Sunday, March 5, 2017

Network Effects in Direct Sales?

This post pertains to how to create a network effect in a direct sales model for wine.

First of all, I love the idea of direct sales. Over the summer, I made good friends with a group of guys trying to do the same thing for craft beer and was entranced by the idea then too.

As I understand it, there are four main stakeholders - the company, the wine educator, the host, and the guests. 

I get the company's and wine educator's repeat motivation (profit) in this situation. Similarly, I understand the appeal of throwing and attending a tasting party. What I have a harder time understanding is what would motivate hosts and guests to continue to be a part of this value chain since, presumably, you need them to engage with the product on an ongoing basis. 

One thought I had for the hosts was to create a tiered system whereby you had (all good quality) base, elite, and exclusive wines. Hosts that either threw many parties, encouraged others to throw parties, had the most guests purchase wines, invited new guests etc. would accrue points. Those points would allow them access to more exclusive wines to throw tastings with and/or purchase. My assumption here is that hosts are likely motivated A) by hosting, B) by discovery of wines, and C) by wine education, and therefore would be likely to respond the being able to hold A) more exclusive parties, B) try newer, rarer wines, and C) by having access to education around these better wines/why. 

On the guest front, presumably, the company wants them to continue purchasing. Given that, I think there may be some value in also allowing guests to accrue points. These points would work towards discounts on future bottles and might be earned by A) purchasing wine in the first place, B) becoming a host, C) attending tastings, etc. 

In this way, you are creating a community around your product and working it into the social fabric of your customers. Social pressure will hopefully encourage a hosting community and reinforce repeat purchasing. Additionally, rewarding guests and hosts for inviting new people into the community will ensure that you have an expanding pool of potential customers. 

Note: This post was supposed to go up after Tuesdays class in the week, but apparently didn't publish!






2 comments:

  1. Interesting insights, Marlena - the tier point system in particular is an intriguing idea. Do you think it plays well with the luxury consumable/ experience-based purchase that is wine... I ask because I like how you're thinking of constituency engagement but I wonder if it would really work with wine, specifically?
    (P.S. - Have also had some blog post delay issues, I think sometimes either my internet at home or the blog rejects my oenologist ideas :))

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