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There's a Wine App for That

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From Vineyard and Winery Management Magazine, Jan-Feb 2013, by Paul Mabray.

Are applications worth the resources it takes to produce and maintain them?
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It’s true: There is an app for almost everything. At last count, the wine industry had almost 600 of them, offering everything from education to recommendations to tastingnote tools.

According to comScore Inc., a Virginia-based Internet technology company that measures consumer behavior in the digital world, the number of smartphone users in the United States surpassed 100 million last year. With those kinds of numbers, the potential audience for wine brands represents a giant target.

But before you jump with both feet into this rich consumer pool, you need to understand what building an app means to your brand – and your budget.

For a wine-related app, the options can be grouped into five major categories:

1. Customer acquisition and insights. This is often an app with the key functions of presenting your wines to consumers and requesting e-mail or social media profiles. It is built solely for getting more contact information or acquiring new customers. The best example of this is the WineDemon app from retailer Naked Wines, which lets users rate wines and search other users’ ratings. When qualified consumers join the app, WineDemon captures their e-mail addresses.

2. Customer engagement. These apps can focus on a particular winery’s brand, events and wines. They typically include lots of tools to bring your key customers back and communicate directly with you. One of the best examples of this is Hahn Winery’s app. With a retailer locator and winery updates, the app helps Hahn fans stay close to the brand they love.

3. E-commerce and customer relations. Some apps are designed to streamline the experience of buying and communicating service issues with a brand. Without question one of the best is the Apple Store app, where you can book appointments at the Genius Bar, order in the store and pick up your item at the counter, and order via e-commerce. You can achieve the same results without creating an iPhone app by talking to your e-commerce vendor (Vin65 can create a mobile version of your site for $500-$1,500).
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4. Branding. Sometimes you want to tell a story and get your messaging out to the world. Other times, you want to provide key functionality, such as wine or tourism knowledge, and ensure that your brand is appropriately represented. In those cases, the return on investment of the application is the quantity of downloads and the usage of the app (even minimally). World’s Most Curious Bottle, from Brancott Estate in New Zealand, is a signature example of this. The app adds interesting interactions when users scan a label, and through augmented reality (superimposing computer-generated content over a live view of the world), it helps educate the consumer about the wine at the point of purchase.

5. For the hell of it. If you have the money and you want to experiment with innovation, the world is now your oyster. Some brands really take this to the limit. Great examples are Liberty School’s WineDJ, which pairs wine with music, and Share the Love by Drive Thru Interactive, which matches wine with good deeds.

CONSIDER THE COMPETITION

Once you’ve decided on the purpose of your app, it’s time to consider the competition. If you think you are competing with other wineries, you are wrong. And if you think you are competing only with other wine apps, you are wrong again. The reality is that every new app launch (and there are a lot
of them – more than 500,000 iPhone apps alone) is competing against the mainstream apps that consume most users’ attention. That means you are up against Facebook, Twitter, Instagram, Pinterest, YouTube, Evernote and so many more.

And then you’re competing against apps that have multipurpose uses for wine, such as the market leaders Cor.kz, Drync, Vivino, Natalie MacLean and HelloVino, which are packed with features for wine journaling, cellar management and food pairing.

Finally, you’re competing against consumer behavior. Is your app worth the time it takes to use it? The greatest commodity we have is time, and at what point does a consumer’s need or passion cause him or her to use an app to help with wine choices or memories?

COUNTING COSTS

Among HelloVino’s many features is the ability to scan labels to find ratings and information about individual wines.
Among HelloVino’s many features is the ability to scan labels to find ratings and information about individual wines.

Then there are costs to take into account. These include:

Launch costs. If you want to create a good app on the iTunes store, development will run you $15,000-$50,000. There are cookie-cutter solutions that can cost $1,000-$5,000, but they lack the unique brand identity and substantive feature set that would create active users. To have the same app configured to Android and Blackberry will cost another $10,000-$40,000. None of this includes the costs
of your internal marketing, data collection and tech resources.

Management costs. Putting an app into existence is only the beginning of the journey. Just like a website, it requires constant maintenance and fresh content, as well as someone to compile reports on how successfully the app is performing. Expect to dedicate 25% of an employee’s
time updating and creating new content. You can estimate the approximate costs for this at $10,000-$20,000 annually. You can also add another $1,000-$5,000 for hosting.

Upkeep costs. Unlike websites, mobile phones upgrade their operating systems regularly, forcing you to upgrade your app for compatibility and to avoid bugs. This will cost around $1,000-$5,000 annually. You’ll probably need to upgrade and enhance the app along the way in
response to user and internal feedback, so you should plan on adding another $5,000-$15,000 per year of additional programming costs.

This brings the total first-year cost for the app to $31,000 at the low end and $90,000 at the high end, with an additional $17,000-$45,000 per year for upkeep.

To recoup the money through direct-to-consumer sales, you would need to acquire 60-180 customers that spend a minimum of $400 in the first year. Before you say, “Wow, that sounds easy,” let me give you a quick stat: You’d need approximately 40,000-80,000 app downloads to achieve those numbers.

With those stats and figures, it’s evident that you really need to have a key strategy in mind, and that creating a truly active mobile app is not a small effort. You need to really think before you launch, and look beyond the development costs to understand if it’s really worth it for your winery to “have an app for that.”

My personal recommendation is this: Don’t build an app unless you have a serious digital team in place – and less than 0.5% of wineries do. Instead, use an e-commerce company to build a mobile-friendly version of your website for a minimal investment of $500-$1,500.


Paul Mabray is the chief strategy officer at VinTank (www.vintank.com), based in Napa, Calif., which helps wineries connect with consumers through digital technology.

VWMlogo Guest Writer
Vineyard & Winery Management is a company with a broad-ranging portfolio serving the North American wine industry for nearly 40 years. VWM prides itself on its grassroots background. What started as a labor of love in upstate New York in 1975, the business has grown and nurtured into a thriving second-generation family owned and independent endeavor. Vineyard & Winery Management magazine has the highest circulation of any North American wine trade publication. In addition, it produces and hosts three regional trade shows and conferences and six unique wine competitions. Because of this diversity of its portfolio, VWM is able to reach segments of the wine industry other companies simply can’t touch.

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