Welcome back, my loyal listeners. You know, I’ve been talking about marketing technology in the wine biz for several years now, and one of my biggest frustrations is the slowness of adoption of marketing technologies in the biz. It still lags behind many other industries, and, you know, I keep feeling we’re falling behind.
That is, until Covid happened, and it’s forced many wineries to move out of their comfort zone and embrace more marketing, automation, integrating email marketing, really focusing on DTC.
So, on this episode, I talk with Chris Towt, he’s the co-founder of VineSpring, a subscription focused commerce platform. It’s one of the leading platforms in the business. We discussed late last year these different subjects – he’s a really smart guy with a lot of insights. We’ve had the pleasure of working with him at Balzac on past projects, so I’m excited to share this episode with you.
So, without further ado, on with the show.
Transcript on Simplifying DTC in the Wine Biz
Our guest this week co-founded VineSpring in 2011, with a mission to simplify the DTC equation for craft producers of wine. Aiming for more satisfied customers through better management of DTC relationships, VineSpring brings together powerful cloud-based tools into one web interface.
He also owns Dunstan Wines, a winery in Sonoma, California, producing around 12 hundred cases a year. Please welcome Chris Towt.
Thanks for joining me on the show today. Before we begin, would you share with listeners how they might contact you?
Yeah, of course. Email is Chris C-H-R-I-S at VineSpring.com. My direct phone number at VineSpring is 707-931-0200. And of course, that line goes directly to me, but VineSpring support always can get a hold of me as well. It’s 707-939-5595.
Great. So, you guys are in Sonoma then, huh?
Yeah, Sonoma – Sonoma based but a remote team. So VineSpring is today 13 people, and most are living and working in Colorado, and Colorado is where I’m originally from.
Got it. Nice. So, I asked you on the podcast today to talk specifically about wine clubs. It’s something that most of our winery listeners are going to either have or be considering.
So, first of all… My first question is, is what do you see as the value of wine clubs?
Well, I’m going to broaden it just a little bit and call it a subscription… Subscription models, because VineSpring really is catering not only to the club model, but to the allocation model, which is part of a subscription umbrella in my eyes. And there’s a third component to that, which is membership. So, there’s club memberships or clubs, and memberships, which I would define as prepaying for a service.
So whereas clubs shipments are created and paid for typically on release, I’m seeing a trend toward more membership based payments where people pay on a monthly or quarterly, maybe even annually basis, some periodic basis and they get some benefit from that. Whatever the case under that subscription umbrella, it’s all about customer satisfaction.
So, creating a great club or allocation or membership is going to be about how does the winery or, you know, VineSpring works of breweries, distilleries, cideries, anybody in the beverage alcohol space. How do they engage with that customer on a personal level with the right message at the right time? And that’s really the trick to creating customer loyalty over the long run.
So, you mentioned… OK, so first of all, let’s define what the difference is between a wine club and an allocation model, if we could.
Sure. Yeah, a club… The terms are sort of broad terms, and people tend to sometimes define them differently. However, I think the majority of people would define a club as the regular shipment of product, whether you engage with the winery or not. Let’s take a winery just as an example.
So, in a club, the winery, you might get two shipments twice a year. The winery might release in the spring, let’s say, their Pinot Noir. And in the fall, they release a Chardonnay in your part of the three bottle club, so you get three bottles of Pinot in the fall – just automatically – and you get three bottles of Chardonnay in the in the spring or vice versa.
So, an allocation requires that the customer engage with the winery. So, you’re… Let’s say I make one hundred cases of rosé and I have ten thousand people who are potential buyers for those hundred cases, you’re going to need to allocate or cater to maybe your best buyers to create a customer loyalty behind those wines. And so, an allocation, you’re making an offer to people, but they’re not automatically getting the purchase like they would in a club.
So, have you seen a shift from this kind of more traditional wine club model to a more subscription based – not… I think there’s something kind of in between that’s emerging between the allocation and the traditional wine club, and this is that subscription model. So how… I mean, what kind of shift have you seen in that regard?
It’s a great question because, you know, technology has really been the inhibiting factor for beverage, alcohol, so to answer your question of what am I seeing?
I’m seeing customers or clients, wineries… I’ll differentiate, I’ll call a winery, a client, and a customer is a customer of the winery. So, I’m seeing clients or winery admins request or want to creative ways to continue engaging with their customers.
So, it doesn’t have to be strictly an allocation model or strictly a club model or strictly a membership model. It could be a blend of any of the three, and that is what technology is really beginning to enable for even the small players.
Let me give a more specific example. Let’s say that you have a, quote, “traditional wine club”, and you’re doing those two shipments a year, Pinot Noir in the spring Chardonnay in the fall, and you’re doing those in like three bottles, six bottle and 12 bottle options. That’s sort of a traditional club model.
Well, blend in a little bit of the allocation to that, and it’s really creating what I would term a custom club model, the ability for that three bottle member to say, you know what, I’m totally in for three bottles automatically, but I want to have some choice on, what, three bottles go into that shipment.
