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December 28 2008
The headline for this post is borrowed from no less a source than a Harvard Business Review article that discusses a simple metric for business that has ironic parallels with wine ratings and some implications for the future.
Wine ratings continue to be a hot button issue in the wine business. It has been that way for the last 20 years and won’t likely abate in the near future, points as entrenched in wine society as cars are to suburban living; the simple numeric rating almost a universal symbol for a subjective basis of wine quality and an equally universal symbol for consumer purchasing confidence.
Despite the flashpoint of ongoing wine controversy and the capricious shrill protests that surround wine ratings, businesses have begun adopting a very simple (and similar) customer satisfaction / word of mouth metric called the Net-Promoter Score to drive their business.
Introducing the Net-Promoter Score
The Net-Promoter Score is a customer loyalty metric introduced by Frederick F. Reichheld in a Harvard Business Review article in 2003.
The premise is simple - Companies obtain their Net-Promoter Score by asking customers a single question that is measured on a rating scale of 0 to 10. The question:
“How likely is it that you would recommend our company to a friend or colleague?”
Based on customer responses, their scores can be categorized into one of three groups:
1) Promoters (9-10 rating),
2) Passives (7-8 rating), and
3) Detractors (0-6 rating).
To calculate your Net-Promoter score, the percentage of “Detractors” is subtracted from the percentage of Promoters to obtain a Net Promoter score.
A score of 75% or above is considered successful.
Now, this is not a piece of junk business trends management—nonsense that comes along every five years or so – companies like American Express, Progressive Insurance, T-Mobile and General Electric (GE) are adopting this measurement methodology. GE CEO Jeffrey Immelt has compared Net-Promoter Scores to Six Sigma, the legendary methodology for process improvement.
Net-Promoter Scores in the Wine World?
Why is this important?
It is simple – there are a several converging circumstances that continue to shape the wine world:
1) An increase in the quantity of different wines from thousands of wineries domestic and Int’l
2) A tsunami of social engagement online amongst wine lovers
3) An ongoing need for wine ratings to help bring order to the marketplace
4) Online tasting note sites continue to grow and expand (CellarTracker and Snooth, amongst others)
Despite the controversy of wine ratings – essentially a Net-Promoter Score, trends would lead you to believe that wine ratings will not decrease in the face of social media, but actually increase! Some have posited that the unlimited space of the digital realm would lead to the ability to use story and narrative as a means to provide a richer detail and context.
Yet, it seems that social media simply means more information to manage which plays directly into the hands of ratings and scores.
Wineries everywhere must be shuddering.
Companies like CellarTracker have a tremendous opportunity to create an ability to translate the user-generated ratings that populate their site into an aggregated score mechanism, like a Net-Promoter Score, that answers the ultimate question:
Would You Recommend Us?
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Additional Reading - Inc. Magazine
Additional Reading - BusinessWeek Magazine
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December 19 2008
When Gary Vaynerchuk remarked at the recent Wine Blogger Conference in Sonoma, “There is no reason a wine blog cannot earn $100,000 a year in revenue,” a lot of people sat up in their chair.
It was that bromide that was the scuttle of the conference.
But, what happens when you look at blogging and our niche, wine blogging, against criteria, like, say, the time value of money and you compare that time spent against another time investment like earning your MBA?
Can somebody credibly make a case that engaging in blogging and social media is a better use of time than earning an advanced degree?
Practically speaking, if you hold down a full-time job, have a family, or at the very least a spouse, actively blog AND you want to get an MBA, something is going to have to give – and that something is likely going to be blogging.
This topic is top-of-mind because I very much would like to earn my MBA.
The reality is, though, as a 36-year old man who likes start-ups and early stage ventures, my ship has sailed in terms of climbing a Fortune 500 career ladder into the Captain of Industry chair.
More likely, an MBA allows me to do a couple of things – offset a resume deficiency for having earned a liberal arts degree, round out my business acumen into insights into operations, broaden my perspective from what has traditionally been a sales and marketing expertise and, the big thing, give me enough education so that I can teach at the university level.
But, again, therein lays the rub. There’s not a chance I could get an MBA and maintain a blog. Wouldn’t happen. It is very hard to do more than a few things at one time and do them all at a very high-level. I think most people would agree with this.
Given that, I guess you need to look at, well, MBA and Finance-like criteria to see, pragmatically, what the best way to spend your time might be: the “time value of money” and the “net present value.”
