What Drives Mid-Atlantic Wine Consumers to Visit Local Winery Tasting Rooms
By Jennifer Zelinskie and Dr. Kathy Kelley
Whether you work in the wine industry or are just a wine consumer who reads the Wine & Grape U. Blog, you have probably visited many different winery tasting rooms. Reflecting on these visits, you probably remember instances when you had an exceptionally good experience and times when your visit might not have been all that delightful. We are pretty sure that you made the decision to return to the facility while tasting the wines or just after the door shut upon your exit.
If you are a winery tasting room owner or operator, you want all of your customers to have a memorable positive experience and have no doubt that they will visit again. This blog post presents data collected from our Mid-Atlantic wine consumer participants as to what had a positive influence on their willingness to visit again.
The Impact of Customer satisfaction
Customer satisfaction is critical to the success of any business. Miguel Gomez, a faculty member at Cornell University, shared five factors that drive customer satisfaction, builds loyalty, and encourages repeat winery tasting room visits. These include:
- ambience – cleanliness, ambiance, lighting, sounds, view, etc.;
- service – staff friendliness, knowledge, appropriate appearance, and helpfulness;
- tasting protocol – variety, amount served, cost, and number of wines tasted;
- tasting experience – flexibility in choice of wines, space (crowdedness), waiting time to start and between samples; and
- retail execution – presentation of wine for purchase, quality, prices, discounts, and ease of locating the winery (http://bit.ly/2jy3v2C).
According to data collected as part of the Northern Grapes Project, funded by the USDA, the average number of bottles study participants purchased increased as customer satisfaction increased. Participants were asked to rate their “level of customer satisfaction” in tasting rooms on a scale of 1 (lowest level of customer satisfaction) to 5 (highest level). Participants that rated their tasting room satisfaction level a ‘4’ out of ‘5’ purchased an average of 2.8 bottles of wine, but those who rated their tasting room satisfaction level a ‘5’ out of ‘5’ purchased an average of 4 bottles (http://bit.ly/2k5gG7L). Average amount of money spent at the tasting room also increased as level of customer satisfaction increased. Those who awarded ratings of ‘4’ out of ‘5’ spent an average of $40 and those who awarded ratings of ‘5’ out of ‘5’ spent an average of $60.
How far did our participants travel to winery tasting rooms during an average year?
In our March 2016 survey, participants were asked if they visited and/or purchased wines from winery tasting rooms that were located within 100 miles from their home during an average year. Of the 1,038 participants, 505 (50.1%) responded “yes.” These 505 participants were then asked a series of questions regarding their winery tasting room visits.
Why might purchasing wine from a tasting room be more appealing than purchasing wine from a retail liquor store?
As a winery tasting room owner you want your customers to come and visit your location, taste your wine, and make purchases on a regular basis. Yet one of your major competitors is the local liquor store, which can be more convenient (e.g., hours of operation) for consumers and provide them with a greater selection of wines (e.g., type, origin, price) than you offer.
Hence we asked our participants who visited winery tasting rooms within 100 miles of their home to react to factors that may have influenced them (positively and negatively) to travel to a tasting room, rather than a liquor store, for a visit and/or to purchase wine. Data presented below (Figures 1 through 3) are for the 95.6% of participants who indicated that at least one factor influenced them in a positive way to travel to a winery tasting room to visit and/or make a purchase. We will discuss factors that had a negative influence in another blog post.
Factors that Had a Positive Influence on Participants’ Visits and/or Purchases
As you can see in Figure 1, below, nearly half of the 505 participants selected “prefer to purchase directly from the winemaker” (48.6%) and that “purchasing wine directly from the winery tasting room provides more support to the local economy” (47.9%) as having a positive influence on why they traveled to a tasting room within 100 miles of their home to make a visit and/or purchase wine, as opposed to a retail liquor store. We chose the 100-mile distance as 64% of participants in one study responded that for a food to be “local” it had to be produced within a 100-mile radius “of the store” (http://bit.ly/2jxi1VO), and there are reasons why you might promote your tasting room as being a local wine source.
