wine advertising

Why consumers want more than low prices to keep them loyal

You sure? Don't believe everything your retail consultant mates tell you.

Well, clearly we all like a good deal and it's always going to be an important part of any buying decision, but if you keep going back to your customer base with just another discount, followed by another, then people will stop buying and disengage with the offers you are sending out. Take Gap. If you sign up to its customer newsletter, you will receive an email every day offering some sort of discount. Customers wait for the 40% or 50% offer to come along before ever spending anything, and even then the numbers drop away quite quickly.

But surely it all comes down to price in the end?

You would be surprised. In a retail industry dominated by the everyday low pricing strategies of the German discounters, price has become less powerful on its own as a way of keeping your customers loyal. Shoppers now expect your prices to be as low as they can. To keep them loyal you have to offer them something else. It's why the majority of retail loyalty cards are no longer just about generating points to get direct discounts. They've subtly changed in recent years to be much more about how a specific retailer can help customers in other areas of their everyday spending.

How do you mean?

Just look at the loyalty schemes you are a part of. Tesco Clubcard, for example, offers you vouchers to spend in restaurants, a trip to the cinema, family days out and other experiences to enjoy. It's not just a way to get money off your next grocery bill. Sainsbury's noticeably gave up its own loyalty programme in favour of Nectar that allows you to spend your points across a number of services or non-competing retailers.

You got any figures to back all this up?

Absolutely. Recent research by Forrester shows that 59% of people want something extra other than price discounts from a loyalty scheme. They want rewards and services not available to others. Get that offer right and 69% of loyalty members will spend more with you and recommend your products and services to their peers. But it's not just about what they get, but how they get it. Fifty six per cent of loyalty customers see good service, like a dedicated customer line, or delivery benefits, as key to that relationship.

Interesting. What else?

Arguably the most disruptive influence on how we all now subconsciously judge a retailer's loyalty offer has come with Amazon Prime. Being an Amazon Prime member does not give you any more money off its products. No, it is all about making your life easier. Ordering products with just one click. Faster, more flexible ways to pay for your goods and then how, where and when you have them delivered. The chance to watch more films, access exclusive programmes (even Jeremy Clarkson), download your favourite music and then share it with friends and family. Being an Amazon Prime member is more of a lifestyle choice than simply a glorified alternative to collecting Green Shield stamps. As those retail consultants say, the trick is to be a loyalty company, not a company with a loyalty programme.

Yes, but the wine industry relies enormously on discounting to get people to buy more wine.

It does and has got into a right pickle as a result. It has created generation after generation of wine drinkers who think price first when deciding what wine to buy. It's why there are so few brands to connect with consumers on anything but a transactional level. But it does not need to be this way. Look at how smaller wine merchants or connected restaurants are becoming so successful. They rely far less on the prices they are charging, or their money off promotions to build a consumer base, but instead get a far more meaningful connection with tastings, events, dinners or winemaker talks.

But how do we make wine promotions more meaningful?

Again it is all about knowing who you are selling your wine too and pushing the right offer to the most suitable customer. Don't just send out a mailer with the same promotions to all your registered customers. Spend the time to break down your lists and then target specific customer groups with the wines they are most likely to buy. Most of all make your offers mobile, and digitally savvy enough that they can be used on smartphones. It might sound like common sense, but too often merchants, retailers or restaurants push the same offers to all customers and wonder why they are not picked up.

So what's the answer?

Well, ideally we would not be thinking about promotions at all. But all the other steps you can take to gain the trust, build the loyalty of your customers. How can you reward them in a way that makes them feel better? It could be providing them with more information about what you sell in ways they can relate to. It might be offering them better delivery options, incentives for recommending their wines to their friends. How you are going to use their data to get them more wines they like, be it online, in-store or a combination of the two. But in the end it all comes down to balance. We all like a good offer, but now we want it to come with bells, whistles and other personal benefits.

