Getting the Most From Subscription Tools

[Zach] My name is Zach Kamphuis. I'm the sales manager at Commerce7. I'm joined today by Kyle Bingham, from Bingham Family Vineyards. And today we're going to be talking about subscription clubs, something that is new to Commerce, and Kyle and the team have been working on for a couple of months here. Kyle really appreciate you taking the time to talk to me.

[Kyle] Absolutely. Yeah. Awesome.

[Zach] Just to start, why don't you go ahead and introduce yourself? My understanding is you're the manager at Bingham Family Vineyards.

[Kyle] Yes. Sure, So I am kind of a CFO-type position, almost COO. I do all sorts of different things on the back end. A lot of what I do is build systems, equip people and make sure different locations are running. My goal is to essentially work myself out of a job, but there's always something going wrong. That's one of the fun things working with Commerce7 is we do have the ability to bring in some custom scripts here and there to help with really specific applications.

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[Kyle] For us we are a multi-location, Texas winery, so when it comes to software, it's somewhat difficult for us to find the right application. We've got 200 acres of vineyard up close to Lubbock, Texas. So we're a high-altitude desert region where most of your vineyards in Texas grow. That's where we specialize in a lot of Spanish and Italian wines.

[00:01:31]

[Kyle] We do Carignan, Petit Verdot and we do a lot of the cab sauv and cab francs as well. And then on the whites, we do some Albariño, Vermentino, and Trebbiano. We're always really pushing on the wine production side of it to figure out what is going to excel well, here in Texas and what's going to work well here. Then from there we take our wine. So our closest town is 15 minutes away, is 400 people, Meadow, Texas. So all of our retail is now going to be six hours away in DFW or Fredericksburg. Which are going to be major tourist areas.

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[Kyle] And so that creates some unique challenges for compliance because we're treated as separate bonds, both federal and then on the state level, we have to track all that. But yeah, in the short that's kind of what we're up to right now.

[Zach] That's awesome. And so, you know, you guys definitely have a direct consumer presence. Do you guys sell through any other channels? Three-tier wholesale?

[Kyle] We have some minimal wholesale. The majority of what we sell is going to be fresh fruit, fresh juice, direct to other consumers, then we've got our next market and bulk wine that we're selling out to other products. And then we've got our DTC brand as well, which probably consumes about 12, 15% of our vineyard.

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[Zach] Gotcha.

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[Kyle] Awesome. Well, yeah, today, you know, super excited to talk about subscription clubs, for people that are listening in and might not know what that is. You know, it's kind of a new feature on Commerce7. It's basically a user choice club that takes the member’s experience a little further in allowing them to do a little more customization around the frequency of the shipments, processing dates, the selection they get - Things like that. [00:03:25]

[Zach] So how long have you guys been using the subscription clubs with Commerce7?

[Kyle] We started trialing it about a year ago. At first, we had a few concerns about how this is going to look, what is it? What's the customer going to think?

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[Kyle] It's kind of a little different, the problem is some of the traditional approaches. But yeah, we've been running it. We trialed it for about three months and that's when we suddenly realized a lot of the strengths. And so we ended all of our monthly clubs, we've phased those out. We're starting to phase out some of our traditional clubs.

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[Kyle]I could see us dropping it down to. At one point, we were up to about 38 clubs and I could potentially see us dropping down to the subscription club plus two or three other clubs. And really, because the subscription club gives so much control, the customers are given what they want, and from the backend side, it's a whole lot easier to manage.So that's the exciting thing for us.

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[Zach] That's awesome. So it sounds like you're able to kind of consolidate a lot of your clubs you had, now into this subscription club. Is that just because before you had a lot of clubs with different options and now you're just letting the consumer kind of pick, you know, pick their own options with the subscription?

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[Kyle] Exactly. So with the subscription club we have, we run it similar to our monthly clubs. So we're going to give the customer a specific model every month. Unlike our monthly club, that customer, because they can go in and pick whatever they want. It's your kind of get the best of both worlds for that customer that wants us to curate that list for them, they get that.

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[Kyle] Then for that customer who wants to pick through. They love that they get to pick through, they get to find what they want. What we love to see also is when that customer jumps in to drop that bottle they don't like, then they have to pick between three or four other bottles to replace it with and they end up picking two or three. So it becomes a very quick sell online without a server actually.

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[Kyle]It's a very simple touchpoint with the customer. They can jump on, switch bottles out, club runs two weeks later and we have it. That's another issue. By having three locations. We need to make sure our inventory is at every location.

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[Kyle]So once that club's run, we can run those reports and make sure that we've got that inventory and every location ready for that customer.

