How to Grow Your Business When Everything Else Is Shrinking

consumer marketing, madison avenue, new opportunities, wine marketing, direct to consumer wine sales, using customer information, using brand advocates, building wine sales, building wine brands Let the ‘4% Factor’ Help You Tap Into the Right Data to Create New Opportunities – Article by Scott Morgan – Published: July 15, 2009 in Ad Age Daily News

Wine marketers should pay attention to Madison Avenue, especially when trying to map out strategies and tactics to get the most out of social media and Direct to Consumer marketing.

Particularly relevant is the article’s discussion of the 4% Factor. Marketer’s talk about “casting a wide net” and it is widely accepted that 20% of your customers typically do 80% of your business. Where Mr. Morgan is spot-on is that 4% of your customer base contains the “true believers”, the “evangelists” and your friends and families that love your brand and will help you succeed if you ask. Brands from Yahoo to Coca-Cola use transaction and behavior data to sort out their best consumers, targeting specific types of messages via specific channels of communication.

According to Mr. Morgan, President at independent, full-service agency Brunner, “Four is the significant digit because it is this relative number that seems to rise to the surface every time a study is conducted or a program is measured, proving that those impacting your brand (typically characterized as volume, margin or advocacy) tend to be a relatively small number of the whole customer universe.” Brunner’s clients include GSK consumer brands, Cub Cadet outdoor power equipment, Golf Pride club grips and Zippo lighters.

One example Mr. Morgan cites in the article is Catalina Marketing: its Checkout Coupon system identified that 1% of IAMS’ pet-food buyers accounted for 80% of the annual volume of the brand’s sales in the supermarket channel. LaRosa’s Pizzeria chain, another example, discovered that a small percentage of its customers account for significant portions of various menu items (for example, 4% purchase 65% of calzones).

The specific steps Mr. Morgan points out to grow a business or product line successfully and to react and adapt more quickly to future opportunities are particularly relevant for small wineries (some of the steps have been edited):

1. Find: Discover and define your main source of volume, margin or advocacy by tapping into existing customer data.

2. Filter: Sift through the data and intelligence by segmenting, profiling and using predictive modeling to develop a pool of target segments and markets. Who are your best customers? Organize them into groups.

3. Magnify: Examine, select and prioritize the top three to five target groups. Listen to what they say on-line, on the phone and in your tasting rooms. Dig deeper into why they buy your wine and ask them if they have friends you should be inviting to your winery for events and private tastings.

4. Expand: Build out the selected communities via holistic communications strategies ranging from broadcast emails to social media in order to establish dialogue and grow the universe of new entrants and new advocates.

Mr. Morgan admits that this has been said before but I like the way he puts it. “Today, brands are built by communities of like-minded individuals who share their brand experiences with others and those with whom they have some connection. Pinpoint those communities — or markets of business opportunity — and find creative ways to get them to help recruit your next customers.”

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