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Many years ago, in his memoir With all its faults, US advertising man Fairfax Cone said two interesting things: “Advertising is what you do when you can’t be there in person” and “There is no such thing as a Mass Mind. The Mass Audience is made up of individuals, and good advertising is written always from one person to another.”
If you could, you would send your best salesperson to see each individual customer – but you can’t afford to. So direct messages are just surrogate salesmanship.
Direct marketing works by putting customers and prospects on a database and treating them, as far as possible, as individuals. Its great strength is that you measure your responses and sales, so you can test one approach against another. Often the results are astounding. I have seen a change in the typeface of a direct mail letter increase response by 60%. The morning I started drafting this piece we were rewording the instructions on a discount voucher for one wine firm. Why? Because the language was not appropriate to the positioning – or character - of the firm in question.
Do such small things matter? Yes indeed. In all marketing, positioning is vital. Redesigning that voucher some months ago had a very significant impact on sales.
But to set up a test in direct mail or the press, get the results and analyse them can take several weeks. The Internet is increasingly important because it accelerates direct marketing. You can think of a test in the morning and have the results by evening. Your potential profits can measurably improve in hours!
Direct marketing principles apply in all markets because people are more united by their similarities than divided by their differences, but I was rather surprised recently to meet a lady who runs a wine club in China.
Why does it work for wine?
Selling wine directly seems at first quite different to what the trade has traditionally done – especially when a new medium like the Internet emerges. People are mesmerized by the new. We tend to think it changes everything. But this is very misleading. Times may change; media may change; selling channels may change. Customers don’t.
Surprisingly, wine has much in common with something entirely different. Finance is by far the biggest direct marketing category, but the similarities are intriguing. Money is a mystery. People don’t understand it. They are daunted by salesmen who use confusing jargon. They fear doing the wrong thing. They prefer to study and take time to make up their minds without pressure.
Wine is also a mystery. How many really understand its jargon? Who has not ended up hurriedly choosing number two on the wine list as the sommelier hovers? Who does not worry about what to serve guests? Also, money and wine are both addictive – perfect for direct marketing, which aims to build continuing relationships with customers: book clubs and catalogues |
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were the first examples.
But money and wine have one difference. People read reams of financial stuff and study tables not because they want to, but because they must to understand its complexity. They read reams about wine and look at pretty labels because they enjoy it. But how does selling wine directly differ from the traditional approach? Less than many people imagine, I suspect.
As I have been pointing out for nearly 30 years, if you strip away the pretentious jargon practitioners use to bamboozle people and liken every situation to real life, marketing is simple, though not easy. You can draw exact parallels between traditional retailing with what is done directly today. Attention to service; weaving stories round the product that charm people into buying; building a relationship with your customer - there is nothing new in this.
Old practices; new media
Imagine you are a guest at a Victorian dinner. When the Port goes round you comment on how good it is, and ask your host his wine merchant’s name. He is flattered and introduces you. This is word of mouth advertising - direct marketers call it friend-get-a-friend, referral or viral marketing. No matter how or what you sell, research shows it is the easiest way to get new customers.
And how does your host’s wine merchant greet you? Why, as a good prospect, to be coddled, perhaps with a special deal. He impresses you with his knowledge and contacts among the shippers – just as direct wine clubs do – in a friendly way that actually reinforces your slight worry that you don’t know as much as you should. Maybe he takes you on a tour of the cellars - which you can do today on the Berry Bros & Rudd website. He ask about your tastes – as Virgin Wines do – making sure you don’t have to expose your ignorance by not asking for names of wines, but what kinds of wine you like Regularly he suggests wines he thinks you might enjoy – just as intelligent direct marketers do by studying your order patterns. He surprises you with wines you’d never find on your own. If you are a good customer he talks to you more often than if you were an occasional one. Every now and then he sends you a thoughtful gift to thank you for being a customer – or perhaps invites you dinner at the cellars.
That analogy applies equally to the structure of the trade. Just as merchants have always sold through retailers, so now they can sell online through affiliates, who are just commissioned salespeople.
I have worked with a number of firms here and abroad, but I thought that rather than look at ‘pure’ direct marketers like Laithwaites or Cellarmasters in Australia, it would be more instructive to look at an older firm I have worked with.
Avery’s of Bristol have not just have tried direct marketing; they have been transformed by it to the point that today 95% of their business is direct. But they have done so |
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without ditching their traditional values - in fact by harnessing them
Harness traditional values
Good direct marketing can often deliver a better service than many retailers, where often one person is trying to take money, with little time to advise – and sometimes too little knowledge. Good direct marketing can replicate that old wine merchant’s service quite well. For instance, Avery’s employ 15 telephone people. They act as ‘personal wine merchants’ for their customers, who trust them implicitly, according to their MD, Dan Snook. “They generate a lot of sales because they are highly trained and offer expertise and a personal service bigger firms find it hard to replicate. The phone is a huge loyalty generator and very effective in recruitment, though it’s hard to find good people.”
