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Constellation: getting real about social media?

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When Walter Cronkite famously stated, in 1968, that he did not believe the Vietnam War could be won, it was said to mark a tipping point. “If I’ve lost Cronkite, I’ve lost Middle America,” LBJ remarked.

Could Rob Sands’ recent statement be a similar turning point? “If anything lends itself to social media, it’s wine,” the Constellation Brands CEO was quoted as telling Bloomberg News last week. So bullish has Constellation become on developing their online profile that the company (America’s second biggest wine producer, after Gallo) doubled its digital marketing budget last year “and is raising it 50 percent this year.”

Up until now, I haven’t been particularly impressed by the social media efforts of the country’s largest wine companies. If anything, they’ve been late to the party, preferring to wait and see what smaller, bolder wineries do before committing their resources.

So what, specifically, is Constellation doing? Well, for one, they hired Karena Breslin away from Gallo to ramp up their digital marketing efforts. It’s not clear, just yet, how she’s doing. Forbes.com reported on May 5 that Constellation is planning “some marketing tricks that are new to it–and to the wine industry” in order “to woo tech-savvy wine drinkers under the age of 35.” These tricks are said to include “a mobile application that will let [Millennials] use their ever-handy iPhones and BlackBerrys to scan bar codes on wine bottles for more information–even video snippets” about the wine. But that doesn’t sound “new to the wine industry” to me. It’s standard QR coding.

I will admit this Constellation ad for Black Box is pretty cute (although it does pander a little to newbies, but that’s okay), and I’d like to see more examples from Constellation. According to the website Market VOX, which recently reported on Constellation’s social media efforts, “The company has seen an increase of click through rates of 150%, increased fans of 75%, and surprisingly a decrease in click through rate cost by 30%.” But Market VOX is mute on some vital information. Where are the click through rates coming from, and what are they resulting in? And 75% increased fans of what? Its Facebook page? Presumably so; the article says Constellation’s “great success” is “based on interest and Facebook ‘likes.’”

However, Constellation’s Facebook page, near as I can tell, has only 195 “Likes,” and its content was lifted straight from Wikipedia. [CORRECTION: In an earlier version of this post, I misstated the number of “Likes” that Robert Mondavi Winery has. It is 8,623.] So, again, I’m not clear where this success is coming from, or what Market VOX’s statements are based on.

Still, progress in social media has to be measured in increments. I give credit to Constellation for making the effort to become active in the digital sphere. If any of the majors are positioned to do it, it’s Constellation. Their stock is at nearly a three-year high, and shipments for January-February were up 17% (Gomberg Fredrikson). In a recent TV interview, Sands told Bloomberg News, “We’re generating a lot of cash flow,” meaning the company has the luxury of seriously investigating the online sphere, not just talking about it. In this sense, Sands may be to social media what Walter Cronkite was to the Vietnam War: in a single statement, he signals the tipping point where the biggest wineries realize the potential of online.

  1. Steve, you must have stumbled on the wrong page for Mondavi. I happen to be one who “likes” them on Facebook and I’m one of 8,626. I certainly can’t compare the Robert Mondavi Facebook page to every other winery with a Facebook page, but I do “like” a few other wineries and Mondavi is considerably better than the others when it comes to updating their status frequently, for whatever that’s worth.

    I would be interested in seeing wineries offer social media only promotions. By that I mean a code or a special offer that is only posted on the brand’s social media sites. It gives customers an incentive to follow or “like” the brand while also creating more interest. Maybe someone already does that, but I’m not aware.

  2. Lisa Mattson says:

    I heard Constellation has been talking to the people behind the Stickybits app, which is a bar code scanner that allows brands to claim their wine UPC codes and attach rich media. Unfortunately the Stickybits app looks juvenile with pink and oranges and whimsical fonts, reminiscent of the Barbie corvette. I hope Stickybits will be changing their design soon; I asked in March and am eagerly awaiting. I can’t compromise our brand image and promote Stickybits now even though our data and videos are loaded. But the app has other problems, such as attaching any reference to the word “Jordan” to our codes, so most posts are irrelevant. I’m curious to see if that is what Constellation is talking about.

