3 Strategies for Setting Up a Successful Wine Allocation Model
Practical steps for getting started with allocations.
It’s decided: Your winery is diving into the world of allocation offerings and you’ve found an ecommerce platform that enables this unique sales model.
But where do you start? It’s safe to say you’ve got some planning to do.
Your winery has plenty of intricate details to sort out over the course of a calendar year. And they can be more complex than you may think: There’s analyzing and adjusting your customer tiers, coordinating with your production team, and setting quantities based on availability.
Not to mention pivoting whenever Mother Nature decides to throw a curveball and affect your yield.
As with any journey, it helps to have a plan and learn some tips from people who have been there. With a roadmap, you can connect the dots between customers, tier structure, vintages, and production supply, adjusting details as necessary.
So what does allocation look like when put into practice and what should you plan for? Let’s take a look.
Your winery’s first allocated offerings
Sometimes the best way to learn how things work is to see them modeled, or picture yourself in the situation. With allocation offerings, it’s no different.
So before you set out to set up your tier structure and select your vintage, we’ll set the stage. Imagine that in a typical calendar year your winery presents two offerings: one in the spring, and one in the fall.
There are different allocation event models you can choose, such as a first come, first serve (which happens exactly as it sounds), guaranteed (where a guaranteed amount is allocated for customers), or request only (where customers request an amount and the winery decides whether to grant their wish).
For your hypothetical allocation offerings, we’ll say you’ve chosen to employ a guaranteed model. You’ll offer two vintages per session (spring and fall), with three customer tiers and one waiting list.
Tip 1: Analyze and evaluate your established tiers every time
First thing’s first: Set up your tier structure and gather the data after each allocation. While there is no one-size-fits-all approach to tiering your customers, using information derived from your customer relationship management software can help. Take a look at:
• Longevity. How long have they been a loyal customer of your brand?
• Recency. Have they purchased anything in the last couple of months, or has it been radio silence since 2018?
• Consistency. Did they buy your top tier wine every fall offer for the last two years, or has their purchasing been sporadic?
• Total dollars spent. Are they big spenders or do they look like they’re on a budget?
• What wines they purchased. Do they have a penchant for your single vineyard wines or a soft spot for your estate cabernet sauvignon?
Once you establish your tiers and have some customer data under your belt, then you can start to analyze customer behavior and adjust your tiers accordingly. You want to consider rewarding the customers who buy a lot and often.
When it comes time to offer your highly sought-after lineup of wines, those in the higher tiers will need to purchase their max at each opportunity to stay in their tier. If they miss purchasing a release or two, they could be bumped down to a lower tier to allow more consistent buyers to move up. In other words, they should be earning their top spots.
Imagine this scenario: Say you have a wine with very little production and a mailing list 20,000 strong. How many bottles will you allocate for your top tier, middle tier, and bottom tier? Based on the performance of each customer in each group, you have some decisions to make.
Be aware that once you move people from your waiting list to another tier, it may be hard to adjust their expectations. Because they’ve started receiving some bottles, their expectations will be such that they continue to receive the same amount every time.
The trouble is, there may be production issues and you may not always be able to deliver that same expected amount. For example, some of your future vintages may not yield as much production because of drought or fire. But because you need to take care of your established tiers first, those in the lowest tier who were expecting three bottles may only get one or two.
So, can you provide the option to actually purchase wines to your waitlist customers? Or is the only option to open up a “wish only” request? (A wish request allows your customers to “wish request” more wines after you have added all of a particular wine in your allocation, or if you simply want to gauge demand.) The answer depends on your winery’s goals and what that waitlist looks like.
If you’re stuck on figuring out the most effective commerce strategy for your brand, reaching out to an agency like Offset can help. We’ve supported hundreds of releases over the past decade plus, the lion’s share facilitated through our commerce platform.
Tip 2: Confirm available vintages and bottles so you don’t run out
To avoid a supply snafu, connect with the entire team to get on the same page about vintages produced and vintages planned for your offerings. You can clear up any confusion about how many you can sell versus how much was made by talking to your production team, then letting everyone else in on the plan.
For example, let’s say you produce 2,000 cases of a 2018 Cabernet Sauvignon. Maybe you decide to make 1,500 available to your customer base, reserving 500 for your library to release at a later date. Thinking ahead with your vintages will help you make long-term decisions that could benefit future releases.
Then, there’s the issue of vintage yield. Some years aren’t as plentiful as you’d hope.
Say your winery produces four different bottlings of Sauvignon Blanc each year. But thanks to a long dry spell and damaging hail, some vintages didn’t yield the typical production amount. And your inventory is down by 30%.
This difference in production will limit the ability to offer a balanced purchasing option for every tier. And your lowest tier could lose out by not being offered a release in the spring.
Tip 3: Nail how scarcity is perceived in your allocation offerings
Getting on an allocation tier can be an exciting moment for oenophiles. It can mean they finally get a chance at that rare cabernet they’ve been waiting years for. Or sometimes it’s a chance for them to build their collection.
In either case, an allocation model signals exclusive status — getting in on something others can’t. To maintain that level of demand, there must be a strategic balance of supply and scarcity (either real or perceived). Your winery never wants to be in the position of revealing to customers you have more supply than you’ve led them to believe.
For example, instead of waiting until the end of the offering, you might automatically grant all wish requests. If you were to grant all of your existing customers their full wish requests, what does that say about scarcity? In this scenario, you’ve potentially set the expectation that a rare bottling isn’t so rare after all.
Even if you have the supply, it doesn’t mean you have to sell it out. Be judicious when choosing your quantities and maintain a level of mystique for your customers.
Allocation models can be a distinctive addition to your wine brand, increasing interest and demand. But it’s not without complexity and nuance.
You may have to negotiate a few twists and turns along the way. But involving an experienced partner like Offset will make your product rollout smoother, more profitable, and most importantly, a better customer experience for those who love your wine.