So that becomes sort of a blend of the of the allocation, the club becoming a custom club model. But other wineries might say, you know, I love being able to offer my customers the club options and the automatic nature of it.
I also love giving them choice when it comes time for that shipment to actually go out. But I want them to pay on a periodic basis, like wine is expensive, and especially the craft producers who are selling DTC are often selling bottles that are over twenty five dollars a bottle, really commonly 50 dollars a bottle and above in some of these models. So, getting hit with a six-hundred-dollar charge for a case of wine might be a lot to some people.
Instead of doing that as an all at once charge, we’re going to not only give them customization over what goes into that shipment, but we’re going to allow them to pay over whatever period of time they feel comfortable, they feel comfortable with. So, it can really become a blend of all three.
Yeah, this this goes back to some of the points that we’ve made in previous episodes about the way that marketing and, well, in sales, for that matter, is heading, and that is more personalization, more choice. People want to have a more bespoke experience when purchasing any kind of product, and wine lends itself very well to that.
The issue has been, as you said to this point, to the technology there and technology know how within a lot of the producers just being able to actually manage that process.
They they’re really good at making wine or making beer or making their spirits, like that is what they got in business to do. So often the sales side of it, you know, hit them hard because they’re like, oh, man, how am I going to sell this and forget just the complexities of compliance and tax collection in the middle and fulfillment through appropriate channels.
I mean, it is it is a very difficult… It’s a wonderful thing to create a great product, which I think many… I think across the board we’re seeing really amazing, let’s say wine specifically, very high quality, well-made wines.
It’s the differentiator becomes the person to person contact and the nurturing of that individual who is your customer wants and how to create them as a customer, how to keep them as a customer for a much longer time. Technology enables that, but historically, in the beverage alcohol space, it’s been an expensive proposition. And so expensive, Mike, that 80 percent of the wineries out there produce less than five thousand cases of wine a year.
So, I mean, that’s a big lift for a lot of those small guys to even understand what technologies are going to enable me to do my marketing side more efficiently. But that’s shifting and it’s becoming more commonplace as technology providers like VineSpring modernize and help to push that envelope, make more accessible things like marketing, automation, to our clients.
OK, so there’s several challenges there. We’ve just discussed, but… so what are most producers not doing right now, that they should be doing?
Marketing automation. Setting up setting up workflows to engage their customer with the right message at the right time is something that I, I would hazard to guess, a percentage out there are actually doing. I think that marketing automation is the big… Is the big shift that’s going to happen for those 80, 80 percent of the of the smaller producers?
I can’t agree more. I’m actually speaking on market animation at WIN Expo in December for that very reason, is that I truly believe that the next big marketing, you know, killer app for wine is going to be, you know, marketing automation.
So, let me give it… let me sort of paint the picture of how I see it unfolding. When I when I started VineSpring, we were… Most of my friends in the wine business, acquaintances, they were using VerticalResponse for email marketing. You remember those days?
Those days are still here, Chris.
A lot of clients still use VerticalResponse, campaign monitor, you know, those sorts of things.
There’s a whole variety of options out there, which is truly awesome because competition and choice will lead to a better outcome for those small producers. But I would argue that 80 percent of the wineries that I knew eight years ago were using VerticalResponse, and I would argue that 80 those same 80 percent or about 80 percent are using MailChimp today.
MailChimp isn’t going to be there forever, right? I mean, they could become the VerticalResponse and like campaign monitor and people tapping into Emma, getting into more marketing automation paths. They’re going to embrace what they see is effective, cost effective, value driven, powerful, simple, easy to use.
MailChimp has sort of become one of those main players that a lot of wineries are using today. And by no means am I saying that that’s going to persist for a long time to come. But today, there’s a lot of people using MailChimp. For me and for our for our clients using VineSpring.
MailChimp is a wonderful beginning to the marketing automation path. It is. It is a great platform for digesting Web marketing automation really needs.
But the key is having ecommerce providers that your order management system integrated directly with their e commerce API so that they too are flowing data back and forth in near real time, so that you can take advantage of the right message at the right time to the right person. And that’s the first step, I think.
Yeah. I mean, it comes down to customer record and customer management, right? Because the one of the biggest frustrations, I think, for a lot of DTC managers is the fact that they don’t know what how their company is engaging with their customers.
And through a combination of marketing, automation, CRM, and ecommerce, that’s today’s is definitely you’re more able to do that.
You are if they’re connected. And the key though has always been the interconnectivity. So, go back again five, ten years, some bigger wineries with deeper pockets could spend hundreds of thousands of dollars in connecting these disparate systems. That is the big shift. No longer does the hub-and-spoke model need to lag behind the all-in-one model.
Meaning, you know, MailChimp gets to focus on marketing automation. That’s what that platform does. Square is a point of sale provider; they focus on the in-person transaction really well. ShipCompliant or they’re all about the compliance side of the business.
