Looking For Our Customer

alexander meets diogenes1Quiet day in Sonoma. As I start composing this post I’m looking out at a passing storm that has brought us nearly four times the rain we have had since November. We’re still in a drought, but my friends who rely on surface water to raise their vines are getting at least a partial break.

For the moment, things are quiet. The vineyard erosion control measures have been checked and are holding up. I’ve temporarily patched our roof leak, the winery is not flooded, and Kyle and Tiffany are holding down the Salon on a day when most customers are staying home, perhaps watching the Olympics.

Last week I went to Houston for our annual partners’ meeting. It was great to be able to report another year of growth behind us, and make plans for expanding sales in 2014. There is no question but that, with big crop years in 2012 and 2013 expanding our inventory, we are going to have to pursue a return to three-tier distribution — a sales mode we withdrew from in 2008 when the Great Recession hit hard.

But since the crash of 2008 we have found a sweet niche in the long tail of the wine market, a niche where we have been successful directly connecting with many wonderful people — people who love the wines we make, and geek out when they get to sit, chat with us in our tasting salon and share our passion for our wines and for Sonoma Valley. One of the topics under discussion in Houston was how to expand that customer base.

Searching For An Honest Customer

Diogenes was said to wander Athens in the daytime with a lit lantern, looking for an honest man. According to his philosophy, honesty was demonstrated when a person’s deeds and actions matched their words. I think about this a lot.

The Down Side

I thought about it the other day when a group of guests came in to spend a couple of hours, bragged about how they had bought 50 cases at another winery, didn’t believe we were a “real” winery because we don’t have an impressive building and landscaped grounds, and bought relatively little.

I think about it every time someone comes into our salon expecting—sometimes demanding—a free tasting.

I think about it every time I exchange business cards with someone “interested in doing something” with our brand and see the look in their eyes that tells me no matter how many follow-up contacts I make nothing will ever happen.

I thought about it when I was introduced to a wine broker recently at a charity event. It was late in the evening and perhaps she was at the point of finding veritas in vino, but when she tasted one of my wines she commented “ooh that’s GOOD — great ‘food’ wine. But I can’t sell this — well maybe to one restaurant I know. People want ‘lollipop’ wines.” By which she meant sweet, soft and alcoholic. And cheap. It was refreshingly honest.

The Bright Side

Mostly I think about it when we meet someone new at the tasting salon and see their delight when they get more from us than they expected, when they “get” the wines, and when they plunk down their hard-earned cash and take some with them. I think even more about how word and deed go hand-in-hand when some of them come to visit again and again, and some of them join the wine club.

I’ve been doing this long enough to know that no matter how optimistic my outlook, not everybody is a potential customer. The people we come into contact with honestly are not “customers” until they engage with us in the cooperative dance we invite them to, and until they actually buy something. So the big question facing us in 2014 is — how do we find more of our kind of buyers?

More Direct Engagement

When I opened our tasting salon just off the Sonoma Plaza in 2005, it was an untested concept in our town. There were two other winery tasting rooms in Sonoma that opened about the same time. Today, in addition to Westwood there will soon be 26 other winery tasting rooms in our Plaza area (moving counterclockwise from us: MacLaren, Envolve, Bryter, Two Amigos, Haywood, Sonoma Enoteca, Victor Hill, Spann, Kamen, Bennett Valley, Stone Edge, Sojourn, Highway 12, Eric K. James, Walt, Auteur, Hawkes, Roche, Three Sticks, JAQK, Adobe Road, Charles Creek, Bump, R2, Petroni, and Rumpus).

Up to a point, every new tasting room that opened seemed to bring more traffic to our own salon. I’ve got to think we have reached a limit by now — a limit dictated by the amount of parking available in proximity to the downtown area. Even with our loyal customer base, referrals, and our great Yelp reviews, we are not going to get any more people in our door in Sonoma unless more parking is constructed and new hotels with shuttles open in the area.

