Over the past decade, UK consumers have become increasingly adventurous in their choice of wine and more willing to seek out interesting wines off the beaten track. At the same time, supermarkets have come to dominate wine sales in the UK - now holding 70% of the market - but this has forced them into offering an increasingly less diverse range of wine.
To ensure continuity and consistency in their merchandising, supermarkets can only stock wines which are produced in huge quantities. But most wines are made in volumes which would stock the shelves of a major supermarket for just a couple of weeks. So it's difficult for consumers to satisfy their taste for the new, especially since they are often still intimidated by the process of choosing wines and find it hard to judge whether they are going to like a new wine before buying it.
That's why Virgin Wines was set up, and it saw the Internet as a way of bringing a wider selection of wines to consumers. It also saw the need to bring back the old-fashioned service which used to exist in independent wine merchants, where staff would get to know the tastes of their regular customers and recommend other wines they thought people would like. In other words, Virgin Wines wanted to find a way to "hold customers' hands" while they explored new wines.
To deliver this business model, the company needed to offer a one-to-one service based on an understanding of its customers' tastes, either through analysing their previous purchases or by directly questioning them.
"The very first thing you should see when you come to the site is an offer targeted at you, to make the purchasing process as straightforward as possible," explains Rowan Gormley, Virgin Wines' chief executive officer.
Furthermore, Virgin Wines wanted to actively bring people back onto its site by using "offline" direct mail to present them with individually tailored offers of mixed cases of wine.
This business model would be impossible without a sophisticated customer relationship management (CRM) solution in place from the moment the site went live. However, Gormley knew from his experiences in launching a number of direct financial services operations under the Virgin Direct brand that it is difficult to get a CRM solution up and running at the same time as getting the necessary operational system together.
"It can cost as much in resources and energy to build good CRM system as it can to build a good Web site and it's just as important," Gormley says. His approach was to look for an e-business toolkit which had CRM and management information capabilities already built in to it and he eventually settled on Blue Martini.
"Blue Martini seemed to have the most powerful set of tools of any of the products on the market," Gormley explains. "For instance, it has a clickstream report, so that almost immediately after launch we could get a picture of how our customers were flowing through the site, where we were losing them or where they were deviating from the path we hoped they would take on the site. That allowed us to discover design and performance issues and change the design of the site to address those issues."
Because Virgin Wines is also running two affiliate sites it has to make sure it sends the right promotion for the appropriate product to the appropriate customers in each business.
"Blue Martini handles all of that through powerful rules-based logic, so we can get a detailed level of granularity," Gormley adds. "Yet the way it's built allows a non-technical person to do that from a simple front-end."
This wide range of functions in the Blue Martini toolkit allowed Virgin Wines' implementation partner, Andersen Consulting, to get the site up and running in just four months. Gormley points out that the company encountered the usual ups and downs of any software implementation but he was impressed by the way Blue Martini has created procedures to transfer experience, knowledge and code developed at one customer site into others in non-competing sectors. According to Gormley, this has helped to reduce the drawbacks of working with a relatively young product.
About a dozen Virgin Wines' staff now use the Blue Martini solution, ranging from merchandisers managing the display of stock on the site through to editors adding articles to the magazine section.
"Once you have the templates set up and the processes in place, it's easy for non-technical people to use it," says Gormley.
It's still too early to judge whether Virgin Wines will be a long-term success, but the Blue Martini solution is allowing the company to recognise customers, speak to them offline and as individuals, rather than just sending blanket flyers. It is also allowing the company to meet its goal of delivering high quality customer service: Virgin Wines is among the small number of Internet companies - just 15% of the total - providing a service equivalent to that expected on the high street, according to a survey carried out earlier this year by e-consultancy Plaut.
On top of that, Gormley is convinced that the Blue Martini solution has got the company off to a flying start by allowing it to double conversion rates since the site was first launched, simply by managing the site properly.
"By analysing what is and isn't working, we can work out how we should change what we're doing in every area, from site design to pricing, to determining the kind of promotions we should run," Gormley explains. "Even if we could have provided CRM in a different way, our business would be at half the level it currently is without Blue Martini."
What CRM does for Virgin Wines
Virgin Wines needed to offer a one-to-one service based on an understanding of its customers' tastes, either through analysing their previous purchases or by directly questioning them. The CRM solution:
- Helped to actively bring people back to the Web site by using "offline" direct mail to present them with individually tailored offers. The first thing customers see when they come to the site is an offer targeted at them
- Provides a clickstream report giving a picture of how customers are flowing through the site, where it is losing them or where they are deviating from the path it was hoped they would take. The team can then take steps to address these issues
- Enables a non-technical person using a simple front-end to send the right promotion for the appropriate product to the appropriate customers
- Allows the company to recognise customers, speak to them offline and as individuals, rather than just sending blanket flyers.