  3. Brian, you are correct about Robert Mondavi. I searched Facebook for “Robert Mondavi” and found this link: http://www.facebook.com/pages/Robert-Mondavi/120011878054154 which appears to be an earlier version of the winery’s Facebook page. It has only 50 “likes.” A search for “Robert Mondavi Winery” brings up the other Facebook page you refer to. I have since issued a correction in my original post.

  4. I’m guessing (hoping) that Constellation already knows this, but engaging consumers under the Constellation brand is probably NOT gonna work, because it’s just not really possible to engage with an umbrella brand at a emotional level. But engaging them at the level of individual brands can totally work.

    Does anyone think about popping open a bottle of “a fabulous Constellation-owned wine brand from an excellent vintage” to celebrate life’s events? No – they think about popping open a Mondavi Reserve Cab; they think about the thing to which they have an emotional connection. No one wants to have an emotional connection with a brand that is a degree or two removed from brand that they can touch. It’s why commercials for things like 3M totally suck – you can’t *pay* the average person to care about that stuff on an emotional level.

    The bottom line, though, is that Constellation’s many companies need to actually give a crap about their customers first, and they need to really want to engage with them, or the effort will fail until they do. Because social media is just a platform where people come to connect and talk about shared passions, and you have to really want to join the conversations if you’re going to use it effectively.

    Cheers!

  5. I’m 100% with Joe (1WineDude) here. For social media to work in the wine world, the people behind individual brands do have to care about their customers enough to interact with them directly.

    When 3M, or Boeing, or ADM, or Fuji Heavy Industries – or any corporate behemoth – says they are “engaging in social media” you can be 100% sure this is meant to appear as a bullet point in the next quarterly report, and that not far away will be the words “maximize shareholder value.”

    In the culture of publicly-traded companies, customers only matter when there aren’t enough of them spending enough money to make last quarter’s revenue projections. When that happens it makes it tough for the board to vote for fat bonuses. ;-)

  6. Joe & John Kelly, sometimes I think people drink too heavily from the “Thank You Economy” Kool Aid. An individual person such as me or you can really engage with our friends. We can call them, email them, banter with them, tell them secrets, make them laugh, turn to them in times of sorrow and joy, argue about politics, etc. etc. No company that ever existed can do that, or ever will. So I don’t have any idea what you’re talking about when you say companies “need to actually give a crap about their customers.” That is just so much hogwash. What does it mean? It means a company has to GIVE THE IMPRESSION they give a crap about their customers. A company by definition gives a crap about one thing only: profits. A company is not a person. You can’t talk to a company. You can talk to somebody employed by the company to oversee their digital marketing, but that’s not a real conversation. It’s through the Internet; your chances of having a one on one, or even a reply to your comment, decrease as more people “friend” or “like” the company’s website. There’s a lot of wishful thinking out there about social media that is not going to come true. You guys assume that a winery can mimic your own affectionate personalities through some deft use of social media, but no winery can do that.

  7. Steve – re-read my post, carefully. What you said in your reply is exactly what I said (in my usual cynical, obfuscating fashion). Companies will never succeed in realizing the promise of social media. Social media is a threat to the status quo; profit-, bottom line-, shareholder value-driven interests have to co-opt it’s mechanisms and formalisms into the corporate media sphere to neutralize this threat.

    And not let me paraphrase Joe: “The bottom line, though, is that Constellation’s …effort will fail… Because social media is just a platform where people come to connect and talk about shared passions, and you have to really want to join the conversations if you’re going to use it effectively.” Um… he’s said the same thing.

