The Tasting Room Experience and Winery Customer Satisfaction
Retailers across all industries recognize that customer satisfaction plays a key role in any successful business strategy. Disappointed customers can lead to a reduced market share and, possibly, lower product prices. Marketing research has documented the importance of customer satisfaction and customer retention on a firm’s economic success and prospects for long-term survival. A recent study indicated that 5 percent reduction in the customer defection rate can increase profits by 25 percent to 80 percent depending on the industry (Kotler and Keller, 2006). Building customer satisfaction is also equivalent to maintaining a loyal client base. The marketing literature stresses that this is economically advantageous for any firm. It is particularly expensive for firms to lose customers and have to recruit more. Acquiring new customers can cost up to five times more than retaining current customers because inducing satisfied customers to switch away from their current suppliers can be expensive and time consuming. Furthermore, the amount of profit that can be derived from each customer tends to increase over time as retained customers tend to purchase more and/or higher quality product and refer the business to others (Kotler and Keller, 2006). Customer satisfaction is especially important for the cold climate wineries in New York and Iowa that are the focus of this study. This emerging industry relies on visitors (regional customers and tourists) for an important share of total sales. Ensuring that customers have a satisfactory experience when visiting the winery can create customer loyalty and positive press as clients recommend the establishment to their friends, colleagues and family. In this study of six wineries across the states of New York and Iowa, 55% of customers responding to our survey became acquainted with the wineries because of word of mouth or because they were repeat customers.