This piece is co-authored by Howard R. Moskowitz.
Across industries from banking to beer, sales and marketing departments are grappling with the Millennial generation—how to reach them and sell to them. As for wine, Millennials now outnumber Boomers, drink nearly as much as Boomers, and are expected to surpass Boomer consumption in a few years. Millennials will shape the market for years to come. Online sales is an important avenue to reach this new generation of wine consumers. Our research, sponsored by Nomacorc, specifically aimed to tackle the critical business issue of helping wineries build their online wine sales among Millennials.
Executives from over two dozen wineries pointed out how critical the need is for nearly every winery to build up the online sales portion of their revenue mix. Distribution challenges make it hard for wineries to sell at retail or in restaurants, and community opposition to wine tourism threatens the direct-to-consumer tasting room, club, and event sales many wineries depend upon. They look to the emerging online sales channel to help them deal with these pressing business realities, increase their sales, and hold on to more profit margin in order to bolster their near-term financial condition and assure their long-term viability.
This post outlines our research goals, key findings, and strategy suggestions for wineries that seek to increase their online wine sales today. More finely detailed results, discussion, and strategies will be available in a soon-to-be released book that Nomacorc will make available later this summer.
Our research set out to accomplish three things that will help wineries create marketing strategies for their online wine sales:
- People differ in their approach to buying wine online. Our first task identified the various mindsets people hold towards buying wine online from wineries.
- People respond to marketing messages differently. One person can be turned on by an idea, another appalled. The second task set out to discover the marketing messages that have the highest “pulling power” within each mindset—the ones that most strongly interest a person in buying.
- Buying any product has an emotional component. Our third task was to identify the emotional satisfaction online wine buyers seek from a purchase.
Achieving these goals enabled us to uncover the “why” underlying online wine buying, not simply the “what” that so many studies report. Armed with the knowledge of the marketing messages that work and for whom, wineries are now in a position to select and communicate those messages that are most likely to contribute to sales.
Five Key Findings
Our research identified five high-level findings:
1. A market exists today for online wine sales by wineries. About 50 percent of Millennials in our study would make a purchase within the next six months. There was no difference in intent between Younger Millennials (21-26) and Older Millennials (27-34).
2. There is no single type of Millennial online wine buyer. Millennials fall into one of three unique mindset segments towards buying wine online from a winery. Each requires its own messaging strategy directed by the research. For each segment, we give it a brief description and recommend a messaging strategy based on the marketing messages that substantially raise interest in buying wine online, along with an expectation for each segment’s profitability.
- Segment 1: Discerning, buys into the winery and wine (20 percent of sample). People in this segment are pursuing wine.
Messaging strategy: Appeal to their interest in distinctive, artisanal, handcrafted wines. Lower their purchase risk by giving them confidence in the wine they are buying—provide detailed descriptions and tasting notes, and highlight those bottles that have garnered high community ratings. It’s not the wine alone; wineries should emphasize their compelling back-stories and show how they conduct operations with uncompromising integrity. Downplay rewards and discounts as these do not drive Segment 1 people’s interest in buying wine online. This group will pay the most for a bottle.
Profitability Expectation: Highest among the three groups because this segment will spend the most for wine that interests them, and they are less deal-oriented. We consider this a “luxury” strategy.
- Segment 2: Quality wine at a great price (20 percent of sample). This group is most interested in a fantastic deal on a great wine.
Messaging strategy: In contrast to Segment 1, tout discounted or free shipping, quantity discount availability, and specials and promotions. Like Segment 1, they want quality wine from right-minded wineries. But these are table stakes for them—they wouldn’t consider buying if the wine did not seriously interest them. For Segment 2, the deal matters most. This group will pay less than Segment 1 for a bottle.
Profitability Expectation: This group will pay less than Segment 1 for bottles that interest them. Wineries marketing to this group will likely have to give up some margin in order to satisfy this group’s need for lower prices. We consider this a “value” strategy.
- Segment 3: On the cusp (60 percent of sample). This, the largest group, is uncertain about buying wine online from a winery.
