Automatically recurring club memberships are a significant contributor to the Life Time Value of consumers, representing up to 50% of overall annual DTC revenue for our winery clients.
With conversion rates from visitor to wine club signups ranging from 1-5% on average (meaning only 1-5 out of every 100 visitors join), wine club memberships are clearly an expensive acquisition for a winery. Further, with more wineries offering competing wine clubs, and club membership averaging 18-36 months, retaining wine club members continues to be a major challenge.
The benefit of increasing club membership tenure (from old french tinir: 'to hold') is obvious. For very little incremental costs, there are big gains. For an example, to increase tenure of 25% of club membership for only one additional shipment, that would represent revenue expressed as (# of club members/4 x shipment price). So, for a 2,000 member club with 500 members receiving an additional $120 shipment, that's $60,000 in extra revenue.
In our User Groups last month (held at the gorgeous Davis Estates Winery), our winery clients were introduced to our latest eCellar tools and techniques to easily and automatically identify at-risk wine club members every month, and take action on that segment.
Here is a winning formula to identify and take action to increase your lifetime value of wine club members.
Identify the average tenure (in months) for each of your club tiers This is the average lifetime of a club membership, and if you have multiple tiers, make sure you get this average for each tier. In our analysis, a 2-bottle monthly club has a different tenure than a 6 bottle quarterly club.
Identify the top 3 reasons why they are leaving that club tier This important item will help you on item #4 to handle potential objections for getting an at-risk club member to stay in the club. If your winery does not store a cancellation reason from each club member that quits, start now.
Search for club members that are 1) currently active and 2) approaching and have exceeded the tenure This is your at-risk segment: club members that are statistically at risk of quitting.
Perform outreach to these at-risk members Email is always a good start, then maybe a followup phone call. Any great wine club manager knows how much members nearby and in far-flung states love hearing from the wine country! Our statistics also show that even a thank-you email to club membership has a purchase conversion rate averaging 7-8%.
Repeat these steps every month Remember - we are working with tenure as a statistical average length of time a club member will actively receive wine from you before quitting, and if you are taking action on these at-risk segments, it is a rolling window in time that will dynamically change every month.
At the end of every year, perform analysis if the tenure for each club tier is increasing If not - it's time to ask why, and take steps to see if you can affect change for the new year.
Our eCellar clients now have an easy-to-use tool set to perform the above steps once (which takes less than 5 minutes across all club segments), and automate them for execution (including personalized outgoing emails) every month. If you'd like to see how they do this, contact us - we'd be happy to show you how you can identify and increase your club membership tenure, ultimately making your winery more profitable.
Let me know what you think by sending me an email: paul@ecellar1.com.