cooper's hawk wine club: marketing communications strategy

Marketing Communications Strategy

Anchie Chen, Jane Flis, Prakarsh Gupta & Abby Rudd

Background

Business Context

•  Focuses on handcrafted wine and modern casual dining

•  Offers signature menu and Cooper’s Hawk wines, made in its private winery

•  Opened first location in 2005 in the Chicago area; now located in seven states

•  Each location has distinctive layout and décor, but all have same warmth and elegance that guests have come to expect

•  Offers the following:

•  Upscale casual dining restaurant

•  Full-service bar

•  Private barrel-aging room

•  Napa-style tasting room and retail gift store

•  Wine Club memberships

Competitors

•  Cooper’s Hawk faces many competitors, both locally and nationally, that serve in the wine club industry (direct competitor), wine club and restaurant industry (direct) or wine industry (indirect).

Direct Competitors

While many competitors exist, many are online

or not in the same regions as Cooper’s Hawk.

Competitors (continued)

Indirect Competitors

•  Traditional wineries •  Grocery stores •  Liquor stores •  Bars •  Wine warehouses •  Wine searcher services •  Online wine library chateaus •  Collectible wine stores

Situation Analysis

Total Revenue •  Revenue decreased 4.64% from year 1 to year 2.

$3,354,876

$3,199,162

$3,000,000

$3,250,000

$3,500,000

Year 1 Year 2

Total Revenue

Situation Analysis

Yearly Revenues Broken Down by Wine Club and Restaurant

Number of Customers

Monthly Fee

Monthly Total Wine Club Revenues

Yearly Total Wine Club Revenues

Total Year 1 Restaurant Revenues

Total Year 2 Restaurant Revenues

Silver 2,901 $16.99 $49,287 $591,455 $1,257,743 $1,152,887

Gold 1,364 $33.98 $46,348 $556,184 $949,492 $898,635

TOTAL 4,265 - $95,636 $1,147,640 $2,207,236 $2,051,522

Situation Analysis

Average Number of Transactions

•  Decreased 6.49% from year 1 to year 2

Average Transaction Amount •  Decreased .7% from year 1 to

year 2

Year 1 Year 2 33867 31668

$66.02 $65.56

$65.30

$65.40

$65.50

$65.60

$65.70

$65.80

$65.90

$66.00

$66.10

30,500

31,000

31,500

32,000

32,500

33,000

33,500

34,000

34,500

SWOT Analysis

STRENGTHS WEAKNESSES

•  High reputation in the industry: 200 wine awards nationally and internationally

•  In-store pick-up service •  Food program that pairs food and wine •  Relatively inexpensive monthly fee of ~$18.99 •  Customized banquet or party design service •  Tasting room with house-made wine designed for

better drinking experience

•  Reward system was designed without difference in segmentation - as a result, all customers are treated the same

•  Competitors also have mostly vintage, classic wines

•  Monthly delivery service is very expensive •  Tasting room has limit of drinks before purchase of

membership

OPPORTUNITIES THREATS

•  The healthy eating trend has contributed to the growth of wine drinking in the last decade

•  Wine is a popular gift to give someone •  The drinking trend has shifted towards lighter

alcohol and healthier ingredients •  House-made wines are now able to compete with

non-house wines

•  Strong competitors have most of the wines Cooper’s Hawk has in its tasting room

•  Some competitors have personal tasting profile records for individual customers to tailor products/marketing

•  Customers expect high levels of customer service, especially Wine Club members

Customer Profitability Analysis

Decile Analysis

•  50% of customers contribute 83% of the total revenue.

Decile Total Revenue Percent of Total Revenue

1 $1,484,326.11 34%

2 $757,739.05 18%

3 $551,627.31 13%

4 $431,845.92 10%

5 $345,691.54 8%

6 $268,824.55 6%

7 $202,901.01 5%

8 $147,245.86 3%

9 $88,931.17 2%

10 $33,002.69 1%

Revenue is more widely dispersed

among customers than Pareto’s

80/20 Rule typically suggests.

Decile Analysis (continued)

0%

5%

10%

15%

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25%

30%

35%

40%

1 2 3 4 5 6 7 8 9 10

Decile

Percent of Total Revenue Contributed

Seasonality

0

100

200

300

400

500

600

700 N

umb

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New Wine Club Members by Month

February and December are the most popular months for Wine Club registrations.