  8. Great catalyst piece. At first read I was thinking “Thats a bunch of crap” Then after reading the rest of the comments I am relieved, not everyone is drinking the kool aid. “Social Media” is new speak for “Sophisticated Marketing Tool”

  9. John’s on the money, or I should say very close to it.

    I’m skeptical that an entire company can do it.

    I’m MUCH LESS skeptical that the RIGHT person in a company can do it well, if they’re allowed to do so. And that person, at the brand level, can positively infect their co-workers and peers to do it as well – IF (big if) the company lets them pursue it.

    TYE is not BS, by the way – it’s spot-on, actually. But how many companies will actually change what needs to be changed to really embrace customer engagement seriously? A tiny, tiny, tiny, f*cking tiny percentage. But that doesn’t mean it isn’t possible, or that Gary V.’s advice isn’t correct. Just because companies can have success now by not giving a crap about customers doesn’t mean that will work 10 years from now.

  10. James McCann says:

    I would perhaps take Gary Vee’s explitive filled speeches more seriously if he actually followed his own advice more often.

    My problem with the “catch-all” of the TYE, social media, etc… is that its biggest proponents seem to think that they invented customer service and personal engagement with customers. NEWS FLASH – most companies, large and small, spend all day trying to figure out how to engage with their customers to grow their businesses. Social media is a nice new addition to the toolbox, but no more innovative than the fax machine, email or cell phone.

  11. James – you’ve got a great point, but most companies fail at it despite working very hard at it (misdirecting their efforts). And in the economy of the last 20 years, they could fail at customer service and still be successful. Where social media is actually new/innovative is that it allows companies to engage in one-on-one dialog with customers, for very little expense; but only if they care and actually want to do it.

    Many companies do NOT, in fact, want to do this.

    I don’t want to sound preachy but I’ve worked with and/or for some of the biggest companies in the world in healthcare, CPG and pharma. They don’t care about customers. They do NOT really care. Not saying they’re bad people – they were taught for decades that not caring was okay.

    Where Gary is spot-on is that people want to feel cared-for by companies. There is a lot of data to support this conclusion, and to ignore that is not a smart business play.

  12. James McCann says:

    Joe, sorry… I thought your previous career had been in IT, not marketing. I’ve spent the last two decades in sales and marketing, and I have also worked for and with companies of all sizes, from Fortune 500 firms down to 4 person operations. My wife is a pharma executive. Now, you may be able to make the argument that the top level executives don’t spend their days caring one bit about their customers, and to some extent, you would be correct.

    However, the sales and marketing departments devote their lives to their customers, and not for altruistic reasons. Have you bought a new car in the last 20 years? How many customer satisfaction surveys were then sent to you? How many people in the dealership asked you to tell them if there was something in your experience that would not allow you to give them the highest customer satisfaction score? Did the folks at Wal-Mart put a greeter in the front of every store to lower the unemployment rate of the 60+ crowd?

    So, while the corporation may seem large, cold and heartless, the people who make their living by interacting with and profiting from the customer on the street level sure as hell care. Also, remember that the end user is not always the customer.

    The economics of social media are often distorted within these arguments. For a small winery with a 500 person club, a personal, social media interaction to gain 50 new members can be relatively inexpensive and wow – 10% growth. Now, scale that to a CPG company with 100 million end users. Can you use social media to have a personal interaction with 10 million new customers? Not so cost effective anymore.

  13. James – you seem to be equating marketing with customer satisfaction. I don’t think they are the same.

    In my experience, marketing departments (you can’t run the web hosting internally and externally for one of the largest CPG companies in the world without spending a A LOT of time with those people :-) do not devote their lives to customer satisfaction (to your point, those can be different from their consumers, of which I’m painfully well aware, believe me). They devote their lives to short-term sales increases and occasionally to growing brand recognition. Not that these are unimportant – they’re just not the same thing as fostering relationships with customers, though they might occasionally overlap.

