend seems most pronounced in San Luis Obispo, where wineries are reporting an increase in visitor traffic of about +5.4 percent year-over-year, but a decline in purchase conversions of roughly -11.2 percent, and a decline in wine club membership conversions of -5.3 percent.
In San Luis Obispo, Napa, Mendocino and Paso Robles, 75 percent of wineries saw a decrease in purchases from visitors to their tasting rooms in the first half of 2019. This trend is worrying on a number of levels, not least because of its impact on the bottom line: when a winery hosts a large number of visitors but fewer of them are buying wine or joining the winery’s club, margins inevitably decrease.
The good news: Overall wine sales are increasing
But there’s a corresponding trend that gives winery managers and association directors reason to raise a glass; though overall purchase conversions may be down, in every region for which Community Benchmark has data, the people who are buying wine seem to be buying a lot. In fact, for many wineries, this is true to the extent that while the purchase conversions have decreased, overall sales figures have increased. In Napa, for example, while purchase conversions have decreased by -3.4 percent, sales per purchase are up +12.4 percent year-over-year.
In San Luis Obispo, Napa, Mendocino and Paso Robles, sales per purchase are up at least 3 percent, and they’re up 7 percent in both the San Luis Obispo and Napa regions. In fact, fully 59 percent of wineries in these four regions have seen a year-over-year increase in sales per purchase.
How can wineries increase sales volume?
For wineries experiencing these trends, there are a few ways to capitalize on these high-value customers, or even increase the chance of closing a sale with more-casual visitors.
Liz Mercer, Bluxome Street Winery General Manager and WISE (Wine Industry Sales Education) Academy Coach and Content Developer, says that while wineries are seeing more “recreational tasters,” that doesn’t necessarily mean that, with the right approach, they can’t become valuable customers.
“Yes, some groups of visitors may be more social in nature, but it’s critical for tasting room staff to maintain the mindset that every guest is an opportunity to convert,” says Mercer. “By asking ‘What brings you in today?’ during the booking process or initial walk in, you can match guests to the experience they desire.”
Jennifer Warrington, Mercer’s colleague at WISE and The Glue, agrees, but emphasizes the need for tasting rooms to have enough staff members on hand to fully engage with guests.
“We have evidence showing that if there isn’t an appropriate level of staff to cover the number of guests, there is less engagement with guests, which leads to fewer sales. Engagement builds trust, and trust makes sales,” explains Warrington. “If there is enough time for staff to create dialog and understand their guests’ needs, then there will likely be a higher conversion rate for wine sales and club memberships, not to mention higher overall guest satisfaction.”
Continues Warrington, “The key here is to understand the service level at which the winery’s sales and club sign-ups are optimized. These rates usually look better during slower times than on a busy weekend because of the increased focus staff can place on fewer individual visitors. Too many wineries just accept lower success rates on busy weekends as something that can’t be avoided. They may be staffing up for increased traffic, but not enough.”
Mercer points out that even if tasting room visitors don’t make a purchase, engaging with them can lead to valuable insights into customer behavior and influences.
“By asking ‘How did you hear about us?’ and cataloging that data in your POS, you can run reports to better understand who is sending buyers,” she says. “Look for who is sending buyers that are higher than the median AOV, and focus on building those relationships.”
Mercer also stresses the importance of managers holding “daily huddles” with their tasting room staff, and creating a weekly focus and monthly goals to create “a culture of performance.”
“Remember that your staff will respect what you inspect,” she explains. “When we emphasize AOV (Average Order Value) and conversion to club rates, staff starts paying attention. The great game of business is a team sport!”
When it comes to the topic of how growing numbers of “recreational tasters” visiting tasting rooms are reducing margins, Mercer says business managers need to make a fundamental choice.
“Are you interested in investing in more toilet paper or six pack carriers? They’re not mutually exclusive, but when we see regions that are experiencing high guest count growth without corresponding sales growth, we have to pause. Do we continue to have more wear and tear on our property–and our staff–without having an expectation that our staff will sell wine and enroll more members?”
Mercer says the solution is, “hiring sales people who have service heart.” But how do you find those employees?
“Does your job ad and description mirror your sales expectations, or does it attract wine educators who want to stand behind the bar and talk?” she asks. “When onboarding, how much time is spent explaining the brand and what makes your wines truly unique, compared to how much time is spent on the POS and the end of day checklist? During daily huddles or monthly staff meetings, how much time is devoted to recognizing those who hit a goal, or had a winning moment, compared to explaining how to count inventory? Yes, operational agenda items are critical to success, but often those conversations take up the bulk of the meeting and training time. Try rebalancing that for a few meetings, and measure the sales lift.”
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About Community Benchmark: Community Benchmark is a Santa Rosa, CA based software company helping wineries identify growth opportunities by comparing key performance metrics with their peers.
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