WineryProfitability.com

The first step in enhancing your tasting room sales is to identify the areas that you can improve.  Winery tasting rooms are different than traditional retail stores in the respect that the customer gets to sample the product before purchasing.  Not only does this step add complexity to the transaction, but it also gives additional insight into the customer’s buying behavior.  In this post, I’ll review the data that your retail staff should be collecting on a daily basis, how to interpret that data, and give some tips on how to diagnose possible problems.

What kind of data is crucial to managing retail wine sales?

The first step to assessing any retail business is to answer two questions:  (1) How many customers came in the door; (2) How much did they buy?  Everything else is fine tuning.  For a winery retail tasting room, these questions would be only slightly different:

(1)   What was my number of tasting room visitors?

(2)   What was the number of purchases my visitors made?

(3)   What was my visitors’ average transaction amount?

(1)   The number of tasting room visitors

Ideally, it would be nice to count every warm body that enters your winery.  Realistically, you need to at least keep track of the number of tastings served.  This number is very important—if you can’t get customers in the door, you can’t sell them any wine.  Some causes of low customer counts could be the following:

Your advertising   Are you part of a wine trail or on a tour map?  Have you targeted the customers who are most likely to visit your winery?

 Your location   Having an entrance on a major road is an advantage 

 Your signage   Road frontage is one thing, getting people to stop is another.

 Your building and grounds   Does your building look like a winery?  Are your grounds well kept?

Your parking area   Is your parking area congested?  Is it hard to see from the road?  What condition is it in?  Do you need sturdy footwear to navigate it?

Your winery’s reputation   Maybe you’ve aimed your product offering at a small niche, so you only draw a small percentage of area customers.  A bad reputation is also possible, but this usually shows up as a steady decline over a longer period of time.    

(2)   The number of purchases your visitors made

How many people decided to buy your wine?  This number is measured by the number of transactions (or sales) that were made.  You should be able to pull this number from your point of sale (POS) software system.  Even if you don’t have a POS system, most cash registers number every transaction (simply subtract the beginning-of-the-day number from the end-of-the-day number). 

With this data in hand, you can also determine what I call your ‘conversion rate.’  Conversion rate is the number of purchases divided by the number of visitors.  Since not every customer will end up becoming a buyer, your conversion rate will never equal 100%.  Likewise, visitors may come in groups and buy in groups, further reducing your conversion rate percentage.   However, even with these data distortions in mind, your conversion rate will be somewhat predictable within a certain range.      

Both the number of transactions and the conversion rate are useful to track to see how your winery is performing over time.  Changes in these numbers can point to possible tasting room problems such as under-staffing, running your facilities at over-capacity, and marketing (product mix and price).  

(3)   Your visitors’ average transaction amount

Your visitors’ average transaction amount is the same thing as your average sale—total sales dollars divided by the number of sales.  By looking at this number, you can tell how much people are typically buying.  For wineries, this number is fairly dependant on the number of bottles purchased and the price per bottle.  Other items, such as gifts and food can add to the total transaction amount, if managed correctly.  Don’t forget tasting fees, as these dollars add up as well.    

There are many ways to tweak average transaction size upward through adjustments in your marketing and product mix.  But don’t forget that total sales is the ultimate goal here–maximizing average transaction size works best when you also maximize the number of visitors and the number of transactions.

Using this data to enhance tasting room sales

If you aren’t collecting the above retail sales data, then you should plan to start as soon as possible.  This data can be easily collected and is extremely valuable.  The next step in the process would be to compare your retail performance with other wineries.  This is one of the benefits of being a member of the Winery Benchmark.  This month’s Winery Benchmark Participants article describes the ideal conversion rate/transaction size combination as well as gives tips on how to increase your performance in both of these areas.  If you aren’t already a member, check out the details on the Winery Benchmark page. 

If you want some additional tips on how to collect the above data, or if you have other tips to add, please provide your feedback in the Comments section above or email me at info@wineryprofitability.com.