Individuals who buy wine from local wineries may do so because they feel a sense of community when they make the purchase. Others may purchase local because of economic benefits. For example, when $100 is spent at a local business “roughly” $68 stays in the community while only $43 “stays in the local economy” when $100 is spent at a non-locally owned business (http://bit.ly/12cRrXn). Or, they may feel that local foods and local wines are a natural pairing. According to David Page of Shinn Estate Vineyards, though it may take decades or longer, “the wine of a region and the food of a region creates the cuisine of the region” (http://nyti.ms/2kcdVBt).
How can you, as a winery tasting room owner or operator, use the “buy local” trend to engage your customers?
- Promote your business as being local, that you make your wine locally, and/or that the grapes and other ingredients used in the wine are from local sources. The Hive Winery, located in Layton, Utah, states on their website that their “wines are crafted using fruit and home from local farms as much as possible” (http://bit.ly/2kwO47H). If you look through their website you will learn that the local theme is not just mentioned once, but they discuss why consumers may want to buy local, indicate the ingredients in each wine that were sourced locally (e.g. “11 pounds of fresh Utah black cherries [are used] per bottle” of their Black Cherry Brandy, http://bit.ly/2kx2K6F), and link to other local businesses. Discussing why local, as well as other environmental practices, is important to them helps convey to readers that they are not merely using “local” just to drive sales.
- Find a “buy local” association, build a relationship with other local businesses, and work together to promote your businesses and the community. In 2013, 14% of independent businesses located in Michigan “Local First” communities indicated that the effort had a “significant positive impact” on their business, 28% reported a “moderate positive impact,” and 33% “a little positive impact” (http://bit.ly/1gcOesa). These businesses reported a greater percent change in revenue in 2013 over 2012, a 7.0% increase compared to 2.3% for independent businesses in communities without a Local First initiative, and a greater positive change in 2013 holiday sales compared to 2012 (http://bit.ly/1gcOesa).
- Register your business as a “Small Business Saturday” participant (http://amex.co/1JdleC6). This campaign, hosted by American Express, is held on a Saturday after Thanksgiving and encourage shoppers to buy from local businesses. Now approaching its eighth year, 112 million consumers shopped and dined at small businesses on Small Business Saturday 2016, a 13% increase over 2015 (http://bit.ly/2koxVRI). Not only do consumers focus on purchasing from small businesses on this shopping holiday, but 77% of consumers who participated in 2014 survey responded that “the day makes them want to shop local year-round” (http://bit.ly/2jxFO7q). One winery that utilizes Small Business Saturday is North Folk Winery, Harris, MN. Thewineyhosted a wine pairing with local cheese and chocolate and offered attendees a 20% discount on bottles when they purchased cheese and chocolate gift boxes (http://bit.ly/2jxdAKH).
Offering discounts in your winery tasting room can help attract new customers, encourage undecided customers to make a purchase, and prompt those who have not visited your tasting room in a while to stop in and see what is new.
Pertaining to discounts and programs that would provide incentives for purchasing multiple bottles, 40.1% of our participants indicated that such a discount had a positive influence on their decision to travel to tasting rooms, as opposed to a retail liquor store (Figure 2).
Ron Lykins, a wine tasting room associate, suggests in a blog post that offering a discount on purchasing multiple bottles of wine is a reasonable strategy and encourages up-selling. He provides an example where a customer is purchasing four bottles of wine and is then presented with a modest discount if the customer purchases an additional two bottles. He stresses that the policy needs to be clearly defined and that all tasting room staff must know when it should be offered (http://bit.ly/2j9BLhe).
But why do discounts work in attracting customers to your tasting room?
The psychology behind discounts is to create urgency. Which can be achieved by:
- Using phrases such as “get $10 off your case purchase” or “get 5% off a case purchase,” which specify what is actually being discounted, are more likely to motivate people to buy compared to using less direct statements like “save $10” or “save 10%.”
- Limit the amount of time you offer the discount, preferably no more than a couple of weeks to encourage customers to buy before it is too late.