Clearly, I am a neophyte here, and the last math class I took was a 100-level Algebra class as a pre-req. for an Executive MBA program I was accepted to, but didn’t enroll in. Before that, I took “math for liberal arts” at 8:00 in the morning as a freshman in college, the only thing that motivated me to go to class was the fact that I could stare at a beautiful girl that didn’t know I existed.
I’m paraphrasing from a couple of places on the web, but a Net Present Value (NPV) is:
The present value of the future cash flows less the cost of the investment. The NPV is a direct measure of “cost versus benefit.” It represents the economic profit to be earned by making an investment.
This basically means what is the value of future cash flow versus present investment. If an MBA costs me $50K in tuition, but earns out over a lifetime in $350K in additional earning opportunities, then the NPV is very good.
The Time Value of Money is (again paraphrased):
The idea that a dollar now is worth more than a dollar in the future, even after adjusting for inflation, because a dollar now can earn interest or other appreciation until the time the dollar in the future would be received.
In action, the “Time Value of Money” basically says a bird in the hand is worth two in the bush. I translate this to a blog. Creating a blog that earns readers is surprisingly difficult to do, but if you can do it, then certainly that has value, even if it’s not monetary, yet who knows where the future will go because whatever value it has now will surely increase in time, specifically against scrapping it thinking you can start over in two years time.
Interesting questions to ponder …
Does one go with the sure thing in terms of return on investment and earn an MBA, or do you continue to invest your time and your passion into a blog that drives a ton of satisfaction with the uncertainty of not knowing how your blogging will yield any dividends in the future?
Throwing out MBA and finance criteria and analogizing to Vegas, which we can all relate to, may be simpler. Because I can always earn an MBA, now, or a decade from now, the SURE MONEY is on blogging.
Or, as Albert Einstein said, “I think that only daring speculation can lead us further and not accumulation of facts.”
Though, I’m still not quite certain about that Vaynerchuk guy and his proclamations.
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December 4 2008
Let’s be honest with ourselves—99.9% of all wine advertising in glossy magazines is horrible. It says very little of anything to anybody and is largely anonymous with zero level of creativity.
Kendall-Jackson isn’t even an exception, they just run so much advertising (at least in the magazines I read) that they are familiar and almost ubiquitous, but not necessarily good. Their tagline of, “A Taste of Truth” is far from compelling.
I couldn’t even tell you the other wines that regularly advertise in Spectator, Wine Enthusiast, Wine & Spirits, Quarterly Review of Wines, Wine Press or any other magazine—I have virtually no recall, which isn’t a good thing.
For once, I would like to see a wine ad that is contemporary and tries to build a brand by targeting a specific demo. with compelling creative. Instead, we get the same warmed over wine lifestyle aspirational ads. Snooze. Yawn. Boring.
Here’s an idea—it’s not even mine; but I wish somebody in the wine business would steal it - tap into the human condition and the maturing of Gen. Y (I’ll even forsake asking for relevant advertising for my demo - Gen. X)—and the passage of time that happens for everybody when they cross the chasm of seeing their parents as authority figures to when they become friends with their parents on equal (or near equal) footing. It happens around age 25 or 26, I think.
In fact, that’s what Canadian Club whiskey is doing in brilliant ads that have been running this year ... not only are they playing into the notion of your Dad probably being pretty cool back in the day, they are turning it into something that makes you want to pour a CC on the rocks and look through old photo albums.
My favorite ad? “Your Dad Was Not a Metrosexual.” Classic. And, true. My Dad doesn’t drink Canadian Club, but he does drink Stroh’s—fired brewed goodness, according to the can. Wine? Not so much.
Bonus points if an old wine brand re-emerges with something hip—Blue Nun, Mateus, Carlo Rossi in a jug, or Cold Duck.
For inspiration, here are three current Canadian Club ads that hit exactly the right balance of kitschy cool, nostalgia, authenticity and voice.
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December 3 2008
You have probably all heard or seen the “Marilyn” wine. The surprisingly good wine line-up adorned with various Marilyn Monroe pictures on the label. What you may not know is that her image and likeness is licensed from CMG Worldwide, a company based in my backyard in Indianapolis, IN.
CMG operates in a little known niche that represents the families and the estates of, mostly, dead personalities, sports stars and entertainers.
It’s a veritable who’s who – besides Marilyn Monroe, CMG represents the images and likenesses of Babe Ruth, Malcolm X, Vince Lombardi, James Dean, Jack Kerouac and dozens and dozens of other household name celebrities, all long deceased.
While I am not in tune with the day-to-day workings of their business, I am sure that their time is divided between sending out cease and desist letters for illegal use of client images while at the same time doing business with appropriate licensing of images and likenesses.