So where does that leave us? I think we have to consider opening a second location. We have to do it someplace that will not cannibalize our existing traffic, perhaps someplace that is already a destination in its own right — maybe The Barlow in Sebastopol, or even perhaps a place in SF like Ghiradelli Square. The big question for me (aside from whether the place will pay for itself) will be, how do we adapt and evolve our customer experience to a new venue? Diogenes

6 thoughts on “Looking For Our Customer

  1. Daniel Dycus

    Wow, how interesting. Christian Sparkman had a similar idea. The Woodinville market is remarkably similar to that of Sonoma. The wineries are a bunch of garage doors and everyone is getting fruit from everywhere they can. Sparkman opened another tasting room in the Hollywood hills just outside Seattle but really 30 or 45 minutes outside the tasting room at the garage. Once I asked him why he wanted to have another tasting room around the posh hollywood hills district and he said something about appealing to two very different types of people. Maybe it’s not the honest customer you are looking for. Those are the kind that wonder into the salon. Maybe the kind of customer you are looking for is rich, arrogant, and a real bastard about boutique wines and cant be bothered to travel outside San Francisco to get want he wants and is willing to pay for it. I hope you find him whoever he is. Once a man told me that your wine tasted like the things dreams are made of. No one has ever spoken about a wine at my table like that. It was refreshing.

    Reply
    1. John Kelly Post author

      Kind words for wines made by an arrogant bastard such as myself! What I was trying to convey in the piece is that I define “honest” customers as those that are willing to pay for what they get. Better yet are the friends we make along the way, who come to see the relationship as something more than service and product, and continue to engage with us. That’s a weird demographic — one that defies age, geography and wealth. It is part of our job to make that relationship interesting, and to keep it fresh.

      Reply
  2. Sandy Johnson

    “we are going to have to pursue a return to three-tier distribution — a sales mode we withdrew from in 2008 when the Great Recession hit hard.”

    Thanks for the good laugh! Because the first thing every business does when a severe economic downturn hits is voluntarily “withdraw” from healthy, successful sales channels! Just be honest. Like a lot of California producers selling forty to fifty and higher dollar bottles of wine, you saw your sales whither and your distribution channels dry up….most likely as those wholesalers transferred their inventory dollars into better selling imports.

    Reply
    1. John Kelly Post author

      Wow – vitriol, much? Brilliant observations — really — but in our case you are way off the mark. There was nothing voluntary about our withdrawal from distribution.

      We only produce a couple thousand cases a year. We don’t have Parker scores in the stratosphere, so distributors actually had to understand our wines and often had to hand-sell them to the lazy or jaded wine buyers out there looking for the next Rombauer or Silver Oak – to do some actual work. We found small distributors who wanted to do that work with us, and things were going well.

      When the recession hit, lines of credit dried up, and every single one of these small distributors either closed shop, or their books were absorbed into larger distributors. We were forced to write off many tens of thousands of dollars in bad debts, and watch our stranded inventories get liquidated. On top of that, for a while I personally witnessed reps for big distributors giving away one or more cases of wine to buyers for each case of well-known, easy-sell brands that they bought — at discount prices. We couldn’t discount deeply enough to compete with this.

      So thanks for the good laugh, calling this a “healthy, successful” sales channel. I’ve voluntarily stayed away from distribution since 2008 because it felt good to stop hitting myself with that particular hammer.

      Meanwhile, we have averaged better than 20% year-on-year revenue growth by focusing on DTC. As credit slowly loosens I see more small, passionate distributors getting back in the game. I’m going to reach out to them, but I will also be working hard to move every case we can manage through DTC – because in today’s market that is the only healthy, successful sales channel for small wineries.

      Reply
  3. Thomas Pellechia

    John:

    Your musing mimics to a degree how I was thinking in 1990, two years before I declared the final vintage for my winery.

    Met some fabulous people/customers along the way, a couple of which are still friends these many years later. But back then, the odds were stacked against me: too small to excite a decent distributor; to small to keep up with expenses that grew faster than sales; too small to hit that sweet spot of volume sales to keep the cash flow rolling; and too small to consider opening that second outlet.

    It didn’t help that the region I was in had yet to gain the interest and respect of either the press or the wine geek public that would seek the small and the unique.

    In every respect, you appear to be in a much better position than I was, so I think you’ll find that customer–and maintain principle as well.

    Reply
    1. John Kelly Post author

      Thanks, Thomas. But the only principle driving me is the one that caused you to declare a final vintage: we have to make enough money to stay afloat. I’ve discovered over the years that we can’t do that by imitating other wineries — large or small. I’ve got to do what I do, as best I can (however individualistic that may seem from the outside) and find enough customers who appreciate that for what it is.

      Reply

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