In direct marketing, the low-priced promotional offer is everywhere, because it builds the customer base – but you rarely make money on the first sale. One big direct wine firm’s boss tells me they lost millions in their first two years, and had to battle hard to make the investment in customers profitable. “Now,” he said with smile, “We’re making millions.”
I asked Snook about discounting, and he commented: “Customer recruitment certainly relies on it. We have tried to enhance our DM recruitment pack with more brand depth – heritage, history, our chairman, John Avery, individual wines, so that there is more than just price. When selling to our customers, price is important, as are deals, but the real message has to be ‘why should I buy this wine’ – a couple of quid off is not the main reason why customers buy; they need to feel appetite and understanding for the story you are telling them.”
Avery’s, although an old firm, has always had a taste for innovation. They were among the first to introduce and vigorously promote New World wines. I asked Snook how he sees the relationship between direct marketing and bricks & mortar. “Very close,” he replied. “All communications must project the same values – on the phone, the Internet or direct mail. The customer must have a clear idea of who we are and what we do. Our heritage, lovely cellars, real people, old fashioned service reassures. Gone is the old mail order image. Wine merchants can no longer rely on a mix of business (wholesale, private client, retail, direct). Business requirements are too varied.”
Improved creativity
He feels that “Direct clarifies what we do and who our customers are because we must communicate clearly. It has made us more focused on wines, prices, and customers and how we speak to them. It has improved our sales and marketing creativity as we test and analyse to stay close to trends and the market”.
Trying to copy the big boys - direct sellers or the supermarkets - has |
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not worked. He aims to offer “a viable alternative for customers wanting quality - not big brands from supermarkets - who want to be talked to in a knowledgeable, easy-to- understand, unstuffy way”.
Accordingly, they aim to focus on customer service, and wine sourcing. They want the product to be irreproachable and retain old fashioned intimacy with easy access to the directors, dinners and tastings. What’s the difference between online and offline customers? “Nothing operationally”, says Dan. “But you can show more range, say more and be more agile on the web, as it is cheaper. You don’t need to design brochures to promote offers. And you can reach customers more ways. Web customers seem more independent, know what they want, whereas direct mail customers buy what we put in the catalogues”
Each firm’s customers differ. For Avery’s, the traditional wine plan or continuity deals don’t work that well. Their customers like to order what they want, when they want rather than a prescribed case regularly. They have a Bin Club – an account customers pay into monthly, free to spend up to three times their credit balance. They use the traditional direct measurement tools: recency, frequency and order value, and measure return on investment on recruitment to know where best to spend. Dan also sees every complaint and compliment they receive, so “we are listening to what customers are saying”.
Imagination important
They find questionnaires get an excellent response – “Customers want to talk to us”. And imagination matters. “Familiarity kills sales – just doing what worked last year is too safe – customers want innovation, excitement and passion. Wine, copy, design need to stay fresh and new.” Snook says Averys have direct mailed from abroad - France, Australia - and that change of pace on the envelope has worked. They also send a personal Christmas card signed by John Avery to the top 1,000 customers. “Direct response emails work very well. They are less intrusive than a mailing pack – customers are prompted to go and buy what they want from the site, not just what is offered.”
Direct marketing is an extremely detailed business. All sorts of thing can go wrong. I recall many years ago that my client American Express sent a mailing to H.M. Queen, Buckingham Palace (and got a reply!).
I asked Snook what major logistical problems Avery’s have. He instantly replied, “Competing with supermarkets’ timed and weekend delivery as well as competing with those who offer free delivery. Customer expectation has been raised by what the supermarkets do.”
Is the market saturated? Can new people still break in? He said: “No to the first, yes to the second - but size will matter. It is easy to be small and niche, especially with the Internet. However direct selling can be expensive. You need critical mass in turnover before you can resource your operations properly.”
Amazon say they are going to go back into the wine business. Can a firm which carries everything imaginable compete with specialists? Snook has no doubt. “Amazon’s strength is their ability to cater for and talk to every customer individually. It should be really powerful. They can create specialist sections, like they have done with all their other products. Tesco have done it with their wine club, and really added value and credibility with their wines and magazines.”
Cases studies of Cellarmaster by Felicity Carter, Direct Wines by Robert Joseph and WIV by Joel B. Payne are found in the attached pdf file.
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