After publishing the DTC Vendor Prism, I got a myriad of requests from wineries about costs, benchmarks, etc. A lot of people also asked which vendors I would use if I were running a winery. While I won’t promote any particular vendors on this post (maybe later) I did think it was essential to compile a good stack of software, services, and people that constitute a real DTC program.
Caveats — These estimates are for a 5K-20K case winery (but are generally accurate up to 50K). You can choose to cut corners on many costs, but this should be the minimum, optimal mix.
WineClub/POS/E-commerce — I have bundled all three into a single package because these three functional units are often sold together. This price, while seemingly expensive to some, is indicative why 360 Customer Views struggle today and going into the future.
Compliance- I’ve sampled an avg of approximately 3200 annual orders across about 31 companies for compliance.
ESP (Email Service providers) are companies like MailChimp, Vertical Response, etc.
Visitation is tools like Tock, CellarPass, Vinovisit, WineRoutes.
Marketing Automation is tools like FullStory, Infusionsoft, Hubspot, etc.
Data Collection is a collection of new tools that like Clubzz, Stage14, and more.
CRM- Sadly there is no real CRM for DTC in the wine industry, so I allocated the costs usually associated with a standard small and medium CRM tool (Zoho, Nimble, etc.).
Side note — While some may balk at these fees they are reasonably commodity based and representative why it is hard for a software company in the wine industry.
I tried to break these into fees that you’ll pay per unit. They are a conservative but cover the key areas that you’ll spend money. Visitation covers apps like CellarPass.
While it would be amazing to have a full-time resource for everything, most wineries have fractional needs for crucial disciplines or might be budget items you allocate to spend over the year. These are really, really conservative figures. In my humble opinion, these should be a percentage of gross revenue, but these are at least a good starting metric for most wineries.
I know this chart is going to make a lot of people unhappy. Though I put the avg salary for Tasting Room Manager and Wine Club manager above 2018 WBM salary survey, I think they are still underpaid for their roles. Moreover, I added two key positions I believe are fundamental to the future growth of winery DTC programs: a digital manager and a CRM manager.
Finally, I have not budgeted for CAC or retention, but these are essential items that should be placed in the budget. My recommendation for an average minimum CAC is 30% for a first-time customer and retention should be no less than 5% (again, super conservative).
In total and not counting transaction fees, additional employee fees (benefits, etc.) or supplementary budget for retention the annual costs arrive at approximately $400,000. That can quickly be lowered to $265K by reducing two new recommended headcount, but you strip out the critical future growth tools in the organization.
While this is an overly simplistic analysis, the critical insight is that DTC is not cheap, it has many moving parts, needs to be budgeted appropriately and it requires more than just two key headcounts to manage its complex multi-channel sales.