So, the trick becomes connecting all of those in a value driven way. And I think that that is those doors have opened, and the reality for a lot of producers is it’s just easier to put the whole picture together than it was in the past. That’s going to drive them to utilizing best of breed systems and that’s going to lead to better customer loyalty and longevity.
So, I infer from this that that VineSpring offers marketing automation as part of your entire package. So, what do you think of some of the more industry leading packages like HubSpot, Mercato, Sharp Spring, those they really focus on, on marketing, automation, what do you… How do you compare with that?
So, we’re not we’re not in competition with them, we’re just as they would be focused on the marketing automation path, VineSpring is focused on this subscription commerce path. We want to be the best player for clubs, allocations, and memberships.
That means we’re really just an order management system, allowing a winery to have an easy path to purchase on their website, great order management tools on their backend, connecting to accounting platforms like QuickBooks books or zero or whatever accounting platform they want to connect to, and to embrace the marketing automation platform of their choice.
One of the things that we haven’t discussed here, but it’s really the enabler is Webhooks. I’ll briefly say, know, one of the reasons it was super expensive in the past to sort of cobble together connect to systems is you had to hire an expensive developer to create a middleware that took data via the API on one side, matched it up, did things with it, and inserted that data into the other program. Webhooks are a modern-day API, in a way, are now enabling connections that you just couldn’t have in the past without spending a lot of money.
So, connect VineSpring to HubSpot, Salesforce Insightly, Infusionsoft. I mean, I’ll bet on a weekly basis I hear about a new one. It’s like, it’s like yes, go use that and VineSpring will be here to create that subscription commerce piece better than anybody on the market. That’s, that’s our drive. That’s what we’re, we’re looking to do.
Fantastic. So, who’s doing it right? Do we have any good examples right now?
Of actual providers, clients or actual…
Clients who are providing an experience for customers, whether that’s club subscription, choice allocation, you know who out there is a good model?
Man, I got to give a shout out to Jason Moore of Modus Operandi. I mean, here’s… do you know, Jason?
So, the reason that I got to give a shout out to him is he is always looking out on the horizon toward what technology can help him do his business better. And Jason’s got a several thousand, maybe three or four thousand case winery.
I know what it’s like to run a twelve hundred case winery. It’s like Jason is doing an incredible job leveraging technology to stay connected with his customers. In conversations with Jason, he once he once pointed out, he said, “you know what the best feeling in the world is?”
I’m like, “what’s that, Jason?” And he’s like, “it’s when I put my marketing automation into effect a year after somebody has left the club and they renew their club membership” because of the paths that he has created to re-engage those customers. It’s winning back the person who may have left for one reason or another. I mean, that is powerful stuff, and he’s doing it as sort of a one man show, and Jason uses Infusionsoft connected to VineSpring.
One of one of the things that I think is really cool, as an example of how it’s working is, I’d encourage anybody to make an appointment to go do an in-person tasting with Jason at Brasswood in Napa. And when you make the appointment, you get an automated personal email that’s sent sometime after you made it.
Not something you get a confirmation email soon after, right after you hit submit, but you get a personal email a little bit later. And then an hour before your appointment, you get a text message that feels really personal about, “hey, looking forward to the appointment just to make sure you had directions, here’s an easy GPS link.”
Then when you show up, you feel like he’s been personally engaged with you the entire journey. He does a tasting, then an automation routine happens after the tasting, helping to drive good comments on things like Trip Advisor or other platforms that help bring him business. That guy has some amazing automation working that I think has really improved his business tremendously.
He’s a model… he’s certainly a model for me and a model I’d love to be able to take a more simple view of what he’s, you know, got years of experience doing that, and be able to make palatable for other users, so they don’t have to go full board with Infusionsoft, they can dip their toe in the water with MailChimp. And then as they start to graduate from the MailChimp side of things, they can make choices of HubSpot, Infusionsoft, etc.
That sounds like a great model and it’s basically ideal for what we’re talking about in terms of marketing automation. So, we’re almost out of time here. Why don’t you give a little plug for VineSpring to wrap things up?
We VineSpring is a great team of people who is very passionate, passionate about subscription commerce for the craft producer.
And what you’ll see VineSpring continue to do in this space is stay focused – laser focused – on those subscription models and backed by a team of people who are here to help support any of our clients to do their business better.
We work with a great community of developers and consultants, accountants, bookkeepers, winery admins. We’re a platform that is, it can scale to any size winery and we hope to help modernize the way that beverage alcohol is sold DTC.
So, anybody who would like to reach out to me personally, I love the conversation, love to communicate. My email firstname.lastname@example.org, or give me a call, 707-931-0200.
Fantastic. Hey, thanks for being on the show. It was a great conversation. I really appreciate it.
Thanks, Mike, appreciate it too.
Chris Towt email: email@example.com
VineSpring Support: 707.939.5595