How to Keep Customers Coming Back: Why Hospitality is Job #1

Do you ever wonder why we spend so much money on getting new customers when retaining customers provides more value to our business? Think about the investment your winery is making in customer acquisition (advertising, PR, social media, email, and direct mail campaigns) vs. customer retention (providing an outstanding customer experience for guests in your tasting room, wine club members, and customers ordering wine online). Which direction are your scales tipping?

Here are three truths:

  1. Keeping customers is less expensive than finding new ones.
  2. Increasing retention of customers increases profits.
  3. Developing relationships with your customers is the #1 way to increase their loyalty.

Here are some illustrative statistics that were put together by Invesp Consulting:

  • Acquiring a new customer is five times as expensive as retaining an existing customer.
  • 44% of companies admit they have a greater focus on acquisition, while 18% focus on retention (the rest claim to have an equal focus).
  • 89% of businesses see customer experience as a key factor in driving customer loyalty and retention.
  • 76% of companies see Customer Lifetime Value as an important concept for their organization.
  • The success rate of selling to a customer you already have is 60–70%, while the success rate of selling to a new customer is 5–20%.
  • Increasing customer retention rates by 5% increases profits by 25–95%.

Another customer experience agency, the Temkin Group, found loyal customers are five times as likely to repurchase, five times as likely to forgive, four times as likely to refer, and seven times as likely to try a new product.

What are the effects of poor service?

  • American Express determined 33% of customers will consider switching companies after just one instance of poor customer service.
  • US companies lose $136.8 billion per year due to avoidable consumer switching.

Are all customers created equal? Heck, no!

You’ve heard of the 80/20 rule, also known as the Pareto Principle, which is attributed to the early 20th-century Italian economist Vilfredo Pareto. Applying it to the business world, the 80/20 rule suggests 80% of your company sales come from 20% of your customers. So what are you doing to exceed their expectations and keep them happy?

Take a look at your data and figure out who your top 20% customers are. Are they all in your wine club? If not, get them signed up. With Oregon wine club membership averages at 29 months, you’re immediately increasing their lifetime value to your winery.

Finally, here are two strategies to make the most of your top customers:

  1. Once you’ve made the investment and earned their business, focus on developing a strong relationship by consistently providing great service! (Take a look at this Capiche blog post on hiring “nice” and teaching wine for some reminders on what that entails.)
  2. Create a new “Ultra-Premium” club for your top 20%, whether wine club members or not. Provide an even greater level of service for these folks. (See ideas below.)

Ultra-Premium Club Benefits

  • Greater discounts on case sales and flat rate or free shipping
  • VIP tours when they bring friends to the tasting room
  • Invitations to exclusive group tours/vacation trips to other wine regions with you and/or your team
  • Special cellar and barrel tastings at key times of year (e.g., bud break, veraison, pre-Thanksgiving)
  • Discounts on special food offerings and winemaker dinners
  • Concierge services for out-of-town guests
  • Extra wine discounts where legal
  • Exclusive seating areas
  • Special attention from your staff
  • Event ticket discounts and reserved seats
  • Special limited release wines with parties
  • Happy hours where legal
  • Gifts of lapel pins, T-shirts, and other branded attire
  • Contests to create new blends with the winemaker

For other ideas, check out our blog post on what makes the best wine clubs. And please share your ideas here. We’re always on the lookout for best practices and innovative ideas!

Remember that relationships sell wine and create long-lasting loyalty. If you’re in the wine business, chances are you love to share the good life with people. When you share the good life with your customers, you create loyal customers (and wine club members)—and these wine club members will bring you more loyal customers and wine club members!

Let the Capiche team help you strategize how to grow your Ultra-Premium Club. Call the Capiche team at 541.601.0114, email chris@capiche.wine, or fill out our Contact form. Cheers!

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Comments

  1. Thank you for the article. This is a wonderful reminder to all of us small business folks out there. Always go the extra mile for existing customers so they remain existing customers. Thanks Chris!

    • Constance – You and David are the consummate service-minded people! That’s why we (and many others) love you and your shop! Thank you for your comment and I’ll see you soon!

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