Segmentation

Segmentation Overview •  Only customer files with complete data were analyzed

•  4,265 customer files included in segmentation scheme (66 were missing data)

•  Customers were split into two groups before segmenting because the average total revenue varies substantially between them:

•  Gold: 2-Bottle Wine Club members

•  Silver: 1-Bottle Wine Club members

•  Fixed base segmentation was used because it allowed us to define clear breaking points based on variables that differentiated customers. Furthermore, we could clearly determine our mid-spenders to target them in marketing communications; these customers have high potential to be migrated to high-spenders and thus increase future revenue.

•  Total revenue and length variables were used because correlation among these two variables was low (.189). Because the Wine Club is a subscription-based service, length becomes a vital variable. Furthermore, nearly all customers in the database are active customers, meaning that recency isn’t a vital variable. In addition, the correlation between total revenue and recency was relatively high (-.341).

Segmentation Overview (continued)

Silver Club Members •  Total Revenue Break Points:

•  Median, 50th Percentile: ~$1,800

•  Even breaking point to distribute segment sizes

•  90th Percentile: ~$3,000

•  Isolates high-revenue customers who require different communication messages

•  Length Break Points:

•  Median, 50th Percentile: 68 months


Segmentation: Silver Club Members

Unripe Light-Bodied

Revenue ≤ $1,800 Length < 68 Months

Unripe Medium-Bodied

$1,800 < Revenue < $3,000 Length < 68 Months

Unripe Full-Bodied

Revenue ≥ $3,000 Length < 68 Months

Vintage Light-Bodied

Revenue ≤ $1,800 Length ≥ 68 Months

Vintage Medium-Bodied

$1,800 < Revenue < $3,000 Length ≥ 68 Months

Vintage Full-Bodied

Revenue ≥ $3,000 Length ≥ 68 Months

$1,800 $3,000

68 Months

Total Revenue

Length

6

4

2

5

3

1

Segmentation Overview (continued)

Gold Club Members •  Total Revenue Break Points:

•  Median, 50th Percentile: ~$3,400


•  90th Percentile: ~$5,200

•  Isolates high-revenue customers that require different communication messages

•  Length Break Points:

•  Median, 50th Percentile: 68 months


Segmentation: Gold Club Members

Unripe Light-Bodied

Revenue ≤ $3,400 Length < 68 Months

Unripe Medium-Bodied $3,400 < Revenue < $5,200

Length < 68 Months

Unripe Full-Bodied Revenue ≥ $5,200

Length < 68 Months


Revenue ≤ $3,400 Length ≥ 68 Months


$3,400 < Revenue < $5,200 Length ≥ 68 Months

Vintage Full-Bodied

Revenue ≥ $5,200 Length ≥ 68 Months

$3,400 $5,200

68 Months

Total Revenue

Length

6

4

2

5

3

1

Segment Profiling

Segment Descriptions

Segment #/Name Description

1 Vintage Full-Bodied High total revenue; longer than median length of relationship

2 Unripe Full-Bodied High total revenue; shorter than median length of relationship

3 Vintage Medium-Bodied Moderate total revenue; longer than median length of relationship

4 Unripe Medium-Bodied Moderate total revenue; shorter than median length of relationship

5 Vintage Light-Bodied Low total revenue; longer than median length of relationship

6 Unripe Light-Bodied Low total revenue; shorter than median length of relationship

Silver Club Total Revenue

6% 4%

25%

15% 22%

28%

Vintage Full-Bodied

Unripe Full-Bodied

Vintage Medium-Bodied Unripe Medium-Bodied Vintage Light-Bodied Unripe Light-Bodied

Percentage of Total Customers Segment Name Total Revenue*

Vintage Full-Bodied $667,357.32

Unripe Full-Bodied $466,190.86

Vintage Medium-Bodied $1,649,705.49

Unripe Medium-Bodied $984,820.42

Vintage Light-Bodied $991,235.99

Unripe Light-Bodied $1,109,125.34

Total $5,868,435.42

* Based on two years of restaurant revenue and approximately seven years of Wine Club revenue

Silver Club Revenue Contribution

1 2 3 4 5 6

% of Revenue 11.40% 7.90% 28.10% 16.80% 16.90% 18.90%

% of Customers 5.7% 3.9% 25.4% 15.3% 22.1% 27.6%

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25%

30%

Perc

ent

ag

e

Segment

Silver Club YOY Change in Revenue

•  Revenues are declining within all segments of Silver Club customers, except the vintage full-bodied.

•  Segment 2, unripe full-bodied, is experiencing the greatest decline in revenues compared to other segments.