Therefore, they probably squash the Marilyn Monroe calendar maker that did not get permission to use the photos and is not paying a royalty while at the same time legally licensing the photos to others and earning a subsequent royalty stream.
This management and prudence ensures that Frank Sinatra’s name, music, and image is not used to sell frozen meatballs in 2008, essentially – or whatever is deemed to not fit within “brand” standards: incongruent items that somebody thinks is a good idea, but really doesn’t fit within our collective consciousness.
Monies from correct licensing, I presume, after management fees, are then paid to the estate.
I have heard estimates that icons like Elvis and Marilyn Monroe earn their estates $10 – 15 million a year in licensing fees.
This is all a preamble to my point – as I have seen Woodbridge by Mondavi advertisements in the second half of this year along with Robert Mondavi Solaire wine, at lower price points, and Robert Mondavi Riedel glasses. I hope beyond hope that in the sale of the winery to Constellation that language did not slip through that gave Constellation ownership of the name and likeness “Robert Mondavi” for perpetuity.
It is relatively easy to think that in the legalese of a sale document, undoubtedly an inch thick, with wines and a winery branded by name and an already iconic image/logo in place, that Constellation now owns the rights to Robert Mondavi lock, stock and barrel.
Without question, in the coming years, the mythology of Mondavi will continue to grow; living legends that pass do not seem to recess into our collective subconscious, their imprint, instead, grows ever larger.
Frankly, it is not a stretch to say Mondavi is the wine industry’s equivalent of a Marilyn Monroe, either. We already give significant credit to Mondavi for building the California wine industry into what it is today and that burnished image is likely to grow in Paul Bunyon-esque fashion in our minds eye in the years ahead, as well.
In the book chronicling the sale of Mondavi to Constellation, The House of Mondavi, a re-occurring theme was Michael Mondavi’s desire to grow the brand, primarily at the lower end of the price spectrum, while Tim Mondavi wanted to maintain quality at the higher end of the spectrum. The greatest tragedy in a chapter yet to be written is if neither son has an opportunity to control the licensing and selling of their father’s image or likeness in the coming years, particularly as his legend grows.
At the least, if Constellation does own his likeness and all permutations thereof, let us hope that Constellation acts as a humane and responsible steward of a man who will only continue to grow in mythological status. In my mind, that means high quality and integrity – assets associated with a legend, not $5 wine and certainly not frozen meatballs.
*Update*
After doing some sleuthing of my own and a comment from a reader, I learned that Marilyn Monroe’s image and likeness are owned by or managed by both CMG and Legends, for what it is worth. I also learned that these license management firms do a little ambulance chasing as well.
*Update #2*
I was factually incorrect when referencing Mondavi and Riedel—Waterford is actually the manufacturer.
Also, I messaged with Mia Malm from Icon (div. of Constellation) and she sent a very thoughtful email about the responsibility they feel to the Mondavi brand (see the below in response to my post):
Hi Jeff, it was good to meet you at the Wine Bloggers Conf. Hope all is well with you and you had a good Thanksgiving. Just wanted to touch base with you re: your post about Robert Mondavi.
While it is true that Constellation acquired the brand equity of Robert Mondavi, it is equally true that upholding the integrity of our founder’s vision and wines is our number one focus. In fact quite a lot of work has gone into the brand teams working together across all four tiers of the brand to be sure that we are all supporting Robert Mondavi’s vision of creating wines that stand in the company of the world’s finest, developing a wine culture in the US that puts a bottle of wine at the family table as part of everyday life, and generally enriching life through wine.
Woodbridge by Robert Mondavi was founded by Mr. Mondavi back in 1979 in his boyhood home town of Lodi, so that has a long history with the family. Likewise he also personally launched Robert Mondavi Private Selection. Solaire by Robert Mondavi is a new tier, but takes its source from Mr. Mondavi’s exploration of CA’s central coast and two vineyards that he bought in the area back in the 1990s. The glassware (which is actually Waterford) was a partnership that I believe was initiated by a Mondavi family member and subsequently supported by Constellation.
Believe me, nobody is going to be launching Robert Mondavi meatballs…! It’s an incredible honor to work on this brand and we all feel reverential toward its stewardship.
Cheers,
Mia
~~~~~~~~~~~~~~~~~~
Mia Malm, DWS
Director of Public Relations
Icon Estates
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November 25 2008
When my mind wanders, I occasionally indulge in an onanistic parlor game of, “what would I do with a windfall of money?”