[Zach] Gotcha. Okay. Makes sense. So it sounds like, it sounds like though, when people are removing bottles, they're adding more back, right when they're swapping out. So you're kind of seeing the average order value go up with this club?

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[Kyle] Yes.

[Zach] That's awesome. That's great to hear. And it sounds like you guys are using the option where each member gets a unique default package that's based off their purchase history. Is that correct?

[Kyle] So right now we still assign their package.

[Zach] So you said that you said the default upfront?

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[Kyle] Yes, okay. So they're going to get it's it looks a little bit more like our monthly clubs, so they're going to get whatever that wine of the month is. But from an inventory standpoint, we've got a number of people that are not going to. They can switch stuff out really quickly. Yeah. So we don't actually have to fulfill that much.

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[Kyle] It's no longer a monthly delivery, sometimes we may run a package for six weeks and then realize we've signed new club members. We're only going to run that package for five weeks. And so we're actually, we'll rotate some of the new stuff in and out a little bit faster. There's a two week lag time on it.

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[Kyle] Uh, but we still curate. Yeah, but they get to go in and switch out

[Zach] They get to go to make changes to what you guys have presented to them.

[Kyle] Yes. And that too, for people who are familiar, they don't get to pick anything on the menu. They have a selection that we present.

[Zach] Yeah. You, you preset the alternative options for them.

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[Kyle] Yes.

[Zach] Gotcha. Okay, and so. Sounds like you guys, you're consolidating a lot of the older clubs into this club. So I'm guessing that with the subscription, you didn't start from scratch. You kind of transitioned some of the previous clubs over into this model. What was that transition like?

[Kyle] So we, we, we ended up starting from scratch.

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[Kyle] So we went from 32 clubs to 33 clubs and we were like, let's just run this and see what happens. It takes off, we’ll let it. And as soon as it took off all of our monthly clubs, every time they complained about, I don't like my wine, we were like, Hey, we will let you refund your bottle. we'll put you in a subscription club and you can pick your model.

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[Kyle]And so very quickly, we just started converting that monthly club into the subscription. And then about six months into that, we realized we were going to drop the monthly clubs. So we just started emailing everyone. “Hey, we are going to end your monthly club, you still get your perks, but shipments will stop in six months.”

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[Kyle]So we had a six month phase out period. We weren't, we didn't necessarily drop the customer. And then we had a pretty intensive phone campaign. About three months into that, then we’d start calling people who didn't make the transition. And a lot of these people when we called them and talked about the audit productions, but it's an easy sale.

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[Kyle] So it was a bit of work on the transition, but we just set a six month goal, the few people that didn't transition, they're still club members. They still get perks, but they don't get shipments. And so it's kind of a dead club and we still take care of that customer, but we don't have to plan for it anymore.

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[Zach] Gotcha. That's pretty interesting though. Starting out, anytime somebody had kind of a, an issue or inquiry with the traditional club, you kind of use it as an opportunity to push them into the new subscription.

[Kyle] Yeah. And that was the most effective tool because the customer comes in with the complaint, they left with more options and as a happier customer.

[Zach] Makes sense. What's it like, managing the fulfillment for the subscription? Is it, do you guys find that it's easier than what you were doing before with the traditional?

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[Kyle] Yes. It was a little bit of a change of how we manage it because of that rolling two-week window.

[Kyle] We have a much more fluid inventory, and we do have to check in weekly. As we start seeing stuff sell out. Once we get close to that sell out date, we make sure we get that bottle out of the selection so that we still have it in stock for two weeks, but it's much easier than a set, you know, wine of the month.

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[Kyle]I need X number of bottles for each club every month. So we found once we got used to it, we found it to be much easier.

[Zach]Gotcha. That makes sense. How about with customer inquiries? I know, you know, wineries out there when they run their clubs, they have a lot of people reaching out, wanting to make changes or change the card on file or the ship to address. Do you guys find it's about the same with the subscription versus the traditional is a bit easier or a bit harder?

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[Kyle] With the older generation, I think it's about the same. They're still going to call in and we're going to jump in the back end. We're going to make those corrections for them. For the younger generation, they're jumping online and getting that done. I think a lot of them are doing that with or without our help, just like they could jump onto Amazon or something like that.

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[Kyle]And so I think with people who understand how subscriptions work and how to get online and do that, it takes a lot of that customer service load off of. Zach: Gotcha. So it makes it a bit easier for you guys there. Awesome, and so you guys still though, you have the subscription club, you're consolidating a lot of the clubs into it. But, you still have the traditional clubs though, correct? You still have some traditional options.