1 2 3 4 5 6

Year 1 $256,430 $212,212 $495,779 $355,506 $221,770 $307,502

Year 2 $261,925 $179,495 $461,601 $335,830 $214,505 $290,989

% Change 2.1% -15.4% -6.9% -5.5% -3.3% -5.4%

0

100,000

200,000

300,000

400,000

500,000

600,000

Profile: Silver Club Members

Vintage Full-Bodied

Unripe Full-Bodied




Unripe Light-Bodied

# of Customers 166 112 738 443 646 800

Total Revenue $667,357.32 $466,190.86 $1,649,705.49 $984,820.42 $991,235.99 $1,109,125.34

% Contributed to Total Revenue 11.40% 7.90% 28.10% 16.80% 16.90% 18.90%

Average Length of Relationship 76.83 months 63.14 months 79.22 months 62.99 months 74.88 months 61.57 months

Average Total Revenue in Wine Club

$1,305.36 $1,072.79 $1,345.87 $1,070.25 $1,272.19 $1,046.05

Average Total Revenue in Restaurant

$2,714.86 $3,089.62 $889.50 $1,152.82 $271.79 $340.35

Average Recency 0.669 months 0.696 months 1.875 months 1.535 months 5.397 months 4.634 months

Average Frequency 29.67 28.50 13.62 15.54 5.37 6.26

13%

6%

28%

16%

16%

22%

Vintage Full-Bodied

Unripe Full-Bodied




Unripe Light-Bodied

Gold Club Revenue

Percentage of Total Customers Segment Name Total Revenue*

Vintage Full-Bodied $667,772.48

Unripe Full-Bodied $303,248.73

Vintage Medium-Bodied $1,433,909.06

Unripe Medium-Bodied $794,073.33

Vintage Light-Bodied $814,228.02

Unripe Light-Bodied $1,098,471.64

Total $5,111,703.26

* Based on two years of restaurant revenue and approximately seven years of Wine Club revenue

Gold Club Revenue Contribution

1 2 3 4 5 6

% of Revenue 13.10% 5.90% 28.10% 15.50% 15.90% 21.50%

% of Customers 7.3% 3.4% 25.7% 14.5% 19.9% 29.3%

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5%

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25%

30%

35%

Reve

nue

Segment

Gold Club YOY Change in Revenue

•  Revenues are declining within all segments of Gold Club customers.

•  Segment 6, unripe light-bodied, is experiencing the greatest decline in revenues compared to other segments.

1 2 3 4 5 6

Year 1 $239,622 $123,769 $389,409 $272,461 $178,802 $301,615

Year 2 $235,960 $118,247 $379,852 $257,384 $175,745 $287,632

% Change -1.5% -4.5% -2.5% -5.5% -1.7% -4.6%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Profile: Gold Club Members

Vintage Full-Bodied

Unripe Full-Bodied




Unripe Light-Bodied

# of Customers 99 46 350 198 272 399

Total Revenue $667,772.48 $303,248.73 $1,433,909.06 $794,073.33 $814,228.02 $1,098,471.64

% Contributed to Total Revenue 13.10% 5.90% 28.10% 15.50% 15.90% 21.50%

Average Length of Relationship 81.13 months 63.17 months 79.88 months 63.27 months 73.74 months 61.56 months

Average Total Revenue in Wine Club

$2,756.84 $2,146.65 $2,714.52 $2,150.01 $2,505.53 $2,091.77

Average Total Revenue in Restaurant

$3,988.33 $4,445.71 $1,382.37 $1,860.46 $487.96 $661.29

Average Recency 0.263 months 0.609 months 0.909 months 0.687 months 2.790 months 2.120 months

Average Frequency 49.32 48.67 22.72 27.02 9.84 12.44

Targeting

Targeting Strategy Targeting Strategy We selected vintage medium-bodied segments as our targets for both Sliver and Gold levels for following reasons:

•  Longer relationship with Cooper’s Hawk and more engaged (30% of total transactions)

•  Contribute more than a quarter of total revenue

•  Average check size is $60, which is well below that of vintage full-bodied ($97) and unripe full-bodied ($82).

