Browsing Tag

recession

Get in the Garage: Innovate by Embracing Limitations

Back in November of 2008 Wired magazine had a short but incredibly sweet article/essay on something they dubbed the “Garage Economy.” (Back to the Garage: How Economic Turmoil Breeds Innovation written by senior writer Daniel Roth – I highly recommend taking a look at it.)

In the article, Roth brings up an incredibly simple but overlooked point – tough economic times are the perfect breeding ground for fearless genius, but most industry leaders focus on cutting back rather than taking chances and moving forward.

In periods of economic turmoil, people are hungry and work cheap, and entrenched companies often concentrate on in-house cost-cutting instead of exploring new markets, which can explode with the next turn of the business cycle.

-Daniel Roth, “Back to the Garage…” Wired issue 16.12

For those that know me, my love affair with this concept is not surprising – it echoes one of my most firm beliefs: OUT OF STRUCTURE COMES GENIUS. Meaning that the more limitations one is given, the more creative that person must be to succeed. Structure forces us to take a look at what we want to accomplish, distill it down, take stock of all our resources, and find a more effective way to reach our goals. This “structure” can be anything from the number of hours in a day, budget limitations, non-traditional resources, or in this case, an international recession.

Welcome to Your New Office

Social media is a widespread example of this, both within the wine industry and beyond. Even as large companies cut back their advertising costs (sorry print & tv), they need brand awareness and sales more than ever. What’s the solution? Free social networks. Resources are re-directed to educate employees about social media (ideally, otherwise see this post), and instead of spending millions of dollars a year purchasing magazine ads, companies spend a fraction of that actually interacting directly with their target consumers. (One of the most incredible side effects of this is that the tiny 1200 case winery has the same chance of succeeding in this medium as the behemoth.) The question is, if all these companies weren’t being forced to cut back due to the economy, would they have made the same decisions to invest their energies in social media? Or would they have continued down the familiar path of traditional advertising?

Because of a seemingly perfect storm of economic restriction, there is a petri dish atmosphere for growing new ideas. For wineries, maybe it’s finding a way to boost direct sales when the Three-Tier System is failing them. Maybe it’s going out into the community and giving back and building a cult following. Maybe it’s forgoing glass bottles in favor of reusable metal containers/kegs for On-Site accounts. No matter what solutions companies come up with, it’s important to remember that these ideas are born out of structure and limitations. Companies that put their heads in the sand and ignore these conditions, or companies that are boarding up the windows to weather the storm, will never put themselves in the position of innovating.

Let’s admit it, the outlook is bleak when you maintain the status quo. Embrace all the limitations facing you – decrease in wine club membership, loss of a distributor, drooping sales, old-fashioned branding – gather them all up, find the smartest people you know, and GET IN THE GARAGE.

Let Your Sales Flag Fly: 5 Tips for Boosting Holiday Direct Sales

As the “O” of O,N,D draws to a close, there’s not a winery out there that’s not feeling the squeeze – or lack thereof.  It seems that smaller wineries and boutiques are hardest hit, with retailers and restaurants alike eschewing these lesser known bottles for product with recognizable names and brand affinity. This doesn’t hurt just businesses in the wine industry – consumers will only have a fraction of the choices they would normally have this season for gifts and special occasion wines. With small businesses losing ground in retail and restaurant environments and consumers looking for more variety, wineries have a chance to make up the loss this holiday season with two magical words: Direct Sales.

At one time taken for granted and simply relegated to the “Wine Club” list, direct sales will be many businesses bread and butter this season. The unprecedented access to new consumers via social media and the significantly higher profit margin of selling bottles at full retail give wineries both the platform and the flexibility they need to be creative and drive sales for the season.

Unfortunately, it’s not as easy as it sounds. There is a tremendous amount of planning, logistics, creativity, outreach, time and effort involved in pulling together a successful direct sales campaign. But the payoff, for this season and for holidays to come, is well worth the effort. Below are a few tips on how to formulate the plan that’s right for YOU.

  1. Assemble a Team and Make the Commitment – Hand-pick a small group of people within the business to help create and execute the plan. These should be people with different skills and interests that you can draw from to build a solid direct sales plan. Once you’ve assembled your team, make the commitment to create a plan and see it through – and ask that they do the same.
  2. Take Stock of Your Resources – Take a good hard look at the resources you have at your disposal, and I mean everything. Take into account  the obvious like your mailing list, wine club, upcoming tasting events, etc., but also think outside the box a bit. Is there an artist in your midst? Is your young tasting room employee a social networking whiz? Have you earned a nickname from the locals? Get your team together and write up a list of these resources. Keep this list in full view while you are coming up with your plan.
  3. Give People a Reason to Buy – It’s not just enough to have the product, you must give your consumers a reason to purchase YOUR product. Is it great pricing? A special bottling? Are you donating some of your proceeds to charity? Is your winemaker signing the bottles? Look to your list of resources and come up with a reason or reasons why people must have your wine.
  4. Create a Full Campaign – Sales campaigns are not just for huge corporations. Gather your team, keep your list of resources in full view and let yourself be a marketing genius. Create a fun and catchy name for the plan, set your goals and timeline, create special pricing or shipping terms, and make sure you have the infrastructure to support everything on your website and in the tasting room. Aside from having all the logistics in place, it’s also important to have FUN while creating your campaign. Using humor is a great way to get people interested in your product and campaign.  The more fun it is for you, the more fun it will be for your potential consumers to be a part of it all.
  5. Use Social Media – If you could push a button and magically reach THOUSANDS of new consumers that you’ve never had access to before, would you use it? OF COURSE. That “magic button” is social media. It doesn’t matter if you’re not on facebook, or don’t understand twitter – find someone who does. There is no reason to deny your business of the successful season you need simply because you don’t “get” facebook. Social media is a tool that businesses must use to get the most out of any campaign. Choose someone intimately familiar with social networks to be on your team and utilize their knowledge and contacts.