    Let’s take the CPG example – much like Constellation, it’s their brands that resonate with people, not their company itself. But guess what? Most CPGs suck at taking care of their customers (the Walmarts of the world, who in turn are the ones worrying about the consumers). I worked for a company that made billions, one of the most successful in the history of the U.S. Know where they ranked for a long time on their customer satisfaction surveys? Dead last – and they finally acted on it **after** it hit their bottom line, not proactively. That’s a failure when it comes to customer satisfaction, and if they had really cared about it they wouldn’t have had to find out after it had a dramatic negative impact.

    I guess where you’re losing me is why “TYE” type stuff has to be applied in one way across any type or size of biz, which seems to be what you’re suggesting? I don’t see that as any more scalable than you do. But a company applying those principles to customers, or brand teams doing that in targeted ways with groups of consumers? That certainly scales – social media isn’t the only way to do it but it’s a damn important one and a cheap one, and it’s also where the fish are right now for those who are fishing.

  14. I should add here that I am no expert in customer service for business – I just probably have more experience with it than the casual reader of this blog, and I’ve obviously got strong opinions about social media as a powerful tool for helping/building businesses.

    So, take my comments with the requisite grain of salt. :)

    I should mention, though, that people shouldn’t be too dismissive of what people like Gary has to say, or oversimplify the application of those messages. There are powerful, useful pieces of advice in books like TYE, and while I find Gary’s comments about how they should be applied in large companies to feel a bit naive, that doesn’t mean that there aren’t big benefits for those who can apply them and strike the right balance. Not having a simple way to apply them in all circumstances doesn’t amount to the advice being wrong, or Gary being a charlatan, etc., etc.

    Cheers!

  15. James McCann says:

    Joe,

    Thanks for your thoughtful comments. I do not think social media should be ignored, and from a quick scan of Facebook, neither does corporate America. It is a very low cost advertising medium, but as you agree, it is very difficult to scale on the “personal” level. I do strongly believe, however, that in that big CPG company, there was a sales team calling on Walmart that did everything they could to make them happy. Almost certainly, that team had only one customer to deal with. If the company executives handcuffed them or otherwise inhibited them from satisfying Walmart, then as you indicated it will eventually hit them in the pocketbook.

    Should Gary be ignored? Of course not. He’s done a remarkable job of building his family’s store and website, and was a true innovator. He has a great message, even when it is delivered in a rather crass manner. What I find remarkable about the reverence afforded him in the wine business is that the average blogger will call retailers who hawk scores from the big publications “lazy”, and often much worse. Then, the next day they will swoon over the latest missive from Gary. Have they not been to his store or site?

  16. James, I could not agree more with your analysis of Gary. The bloggers have idealized him partly out of a sense of respect for his accomplishments and partly out of a sense of envy. They believe that if they copycat him, they will share in his success. But this isn’t true. Gary has built his brand the old-fashioned way, the same way as (dare I say it) the Kardashians or Paris Hilton. He’s famous for being famous, a celebrity. I have tried to understand how his message is anything different from “Buy my books, buy my wines, hire me as a consultant, and I’ll let my fans know you exist.” That is hardly a credible message nor one that will sustain wine writing in the future.

  17. Steve – you’re being a bit harsh on Gary, I think. Have you read Gary’s latest book? You’re way too smart to state Gary’s message as solely being “Buy my books, buy my wines, hire me as a consultant, and I’ll let my fans know you exist” if you’ve read it. Now, he can certainly give that impression on twitter from time to time but there’s for sure more substance to the book.

  18. “The bottom line, though, is that Constellation’s many companies need to actually give a crap about their customers first…”

    I’m so tired of these whiny ass bloggers thinking they know exactly how to fix everyone’s business. They are so quick to judge us in the wine industry…..we need to do this…we need to do that…we need to treat our customers well…..

