The Anatomy of Allocations: How to Ensure a Successful Offering for Your Wine Brand

The same could be said of an allocation offering: The ping of an email signals the thrill of a purchasing opportunity for your customers. For winemakers, it signals the amazing amount of strategizing and preparation it took to pull it all off.

There is more to any allocation than meets the eye. And each has a common thread of strategy, risk, and a balance of perceived scarcity and exclusivity that you don’t appreciate until you’re living it on the other side.

Before your winery can weave its allocation model strategy there are nuances to untangle. These include your tier structure, the timing of each allocation, and the different types of allocations — and all the factors therein. Understand these factors and you can confidently maneuver the levers that will make each allocated offering more in-demand than the last.

First thing’s first: You need to specify the tiers of your customer base. You can set up your tier structure however you like, though it’s common to have a VIP or top tier, then 2nd, 3rd, and so on. You want to structure your tiers strategically, with the top tier consisting of customers you’re sure are going to enthusiastically participate. The better you know your customers, the better predictions you can make about their buying behavior, and structure each tier accordingly.

While there is no one-size-fits-all approach to tiering your customers, here are a few important factors to consider:

• Longevity. How long have they been a loyal customer of your brand? Have they been buyers since the beginning or did they just recently sign up?

• Recency. Have they purchased anything in the last couple of months or has it been radio silence for the last two or three vintages?

• Consistency. Do they purchase their allocation every time an offering goes live or has their spending seemed sporadic?

• Total dollars spent. Are they big spenders or do they look like they’re on a budget?

• What wine they purchased. Do they equally support your entire lineup of wines offered, or only cherry-pick the gems?

Sometimes it’s obvious who belongs in your top tier. These are your loyal, high spenders who are your ideal brand ambassadors. When there is high demand for your allocated wine and production is limited, it makes the most sense to reward your most loyal customers by putting them in the top tier.

For new brands prepping for your first allocation, setting up tiers based on those who signed up first is important to give them a reward and start building that relationship. You may need a tier for VIPs who are friends of the brand to receive the most quantity and first access, then a second tier for lower quantities. Finally, you may consider a waiting list tier of people who mathematically don’t have a shot at buying wines unless others who signed up before pass on making a purchase.

From there you have some decisions to make. Do you graduate your recent big spenders from Tier 2 to Tier 1, hoping they’ll purchase a larger amount associated with that elevated tier? Conversely, do you relegate a loyal customer whom you haven’t seen buying in high volume to a lower tier? There’s no right or wrong answer for any brand because you never know how your customers will respond. It’s up to what you’re willing to risk.

As your allocation offerings continue, you’ll better learn who to move up or down in your tier structure, based on their participation. The trick is knowing your customers as best you can and placing them based on your predictions. Nothing is ever set in stone, so you can always be iterating.

In the hustle and hype of an allocation, your brand’s hospitality still matters. Thus, the timing of your launch is critical. How much quality customer service will your brand reasonably be able to provide at each launch?

So, consider: Is your team big enough to provide effective and timely customer service if you send out the offering to your entire customer base all at 9 a.m.? Because if a flood of calls come in at 9:05 a.m. asking questions, you better hope your customer service team can deliver or you risk upsetting loyal customers with rightfully high expectations.

Certainly, your ecommerce platform should do the heavy lifting. But sending an offering to thousands of customers may be best spread out over a couple of days to ease the load on your customer service team.

For your most loyal customers, there is nothing wrong with giving them the first crack at the newest vintage on a Tuesday, so that your staff can provide them with the best feedback promptly. Then you can open it to your second-tiered groups on Wednesday, then the waitlist the following week. None of your customers know the difference between who gets what when, so you don’t have to worry about offending anyone.

In the end, you want to make sure each customer has the best experience possible.

Once you have your parameters in place, you have three allocation options from which to choose. Will you go first come, first served, guaranteed, or request only? It depends on your comfort level with risk, and your winery’s allocation experience.

Though there are nuances to each event, here’s a high-level overview:

1. First Come, First Served. The frenzy and excitement of a first-come, first-served (FCFS) model is one of the best parts about it. Your customers vie for highly sought-after wines in a matter of hours, and your winery enjoys the attention and cash flow. But it’s perhaps the riskiest move because you have to have a smart prediction about your tier structure to make sure you have enough inventory to cover your orders. If something goes wrong that upsets your customers, like a site crash or not enough staff to handle customer orders, you could see your customers leave the queue.

2. Guaranteed. Similar to the FCFS model, you allocate a guaranteed amount of wine for customers. The difference is it’s only for a specific amount of time, so there is a lack of frenzy. Your customers have more time to consider what they want to purchase. And though it’s generally less risky, it does require more upfront work to set up for each tiered group, or individual. This is a model that wine brands advance as they learn their businesses better over time.

3. Request Only. This may be the safest model out there, but perhaps the least employed because of the amount of work it takes after the fact. There is no actual order that takes place. Instead, a request for products comes in and your winery later decides how many requests to grant based on whatever rules you decide. This model doesn’t require you to make any estimations upfront on how to allocate wines and allows the most flexibility.

Though not a separate allocation, a wish request is similar to the other three models in that you can allow your customers to “wish request” more wines after they have added all of a particular wine to their allocation cart, or if you simply want to gauge demand. With wish requests, your winery can come back to grant those wishes (again based on your winery’s rules and available inventory). Those grants are then added to the original order.

A wish request helps you fulfill demand and complete orders when your prediction for your allocation model is off (which it often can be). Another benefit to wish requests is that they allow you to collect the data on potential demand. This helps you better understand the buying power of your customer base, and teaches you how to adapt your production models going forward.

Part of what makes allocation offerings exciting is the hype they build, no matter which model you employ. Your customers have the opportunity to be let in on an exclusive wine purchasing opportunity, and your winery has the excitement of demand. But you have to play your cards right.

In all these cases, there is either real or perceived scarcity at play. Your brand could face high demand and not enough product. Or, you could have a sufficient amount of product, but intelligently dish it out to customers, only allowing them to buy a certain amount.

Most allocation offerings are merely perceived scarcity, creating the illusion of exclusivity and desire. Whatever you do, tread carefully. When “perceived” turns into something your customers actually recognize, it can be damaging to your brand.

If your brand lacks true scarcity at any time, you’re still at an advantage because you have tighter control over your inventory, allowing you to allude to the notion of scarcity to build intrigue.

But even if you do have enough product, you might want to strategically hold some back. For instance, you could rerelease it down the road with an increased level of perceived exclusivity, thus making it worth more. At that point, you could create more frenzied demand for it. It’s all about striking a balance.

It’s helpful to realize with every allocation, you will get better at measuring the effectiveness of these models. You’ll see opportunities for incremental improvements along the way.

When you’re ready to create your next allocated offering, knowing some of the ins and outs can help you avoid making the riskiest moves without much chance of reward. Plus, you’ll cement that positive Pavlovian response your customers have come to expect when they see a new allocated offering in their inbox for many vintages to come.