[Kyle] Yes. We're still running the traditional options. There is thought of phasing, most of those out. So we do twice a year. We don't do big pickup parties. And so for a winery that does the big pickup party. They may be happy to run both that 2, 3, 4 times a year pick up, and then also the subscription club. We find a subscription club is easier to sell, because if I sell someone 12 bottles, with a 10% discount twice a year, there's a bit of sticker shock when they see a six bottle pack. But if I sell them a bottle a month with a 10% discount, they don't have that sticker shock.

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[Kyle]And we see that as huge they'll look at both clubs and they'll pick the subscription club because it's cheaper than they have a little more element of control, and it just makes them more comfortable for their budget. They know that they can switch the subscription. We allow them to go up to one to two bottles a month.

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[Kyle]They can flex how much they get, and they're not worried about buying too much wine.

[Zach] Gotcha. That makes sense. So is it, is it kind of like a similar lifetime value, except that it's, from the customer's perspective, the pricing is more broken up across the year?

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[Kyle] Yes, very similar. The discount's not as deep because if you're buying three cases twice a year and you come in and pick it up, that's still the easiest customer to take care of, those customers still get the best discount, but the subscription clubs close behind is not too difficult.

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[Zach] Gotcha. Have you guys run into any issues with the subscriptions?

[Kyle] I mean at this point, I would, there's really no major issues. It really comes down to what our goals are at the winery and how we want to push different products.

[Zach] Yeah. Gotcha. That makes sense. Yeah. I think last time we talked, you mentioned that, um, subscription clubs might not be for every winery based off the goals. Is that still the case?

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[Kyle] Yeah, I think some wineries may prefer it if they're going to have two big pickup parties a year and they're centered around that. I think that they may not want to switch to the subscription club, For us we're just as happy to keep, to try to build consistent traffic month in, week in, week out. And so that's why we'll do the club dinners, but we don't do the big pickup parties. So it's a little bit different mindset. So I think it's going to come down to how the winery chooses to.

[Zach] Gotcha. Based on kind of their business model.

[Kyle] Yeah. Their business model, their branding, their clientele, all those things are gonna come into play.

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[Zach] Do you guys, um, do you see any difference in the ratio of online versus tasting room sign-ups for the subscription versus the traditional, or is it more or less the same?

[Kyle] From a breakdown perspective, we still see most of our signups are still in-house. It's going to be a server that is going to do that tasting, we're going to talk about the wine and they're going to make that, that sign up. That club number. Most of our online signups are a friend of a friend, versus online marketing. So we don't really see a lot of online marketing return club members.

[Kyle] I mean, you know, someone comes in, they have a great time and they go back and tell all their friends, Hey, we've got a really good wine.It's your discount here, type thing. So essentially you're still getting that personal touchpoint. You just have that super customer going out there doing your job for you.

[Zach] Makes sense. So most of it's coming from the tasting room. I guess how, how do you guys in the tasting room, or how do you train the staf to bring up the two options there cause they seem pretty different. Is it just kind of like a case-by-case basis? You read the customer bid and determine, you know, what might be the better pitch or do you give them both options upfront?

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[Kyle] So a little bit of both, we give them two options. We give them twice a year and the subscription club, and then you kind of read where their interests lies and once they start, oh, you know, once they see interest in one or the other, then we start talking about all the details about the twice a year pickup or the subscription club instead of presenting every, you know, at this point, I think we're still at 16 clubs.

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[Kyle]We don't present 16 clubs, we present two options and then go down one rabbit trail or the other to try to work on that. We have a lot of people come in asking once they've had a good experience and we talk about the club. It's generally the customer's like, okay, I love your wine. I want the discount, tell me about the club. So a lot comes to referring to the club and the perks throughout the experience, and then at the end, inviting them to join the club versus trying to make the sale.

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[Zach] Awesome. Any kind of tips or recommendations for wineries that are considering this or anything that maybe we haven't gone over that would be important to highlight?

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[Kyle] I mean, so after we tried the subscription club, it's so easy to trial it. I don't see why you shouldn't at least run a six month trial on it. I mean, it's like anything that makes you plan and figure out your inventory. How are you going to manage that? How's that going to look? But it's, it's like anything else.

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[Kyle]You're not going to know if it's going to work for you, but with our experience, with the subscription club, especially your urban wineries, there's no reason not to be doing this as an urban winery. Maybe your larger locations are outside of town, where you're more of a destination winery, then maybe that's a little more of a conversation you have.

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[Zach] Gotcha. Awesome. Well, thanks for all the insight, Kyle. You know, we really appreciate it. Any closing thoughts there?

[Kyle] That's all for now.

[Zach] Awesome. Well, thanks again, Kyle.

[Kyle] Yeah, absolutely. Take care.