•  The average total revenue is $2,834, which is way below the top spenders at $5,038

•  The average annual frequency for Gold level is 11.36, which is half of the full-bodied segments

1 2 3 4 5 6

Check_Total $82.53 $97.11 $59.69 $67.58 $47.29 $50.57

$0

$20

$40

$60

$80

$100

$120

Average Check Total – Gold & Silver

1 2 3 4 5 6

TotalRevenue $5,038 $4,870 $2,834 $2,775 $1,975 $1,841

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Average Total Revenue – Gold & Silver

Silver Club Vintage Medium-Bodied Profile Total Revenue Contributed $1,649,705.49

Percent of Total Revenue Contributed 28.10%

Average Length 79.22 months

Average Total Revenue Spent in Wine Club $1,345.87

Average Total Revenue Spent in Restaurant $889.50

Average Recency 1.88 months

Average Frequency (2-year period) 13.62

Club Type Red: 34.1% Sweet: 4.1%

Variety 52% White: 9.8%

Most Recent Revenue Center Banquet: 0.8% Bar: 25.2%

Patio: 3.8%

Server: 47% Tasting Room: 23.2%

Silver Club Vintage Medium-Bodied Profile •  Contribute largest portion to Silver Club’s total revenue (28.1%), but their

average total spend is moderate compared to the vintage and unripe full-bodied segments.

•  Indicates there is a larger number of customers that fall into this segment.

•  Typically spend more through restaurant as compared to Wine Club.

•  Extremely frequent and recent with a long-term relationship with Cooper’s Hawk that provides evidence of their preference for the brand.

•  The variety club type is preferred by these customers as they receive one bottle of wine per month and desire a mix between receiving red and white wines.

Gold Club Vintage Medium-Bodied Profile Total Revenue Contributed $1,433,909.06

Percent of Total Revenue Contributed 28.10%

Average Length 79.88 months

Average Total Revenue Spent in Wine Club $2,714.52

Average Total Revenue Spent in Restaurant $1,382.37

Average Recency 0.91 months

Average Frequency (2-year period) 22.72

Club Type Red: 37.7% Sweet: 2.6%

Variety 55.1% White: 4.6%

Most Recent Revenue Center Banquet: 0.0% Bar: 29.4%

Patio: 3.1%

Server 43.7% Tasting Room 23.7%

Gold Club Vintage Medium-Bodied Profile •  Contribute largest portion to Gold Club’s total revenue (28.1%), but

their average total spend is moderate compared to the vintage and unripe medium-bodied segments

•  Indicates there is a larger number of customers that fall into this segment.

•  Typically spend more through restaurant as compared to Wine Club.

•  Extremely frequent and recent with a long-term relationship with Cooper’s Hawk that provides evidence of their preference for the brand.

•  Variety club type is preferred by these customers as they receive two bottle of wine per month and desire a mix between receiving red and white wines.

•  Red wines are extremely popular as well.

Marketing Communications

Key Survey Results and Insights

25%

18%

20%

22%

10% 5%

Reason for Joining

Quality

Variety

Reasonable Fee

Exclusive Benefits

Peers

Others

0 0.5 1 1.5 2 2.5 3 3.5

More Educational Opportunity

Wine Diversity

Special Event and Celebrations

Rewards

Ranking* for Areas of Improvement

Wine quality and exclusive benefits were the top two

reasons for joining the Wine Club.

Rewards program received the

highest ranking for things Cooper’s

Hawk could improve upon

*Lower value is means higher ranking

$3,354,876

$3,199,162

$3,359,120

$3,000,000

$3,250,000

$3,500,000

Year 1 Year 2 Year 3

Marketing Objective Cooper’s Hawk aims to grow total revenues generated by 5.0%, or $161,194, in the next year (year 3).

Must increase Revenue by

$159,958

Silver Vintage Medium-Bodied

Behavioral Objective

To convert 50% of the Silver Vintage Medium-Bodied members to the Gold Club level in year 3.

Mental Objective

Cooper’s Hawk Gold Wine Club offers benefits that are exclusively available for Gold Club members; as a Gold Club Member, you are rewarded for the value you bring to the company.

Why purchase just one bottle a month when you can purchase two to share with your friends and family?

Achieving the Marketing Objective Silver Vintage Medium-Bodied Segment

Year 2

# of Customers Price Monthly Revenue

Yearly Revenue

738 $16.99 $12,538.62 $150,463.44

Year 3

# of Customers Price Monthly Revenue

Yearly Revenue

369 $16.99 $6,269.31 $75,231.72

369 $33.98 $12,538.62 $150,463.44

INCREASE OVER YEAR 2 $75,231.72

Silver Vintage Medium-Bodied Marketing Communications: Tactic 1

•  Email campaign delivered to Silver Vintage Medium-Bodied customers that communicates the new incentive package when upgrading from the Silver Level to Gold Level wine club.

•  If customers upgrade to the higher club level, they are rewarded with a personalized bottle of an exclusive, handcrafted wine with the member’s name and anniversary date included on packaging.

•  Survey results indicate that customers desire to be rewarded more and to receive exclusive benefits that make club members feel special and appreciated.