I usually think about what kind of business I would start, not necessarily what I would buy; and more often than not, I think about what I would do around the wine business.
I guess I channel my inner Andy Warhol –-especially when he said, “Being good in business is the most fascinating kind of art. Making money is art and working is art and good business is the best art.”
Mostly, my ideas are marketing-oriented and more of a point solution or along the lines of a product than anything truly revolutionary. I chalk it up to the inured lack of innovation that seems endemic to wine and how it evidently has rubbed off on me.
Along those same lines, as the year winds down, I was thinking about my year of wine and the things that I experienced in ‘08 that I thought were truly interesting.
Bar none, one of the most under-noticed items in the pantheon of wine this year has to be the Fusebox Wine Blending kit from Crushpad wine (I wrote about it in late May).
And, within that Fusebox Wine Blending kit, the thing that absolutely fascinated me were the included recipe cards that allowed you to blend wines to an approximation of famous wines – a 2002 Joseph Phelps Insignia, a 1997 Opus One, a 2000 Chateau Margaux, etc.
It is genius, really.
I do not know how they developed the recipe cards, but I am certain that Vinovation, who unofficially indicate to their winery customers that they can help develop a wine that will score 90 pts. surely have a good idea of how to both engineer a wine and reverse engineer a wine.
At the same time, earlier in the year I read about a French company called Wineside that was packaging wine in sample tubes – according to a blurb from this site:
… WineSide is taking a novel approach by offering wines packaged in sample-sized tubes.
WineSide offers both sweet and classic wines in patented, flat-base glass tubes with screw tops carefully engineered to protect the wines’ flavour. WineSide’s collection represents a range of appellations and producers; tubes are available individually or by the box, which can be chosen to provide an introduction to a variety, year or region.
Interesting. It makes you wonder why only plonk wine goes into the 187 ml bottles that are packaged in 4-packs.
As a side note, I have, in a peculiar way, always fetishized wine after visiting the tasting room at Teldeschi where he administered our tasting by pouring from chemistry lab beakers …
So, if you are following my circuitous path to this point and then you look at a company in another niche, Compass Box Whiskey, then maybe the picture turns from Monet to Rembrandt.
This article from Wired magazine sums up Compass Box well (excerpted):
The energetic (John) Glaser, a forty-something Minnesotan whose ready grin mitigates his piercing gaze, is the sole whisky maker of Compass Box, the boutique company he founded in 2000 after quitting his job as a marketing director for Johnnie Walker.
Although the brand sells only some 6,000 cases yearly, Compass Box’s independent ways have made an impression on the whisky world. I’m visiting Glaser here at Compass Box headquarters, but the apparatus of whisky making that surrounds us is limited to desks, computers and some glassware—Compass Box doesn’t do any distilling.
In a role that Glaser compares to that of a wine négociant, the company buys casks of whisky from some 15 Scotch distilleries, chosen for their wide range of characteristics, and assembles them into blends of Glaser’s own careful design. He takes, for instance, Caol Ila whisky, which has all the smoky savor of a barbecue, tempers it with an equal amount of Ardmore, whose likewise substantial peat is mellowed by delicate, complex fruity notes, and adds just a splash of uniquely peppery, briny Clynelish. (Among today’s treats for me is tasting these components separately, then together.)
Really, the idea is to be a dash of Cameron Hughes, a dash of Michael Brill from Crushpad with his Fusebox product with a dash of John Glaser, all delivered in a sampling format with recipe cards for how to assemble famous wines.
If I had a small windfall of money, I would have famous wines deconstructed both historical and contemporary, I would buy quality bulk wine and work the spot market, even buying bottled wine if I had to in order to make a faithful blend. I would assemble kits of wine samples and recipe cards matched to premiere vintages. I would sell that wine in a multiple bottle 187 ml sampling format that was packaged for high-end, velocity sales at boutique wine retail for subsequent in-home consumer blending.
Do you think there is anybody interested in tasting an approximation of a ’47 Cheval Blanc? Or, a ’97 Screaming Eagle or other scarcely available, uber-expensive wines? What about the spectrum of Parker 100 pointers?
Does this resonate in a wine environment where the rarified air of the finest wines becomes exceedingly rarer as India and China takes to wine with new money?
I do - for the same reason that, inexplicably, we go to see celebrity impersonators in Vegas. It is not the same, but it is still a vicarious thrill and we are entertained.
The traditionalists in wine would hate the idea; the manufactured, cheapening of the art, but as Warhol noted, “business is the best art.”
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