Issue link: http://winesandvines.uberflip.com/i/975273
30 WINES&VINES May 2018 Here's What Works A re the winemaking and sales decisions in your winery data-driven? Are all of your data sources well integrated into one system? Ask the question of some winery owners, and you may get these responses: • "I will use data to run my winery once a really well- known Napa Valley winemaker does it and gets a 98-point score. It's the wine industry, where every- one strives to be the first one to be the second one." • "My winery prides itself on making wine exactly the way they did in France in the 18th century. I even have my tasting room staff wear Les Miserables cos- tumes at work, and on weekends when we have big crowds, I make them sell their teeth just like Fantine did. The tourists love it!" • "Data analysis is what the 'big guys' do, but not here. We're just farmers." • "Wine is an art." True, I invented the quotations above, but they're not as far-fetched as you might think. Data is generated at every step in the winemaking process, from soil moisture to vineyard sampling to weight tags to all steps of winemaking to case goods to sales to consumer data. We are buried in data, yet we often make important decisions on anecdotes and "gut instinct." Everyone has a story of an owner saying more or less, "I love our Gold Digger's Reserve, named after my last three wives. Sure, we only sell 173 cases every year, but let's keep making 1,000 cases." Marshall Graves is a vice president and wine industry specialist at Bank of Marin. He encourages wineries to "go beyond using your data set to simply resell to existing customers. Aggregate and examine your data to obtain a precise understanding of what your club members enjoy beyond wine." Graves suggests accomplishing this by collabo- rating with companies that specialize in data ana- lytics and social physics. "Done well, this will improve wine club retention and ultimately result in wineries having a more efficient and cost-effective marketing strategy." He added that "each of the top five wine-producing states also have es- tablished technology hubs. Those who engage in conversation with their tech community will become agents of change vs. being the disrupted." We all know we need to use data better, but turning it into something that objectively drives decision-making is a challenge for nearly everyone. I interviewed representatives of two wineries and their data vendors who are successfully integrating and using data in their everyday operations. DRY CREEK VINEYARD DtC and consumer data drive decisions Michael Longerbeam is the direct-to-consumer manager at Dry Creek Vineyard, a 100,000-case operation in Northern Sonoma County, Calif.. Founded in 1972 and still family-owned, Dry Creek relies heavily on direct sales. Longerbeam is a marketing veteran, having done it in both software and wine, including Windsor Vineyards, one of the industry's DtC pioneers. Longerbeam observes that most people see the wine industry as a relational business, where decisions are often made on interpersonal contacts. He encourages including data analysis in addition to conversations with industry colleagues when making business decisions. Longerbeam suggests looking at three things in your DtC program: • Recency. When was a customer's most recent purchase? • Frequency. How often does the customer purchase? • Monetary. How much does he or she spend per pur- chase or per year? Longerbeam used to do all the data crunching himself, joking that the other DtC staff see him as "the nerd on the computer." He creates and slogs through a number of spreadsheets, with the intent of distilling the data down to something useful or actionable. He warns that doing it on your own, you can "go snow-blind by all the data," and not end up with the result you want. His most relatable example is using data analysis to increase wine club retention. His team had dis- cussed giving every club member a gift to improve retention. That may help sales, but it's expensive. Sending no one a gift costs nothing, but you may lose some revenue and profit from club drops. By grinding through the data, they learned there was a spike in cancellations at a certain number of months. They then used that data to send gifts to only those club members who had been in the club that long, showing them some love at a point when they were most likely to break up. Longerbeam then measured club retention, and it improved. He notes that analysis "can get granular, but that's where the power of the data is." n ANDY STARR How Wineries Take Advantage of Big Data (or Any Data)