    Tell us something we don’t know. I’d love to see one of you high-horse bloggers knee deep in a fermentation bin, doing punch downs at 2:00 AM, while thinking about how the wines in the market are not selling well due to the economic downturn, and how distributors are too overwhelmed to do anything but try to move boxes; and how wine club and direct sales have fallen off because of the econonmy. And, thinking about compliance issues and taxing issues and all of the TTB paperwork that has to be filed CONSTANTLY.

    And, how it’s hard to track down depletion reports and when you finally get them, you’re already too busy back at the winery with staffing/farming concerms, to make time to work the market…

    And….and….and…

    Meanwhile, you all are sitting in your little Izod pullovers, criticizing from your ivory towers.

  19. If Constellation really wanted to improve their relationships with customers, they should actually leave Manhattan and visit these wineries and see how poor the customer service is at some of their tasting rooms. Instead of building long-term relationships with their customers, they ram wine clubs down the throats of visitors. Spend a few million dollars less on social media and properly train your employees IMHO.

  20. Raley – I don’t know how to fix anyone’s business. Neither, I suspect, does Gary V. or any other blogger (I don’t own izods and I work pretty hard, too, by the way. ;-)

    But I am pretty sure that not caring about customers is not going to help anybody’s biz no matter who they are or what they do. And I know from experience that most companies don’t really care about their customers, not in the way that Gary and others are talking about.

    They don’t *hate* their customers, they just don’t think to care about them in any way that resembles a personal connection because until recently customers didn’t have the power to easily influence others in their social circle with their opinions abut those companies/brands. But the times have changed, they have that power now, it will definitely start to impact their bottom line at some point because the tech is only ever going to make broadcasting consumers’ experiences easier and easier and easier to more and more and more people. And the data shows that people want to engage on a personal level with brands and companies.

    Not all companies, but many, many companies.

    So it’s not declaring that all biz is broken and saying “this is the only way to fix it…” It’s pointing out that the tide is changing and most companies are not yet set up to deal with it effectively. That’s not a moral, ivory-tower judgement, it’s just trying to illuminate facts in a way that is hopefully relevant for people (in wine, in this case). I don’t have answers, I just have a potentially unique perspective given my background and what I’m doing now – take it or leave it, of course. I never try to be preachy, I just get really fired up about this stuff because I love wine and want the wine industry to succeed.

    It’s also not a terribly well-thought-out comment on my part, which I’d argue is fine because I’m saying it here in quick comments on Steve’s blog and not broadcasting this out to all of my website readers, etc. And while Steve gets a good number of eyeballs here, so does my website and a lot of those people are the same, so I think it’s important to note that I don’t really stand to gain by taking any potshots at the industry here and hoping for some kind of run-off website traffic. I just *genuinely feel passionate enough* about the conversation to chime in on it. Hope that all makes sense!

  21. Dude, I don’t think anybody feels you’re taking potshots at the industry! You’re just expressing your belief. Back to the point (which I also feel passionate about), I do believe this “caring about your customer” thing has been carried too far. Businesses have always understood they have to let the customers know they’re loved and appreciated. Nothing new about that. In every era, a good company does that with whatever technology is available. Social media hasn’t changed the underlying concept — it’s just the latest technology. Sure, some companies are faster than others learning how to use it. But if social media has an inherent value, all companies eventually will adapt to it. I, personally, feel that social media’s “magic bullet” potential has been exaggerated from the beginning. You know that. We’ve had that conversation. Reasonable people can disagree. Social media’s near term impact probably will be less than, say, Gary predicts and somewhat more than I grant it. But we don’t know. Meanwhile, Gary’s made a fortune advocating it. More power to him.

  22. Sean, your comment about tasting rooms is right on. Many tasting rooms I’ve been to could use a little help in the hospitality arena. And by the way, everybody is ramming wine clubs these days, not just big companies like Constellation. In fact, the smaller wineries who can’t get distributed are the most ferocious at it!

  23. Wine Dude,
    That was a respectable, thoughtful answer. Thanks for that.

  24. Thanks, Raley – I filled my respectability quota for 2011 there, I think. ;-)

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