Messaging Strategy: None of the ideas crossed our threshold for high “pulling power.” Several ideas bubbled below the threshold that may be worthwhile to employ as background assurances. These concerned pricing, reducing purchase risk, and enjoying their wine with friends and family. This group will pay the least for a bottle.
Profitability Expectation: This group will pay the least for a bottle. Individuals in this group are not yet as interested in buying wine online from wineries as the first two segments. For most wineries, Segment 3 would be a secondary consideration today. We expect people in this group to offer less action while being the most costly to acquire in the near term, but they represent potential over time. We consider this an ‘investment” strategy with returns mostly in the future.
3. Each segment reflects a different potential for sales and needs its own person-centered strategy for effective online wine marketing.
Marketing effectively to each segment means that wineries should have a way of identifying visitors and assigning each one of them to a segment, and then tailoring visitors’ onsite experience with the marketing messages that work best for their segment. We developed an app that assigns people to a segment—it takes under a minute, so that wineries can know very quickly which visitors belong to each segment. The app can be incorporated into a web or mobile page, email form, etc., so that it is easily and seamlessly accessible to visitors. You can try the app out here.
Segment 1 and Segment 2 represent near-term opportunity—they account for 40 percent of Millennials, and should be the most productive for wineries selling wine online. Segment 3, although larger, appears to offer less potential today and would most likely be considered a secondary target for most wineries selling online.
Wineries marketing online to Millennials should create unique strategies for each mindset segment that are developed in line with their winery’s business goals, business model, values, practices, offerings, services, and experiences.
4. Millennials seek specific emotional satisfactions from online wine buying. These are the same no matter which mindset segment a Millennial belongs to.
For many people, online wine buying is a risky business. That risk can be a turnoff if not addressed, leading to abandoned shopping carts and lost sales. Combined with the mindset messaging strategies that wineries create, including ways to satisfy the emotions that come into play can help visitors overcome resistance to buying while helping them feel great about their purchases.
Going in, we had expected that different mindset segments would express different emotional needs. Instead we found that the emotional satisfactions sought were universal: they applied to every segment. We uncovered three emotional drivers:
- Online wine buyers do not want to feel insecure—they want to feel that they are buying the right wine and feel a sense of accomplishment about purchasing it.
- They do not want to feel disempowered—they want to feel that that they are getting what they want.
- Nor do they want to feel disengaged—they want to look forward to drinking what they’re buying and to feel that they will enjoy it with others.
5. Millennials are not unique. The mindset segments apply to all generations.
We also studied Boomers and Xers so that we could compare and contrast them to Millennials. We found that the older generations fall into the mindset segments in nearly the same percentages as Millennials. Emotional satisfactions showed the same patterns. The upshot is that marketing strategies based on the segments and emotions can be consistent across generations—helpful to creating a total market strategy that is crucial for brand growth—but specifics like imagery, sounds, and language should be tailored to each generation to ensure relevance.
Some of what we’ve written might be familiar to you. In talking with various wineries about our results, we learned that many wineries have some of the ideas about segments and use some of the marketing messages. What our research gave them, they said, was a sensible, easy-to-apply framework that sharpened the winery’s understanding of its customers’ thoughts and emotions, equipping them to increase sales by offering a more compelling site and online buying experience for each visitor.
As mentioned, Nomacorc will be distributing a book and e-book with more detail. We are happy to speak with you about the findings and recommendations and how they can apply to you and be implemented by you.
Dr. Howard R. Moskowitz
Dr. Howard R. Moskowitz created the science of mind genomics, a way to understand the different mindsets people have towards any product, service, or experience, and to use that understanding for segmenting consumer interest, discovering the features that people most desire, and for identifying the messages that work to create sales. Prego’s chunky tomato sauce, the Goodyear AquaTread tire, the first Braun electric toothbrush, Vlasic’s Zesty Pickles, Cherry Vanilla Dr Pepper, are just a few of the breakthrough brands created with the mind genomics method that have created billions of dollars in sales. Howard, the author of more than 20 books and 400 peer-reviewed articles, was awarded his Ph.D. from Harvard University.