* This article was first published as part of the Grapevine views, insights and analysis newsletter produced for the London Wine Fair.  

Will wine ranges soon be picked by Big Brother algorithms and bots?

You’ve been reading your Steve Jobs book again? What’s all this about robots and wine?

If you are traditionalist and like to think of wine suppliers and buyers carefully working together tocurate lists and negotiate prices based on their years of experience and tasting skills, then look away now. Computers are already automatically determining ranges and prices of goods in wine and other categories based on equally carefully crafted algorthims. Just look at Amazon. It is not employing members of staff to trawl the aisles of Aldi and Asda to look at their ranges and work out how much, say, their own wines need to be to keep up with the competition. It is using carefully programmed algorithms to trawl the internet, compare prices and change automatically up to half of all the prices on its site every day. There is no need for a Master of Wine or wine buyer with decades of experience to assess sales pattern trends using that model, the algorithm will do that for you. 

 

You’re right it all sounds very Big Brother. 

We may not realise it but carefully constructed algorithms are dictating many of the decisions we make on a daily basis. Take the movies you are shown to watch on Netflix. That is based on all your previous searches and are said to result in 60% of the films you watch. Data scientists are even being used by Hollywood to decide which films to make. It’s why Wall Street now employs some 2,000 physicists to keep ahead of the algorithms managing the millions of transactions taking place every day on global stock and currency exchanges. Algorithms that can close a deal a milli second faster than another really are worth their weight in gold.  

 

But are algorithms dictating what wines we are buying and selling?

Yes, and they will do so to a greater extent in the future. You might be working in a company that already has algorithms and bots helping to manage what you do. Particularly if you are involved in ecommerce or using wine recommendation apps. Vivino has just introduced Vivino Market that is using a range of machine learning algorithms to scan the 20 million consumer reviews, 65 million ratings, and 10 million wines it now has on the platform, to give any of its 23 million users a personalised wine recommendation in less than a second. 

 

That’s a potential game changer? 

Absolutely and what is particularly worrying for the traditional wine trade is that Vivino is not a wine business. It has from day one been focused on collecting enough data about highly marketable, well heeled consumers to drive a Big Data-fuelled business, one that is now highly attractive to third parties to access. “We had to grow our community first in order to leverage the power of our data,” says founder Heini Zachariassen. An increasing number of other algorithm-based apps and websites have all been set up in the hope of taking their cut from the marketing power of the average wine drinker.  

 

This is too much for me. I can’t keep up...

Sorry, but you have very little choice. There is no place for luddites in modern business. Many of the software tools we innocently use on our smartphones, laptops and desktop computer are jam packed with bots and algorithms effectively controlling what we see and do. Our social media feeds are full of them, which is why we all get to see the same daft videos of cats and dogs on Facebook.

 

Any other examples?
Well, brands, retailers and social media platforms like Facebook and Snapchat are increasingly using artificial intelligence and chatbots to engage with users. Beauty brands are now able to “talk” customers through trying different types of make up to selfies posted on a smartphone. If a website takes you through a series of conversational steps to book a table, buy a plane seat, change your password, or order a case of wine then you have probably been interacting with a chatbot to do so.

 

What else can they do?
The most advanced chatbots are being used by brands on messaging apps, like the new Facebook or eBay Shopbot service, to not just “chat” to users, but are capable of learning from each interaction so that they appear even more authentic and personal to the next user. Chatbots are increasingly being used to improve our experience of e-commerce by placing orders knowing what we have previously bought, contacting us throughout the delivery process and then following up to find out what we thought of what we have just bought. Soon bad customer service will be for any transaction where we don’t feel like we’ve had our hand held all the way through the process. Even if by a robot. 

 

What else can we expect

Well, here’s one for you. Facebook is working on new augmented reality technology that could allow us to type, hands-free, up to 100 words a minute just by using our brain waves. All it would involve is for us to wear a device that can read our thought patterns and then write them out for us. I can assure you this article has not been written by a robot...by a robot.