Wine Club & Subscription Overload: Why Focusing On Recurring Revenue Can Be Counterproductive
When we ask winery owners about their top business objectives, almost all of them say, "Grow our wine club." In theory, it makes sense to secure as much recurring revenue as possible. However, we are finding wineries have become obsessed with this goal to the point that it becomes counterproductive.
Consumer behavior is always evolving, and we believe society has hit peak subscription. Let's face it, everything is a subscription these days from wine to dog food to beauty products to television. The wine club may have been the original subscription model before this boom, but unfortunately, all these other industries have ruined it for the rest of us.
We review countless winery websites and see the main call to action on the homepage is to "Join The Club." Likewise, we see random ads on Facebook for wineries we have never heard of, and the ads are trying to get us to commit to the wine club. While wine clubs and subscriptions are a great way for wineries to generate recurring revenue, this should not be your main call to action nor be part of your top-of-the-funnel marketing.
Recent data from WinePulse, a favorite wine DTC analytics company, shows that club sign-ups and the number of active members are declining. According to founder Remy Sabiani, "Club sign-ups are down 17% compared to the same year-to-date time period in 2022. The number of active members is down 2.7% since the beginning of the year comparatively as well." These figures are a warning sign that wineries need to rethink their approach to their marketing and business model.
The Wall Street Journal recently published an article titled "People Are Sick and Tired of All Their Subscriptions." The article highlights how consumers are overwhelmed by the number of subscriptions they have, and many are canceling them. This trend is not limited to the wine industry. It is a broader consumer trend that wineries need to wake up to. We worry that if ignored much longer, it will be too late.
Focusing too much on advertising the wine club in the top-of-the-funnel marketing is a waste of time and money. It is equivalent to asking someone to marry you on the first date. You need to go on multiple dates with a customer before trying to get them to join the wine club. The key is to focus on building a relationship with the customer and creating repeat purchasers.
According to wine ecommerce platform Commerce7, it takes an average of 4.22 orders before someone joins a wine club. This statistic highlights the importance of focusing on growing e-commerce and repeat purchases. If wineries can create loyal repeat purchasers, it will be easy to get them to join the club. However, if wineries try to get customers to join the club right away, they risk pressuring them into it, causing them to quit the club shortly thereafter. Losing a customer for life is not worth the risk of trying to get them to join the club too soon. Patience is a virtue.
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To grow revenue, wineries need to rethink how a traditional club fits into the customer journey and pay attention to overall consumer trends and the death of the subscription model. Many wineries do not allow their wine clubs to be flexible enough to meet the customer's needs. We have seen too many brands hide the "skip shipment" button on their website and make it as hard as possible to cancel. Even worse, Commerce7 notes that 25% of clubs running on their platform still do not allow customers to customize their shipments. Wineries need to be more flexible and offer a better customer experience to retain members.
To avoid wine club and subscription overload, wineries need to focus on creating a brand and not just a product. The wine industry is highly competitive, and customers have many choices. To stand out, wineries need to differentiate themselves from their competitors. They need to create a brand that customers can identify with and be loyal to. Instead too many focus on discounts and free in-person tastings as the major club benefits.
Wineries should focus on building a brand that resonates with customers, rather than simply pushing wine club and subscription sales. By prioritizing e-commerce and repeat customers, wineries can create a more sustainable and profitable business model while fostering loyalty and trust among their customer base. So, take a step back and think about how you can improve your marketing approach to cultivate a loyal customer base and increase sales in the long term.
Not sure how to improve your winery’s marketing approach yourself? Talk to our team at Highway 29 Creative. We provide a full service marketing solution for your DTC channel.
Simon Solis-Cohen is the founder of Highway 29 Creative, a leading digital and creative agency serving the wine industry. He challenges clients to think about the future and constantly innovate. The agency chases data, not fads, and provides one-stop shopping for wineries looking to enter or jolt their direct to consumer sales. Their approach starts by designing and building a website focused on conversion (wine sales, club sign ups & tasting room reservations) and then dives into each digital channel with consistent and effective content and messaging.