It’s not too late to make the most of this of this season for any winery who has the drive. Incorporate these five tips while coming up with your direct sales plan, watch an episode of Mad Men for inspiration, get up, and take the season into your own hands.

Small Indulgences in Hard Times: How the R-Word Can Work for Wine

Back in August I was invited to a press tasting here in Los Angeles. Normally, this would not be something to write home about – or in this case, the entire world – but this particular event fascinated me.  It was not at a trendy restaurant during the off-hours of a weekday, it was not during cocktail-hour at one of the dozens of ultra-luxury hotels in the city, and it wasn’t a dreadful luncheon.

Setting for the Press Tasting

Ruffino Wines was holding their press tasting at Voda Spa in West Hollywood – complete with manicures and massages. Upon first glance of the invite, I marveled at the balls-out audacity of securing RSVPs by offering free spa services and thus guaranteeing a completely captive audience of press. And all of this with no obvious connection to wine – especially Chianti.

Upon further inspection of the materials, however, I was absolutely taken.  They had found a simple and luxurious way to work WITH the recession in order to market their wines.

HOW IT WORKED

In 2008, the New York Times ran two stories on The Lipstick Index – a term coined by Leonard Lauder of Estée Lauder that described his experience of selling more lipstick in times of economic hardship. The theory behind this term is based on the idea that when times are tough and big luxuries – vacations, cars, even couture clothing – are no longer realistic expenses, people seek small indulgences, like nice lipstick, to see them through the times. Sound like a stretch? Check out the article for yourself.

The brains at NY-based Cornerstone PR, Ruffino’s public relation firm, read the article and decided that wine could be a similar small indulgence. Riffing off this idea, Ruffino soon had a press campaign called “The Chianti Index” and set up tastings at Spas that featured wines in the $8-$25 range, along with Chianti-colored manicures.

SO WHAT?

So many companies in the wine industry seem to be putting on a brave face and pretending (at least in public) that either there is no recession, or that it’s not affecting them.  In the meantime, behind closed doors these same companies are panicking about dropping prices, decreasing wine club membership, and the uncertainty of sales this holiday season.  For marketing wine, behaving as though nothing has changed DOES NOT WORK.

Marketing a product to the masses as “the ultimate in luxury” will not be effective when the masses are not comfortable spending money on true luxury items right now.  HOWEVER… Being able market that same product as a small indulgence – the flexibility of adapting to the mental state of the times, the idea of The Lipstick Index and Recessionistas – can mean the difference between a rise in sales, or a drop.

Imagine: Let’s say a particular winery has a $50 bottle of wine that is marketed as the absolute top-tier, ultimate in luxury, single vineyard, special lot, 18 months in new French Oak, yaddah-yaddah of it’s class. The current branding says “When you want the absolute best wine, this is the wine you get.”  Now let’s look at a consumer. Doesn’t matter if they are 45 and lost 40% of their kids’ college fund in the stock market, or if they are 25 and making $30k a year, we’re looking at the average consumer that is feeling the pressure to cut back. Think about your own spending. About the conversations you’ve had with friends.  The first cut-backs are on things we don’t need. The Ultimate in Luxuries. The nice-to-haves. The new german cars. The big vacations. The best new gadgets.

By continuing with the branding of “Ultimate in Luxury,” our example wine has placed itself squarely in the Should-Not-Buy category of products. The odds of our consumer purchasing this wine are pretty slim.

HOWEVER.  If that same $50 wine adjusts it’s brand message from “Best of the Best” to “Small Indulgence,” it’s chances increase dramatically. If the message says “This is how you can pamper yourself – no vacation needed,” then that wine no longer resides in the Should-Not-Buy zone for our consumer, but rather the We-Deserve-This zone. The Stay-cation zone. The I-Can-Share-This-With-Friends zone.

What wine needs to do is take a tip from the Lipstick Index. By sticking to traditional branding, companies are making it more difficult for consumers to qualify spending their money.  By adjusting their branding, companies are making it easier for consumers to make the decision to buy. I know it sounds simple. That’s because it is.

Don’t look at this as a magic bullet. Think of it as the bullet that wine companies can save by NOT shooting themselves in the foot.