•  This special gift is a symbolic trophy of the relationship between Cooper’s Hawk and the club member.

•  This special incentive taps into a customer’s self-motivation and esteem for being a highly-valued club member.

Silver Vintage Medium-Bodied

Marketing Communications: Tactic 2

•  Email campaign delivered to Silver Vintage Medium-Bodied customers each week that promotes the increased incentives for Gold level members.

•  Gold Level members will receive 1.5 points for every $1 spent, as opposed to the previous 1-for-1 reward system.

•  Survey results revealed that customers want to be rewarded and feel like they are valued.

•  This strategy incentivizes customers to upgrade to the Gold Level membership and by increasing the pace of redemption for rewards.

Gold Vintage Medium-Bodied

Behavioral Objective

To increase frequency of restaurant visits by 4 from 11.36 per year to 15.36 per year for 50% of Gold Vintage Medium-Bodied customers in year 3.

and

To increase average transaction amount by $20.11 from $57.45 to $71.81 (an increase of 35%) for 50% of Gold Vintage medium-Bodied customers in year 3.

Mental Objectives

Every meal at a Cooper’s Hawk Winery and Restaurant location is the ideal accompaniment to one of their exclusive, unique, and perfectly-paired wines to enjoy with your family and friends.

Gold Vintage Medium-Bodied Achieving the Marketing Objective

Transaction Amount

Year 2 Number of Customers 350

Average Transaction Amount - Restaurant $57.45

Frequency 11.36

Yearly Revenue $228,421.20


Average Transaction Amount - Restaurant $57.45

Frequency 11.36

Yearly Revenue From Lower Average Spend $114,210.60

Number of Customers 175

New Average Transaction Amount – Restaurant $77.56

Frequency 11.36

Yearly Revenue From Higher Average Spend $154,189.28

Total Yearly Revenue $268,399.88

New Overall Average Transaction Amount - Restaurant $67.50

REVENUE INCREASE OVER YEAR 2 $39,978.68

Gold Vintage Medium-Bodied Achieving the Marketing Objective (Continued)

Frequency


New Average Transaction Amount - Restaurant $67.50

Increase in Average Frequency 4

REVENUE INCREASE OVER YEAR 2 $47,250.00



•  Gold Vintage Medium-Bodied customers are given a a special stamp card at their next wine pick-up.

•  The stamp card correlates to the year-long promotion where customers collect stamps for each transaction made in a Cooper’s Hawk restaurant serving-area, bar, patio or tasting room.

•  If a club member collects 15 stamps in one year, he/she is invited to an exclusive, year-end tasting of new dishes being tested for future menu changes.

•  Survey results indicate that customers desire to be rewarded more and invited to more exclusive events that make club members feel special and appreciated.



•  In-restaurant promotion encouraging Gold Vintage Medium-Bodied customers to bring a group of five or more people.

•  Promotion includes receiving 20% off a bottle of wine for the table if the member’s party is five or more.

•  This encourages positive word-of-mouth marketing as customers and club levels share this information across networks and encourage people to come with them to Cooper’s Hawk.

•  Survey results revealed that customers want to be rewarded in more ways.

Achieving the Marketing Objective

Year 2 vs. Year 3

Year 2 Total Revenue $3,199,162

Percentage Increase in Revenue Needed for Year 3 (From Marketing Objective) 5%

Amount Increase in Revenue Needed for Year 3 (From Marketing Objective) $159,958

Year 3 Revenue Increase From Silver Club Members Converting to Gold Club $75,231.72

Year 3 Revenue Increase From Gold Increased Restaurant Transaction Amount $39,978.68

Year 3 Revenue Increase From Gold Increased Frequency $47,250.00

YEAR 3 TOTAL REVENUE INCREASE OVER YEAR 2 $162,460.40

Summary

Summary

Background

•  Total revenue from Wine Club members is decreasing from year 1 to year 2.

Customer Profitability

•  52% of customers contribute 80% of the total revenue. Revenue is more widely dispersed among our customers than Pareto’s 80/20 Rule typically suggests.

Segmentation

•  Fixed basis segmentation was used to segment 4,265 complete customer data files on the variables of total revenue and length of relationship split between Silver Club and Gold Club members.

Targeting

•  Vintage Medium Bodied segments were selected as targets for both Silver and Gold members. These targets are moderate-value, longer-term customers.

Marketing Communications

•  Communication messages focused on maximizing membership level, increasing frequency, increasing average transaction size and making the relationship more rewarding

cooper's hawk wine club: marketing communications strategy

Data & Analytics