- Inform customers about the discounts when they are if your tasting room and through all modes of communication (http://bit.ly/2jA0Cho).
Of the 505 participants who visited and/or purchased wines from winery tasting rooms that were located within 100 miles from their home during an average year, few participants (14.7%) indicated that being a member of the winery’s wine club and earning rewards by making purchases was a positive influence. This low response may be due to the fact that only 20.8% of these 505 participants reported being a club member or subscriber.
Although this is the case for our survey, as a winery owner or operator, you have the ability to customize your reward system and offer benefits that motivate your customers to become members and renew annually. Keep in mind that it is not just the discount that encourages customers to join a wine club, but there are also “intangible” benefits. You have the opportunity to make your club members feel special, whether that means hosting private events or getting to know them by name (http://bit.ly/2j9BLhe), both of which help members feel truly connected with the winery and tasting room staff. You can read more about our participants’ interest in wine club membership benefits by clicking here: http://bit.ly/2iCoulc.
Whether you are offering discounts to all customers or just members of your wine club, consider the following to make sure that your discount does not have a negative impact on your business:
- Calculate the best discount price that will still generate a profit by understanding your gross margin, markup, and breakeven figures.
- Know that you will need to increase your sales volume, which differs based on the discount offered, in order to maintain the desired gross margin. According to the example on the Business Victoria website (http://bit.ly/2jIa96k), if your gross margin is 40% and you offer a 5% discount then you will need to “increase your sales volume by 14.3 percent in order to make a profit.” If you change that 5% discount to a 10% discount you will need to increase your sales volume by 33.3%.
- Become familiar with what discounts other winery tasting rooms in your area are offering. Though your operations may not be identical, this can at least give you some guidance as to what type of discount you might offer, amount of discount to provide, and frequency which to offer the discount.
- Review last year’s sales and identify times (days of the week, seasons, etc.) when your sales were low and that, perhaps, running discounts during these times could increase foot traffic and boost sales (http://bit.ly/2jIa96k).
Figure 3 shows survey participant responses to the remaining three factors that could have a positive influence on their likelihood to travel to a winery tasting room, as opposed to a retail liquor store, within 100 miles of their home. Over half, 56.6%, of participants indicated that they like to be able to taste all or most of the wine before making any purchases. Half (51.0%) indicated that they like the taste and/or quality of the wine they purchase directly from the winemaker and approximately a third (31.2%) reported that being able to buy wines made with grapes native to their area (e.g., Niagara, Catawba) were reasons why they traveled to the tasting room.
You know how wine tastings influence your visitors’ purchasing decisions, and that if you can get a reluctant visitor to try a wine that they are unfamiliar with – you might just get a sale. Whether you currently make wines that are less known or are contemplating doing so, you should consider encouraging as many visitors as possible to sample them.
In 2012, Michigan State University researchers investigated consumer awareness and perceptions of cold hardy grape wines (e.g., Brianna, Edelweiss, La Crescent, Marquette). According to their results, slightly more than half (55.5%) of Michigan tasting room visitors responded that they were not familiar with cold hardy wines, while 65.3% indicated that they had tasted them. An additional mail/email survey was implemented in six Mid-Western states. Awareness was even lower among these wine consumers, with 70% responding that they were not familiar with the wines and only 26.8% responding that they had tasted the wines (http://bit.ly/2jKwLC).
Although awareness of cold hardy wines was low, consumers who had tasted cold hardy grape wine reported to like them “a lot” (41.9% of the MI tasting room visitors and 39.3% of mail/email survey participants) or “a little” (29.9% of the MI tasting room visitors and 31.1% of mail/email survey participants; http://bit.ly/2jKwLC).
Educating your staff about these wines and guiding them as to how they can encourage customers to taste “unknown” or “less familiar” wine is crucial.
We recognize that percentages of respondents who indicated that these factors had a positive influence on their winery tasting room visits were not as high as might have been expected. None of the percentages were greater than 56.6%. In the future, we plan to investigate other factors that may have a positive influence on winey tasting room visits.
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