Guild Companies

When the sixth-generation vintners at the Gundlach Bundschu Winery decided they needed a better way to manage their 3,000-member wine club, their first instinct was to go to a prepackaged CRM application. After reviewing their CRM options, however, none of the applications seemed to fit. Instead, the winery decided to expand its Lotus Notes system, and in the process helped create what may be the first killer application for the midrange wine industry.

The 400-acre Gundlach Bundschu Winery Rhinefarm, located in southern Sonoma County a half-hour drive from Napa Valley, started producing wine in 1861, making it one of the first wineries established in the young state of California. Jim Bundschu, the great-grandson of the original German immigrant who established the winery, replanted the vineyard with grapes in 1970 following a period of pear-growing due to Prohibition, and today the winery produces about 50,000 cases of wine. Its Chardonnay, Pinot Noir, Merlot, and Cabernet Sauvignon varietals regularly win wine-tasting competitions across the state.

The search for a CRM application was headed up by Jim Bundschu's son, Jeff Bundschu, the winery's chief executive and general manager. Bundshchu had a fairly good idea of what he was looking for. About 80 percent of the company's wine is bought by large distributors on its way to grocery stores, restaurants, or other institutional buyers. The other 20 percent is sold directly to wine drinkers, either those people who visit the winery's tasting room or other individuals who managed to find their way onto the winery's "Friend Keeper" database. Jeff Bundschu wanted a new database application that was easy to use and would allow the winery's sales staff to pull up information about its direct buyers at any time. The goal of this application would be to improve the winery's relationship with customers by tracking--and thereby anticipating--their wine buying habits, which would eventually make buying Gundlach Bundschu wine a more rewarding experience.

"We might have three or four or five people with our company interact with our customer at a given time," Jeff Bundschu said. "I was very interested in being able to track all that communication and put it in a single place, so anybody can call up that customer, and see all the interactions."

Bundschu said all of the CRM applications he looked at would be able to track his employees' contacts with his customers, but they weren't to his liking. "The applications were a little bit aggressive for what I was looking for," he said. "They were fairly regimented. You could tweak it, but you were at the behest of the company selling the software all the time. It was either over-built in areas I didn't want, or under-built in areas that I did need."

Instead of investing Gundlach Bundschu's cash in one of many CRM packages, which are notoriously difficult to implement, Jeff Bundschu decided to give the local Lotus Notes developer that had developed his calendar application, Santa Rosa, California-based Tech Frameworks, a try. "We had a lot of luck with the Notes calendar," he said. "We knew what we specifically wanted and they said 'Let's see if we can do it.'"

The opportunity to use Domino for the winery's customer management application was immediately apparent to Tech Frameworks president Mike Ochoa. "When we started talking with them about their wish list, it was fairly obvious we could use Domino to take them where they wanted to be," Ochoa said. "Domino is a good platform for the price and functionality. It's got a Web server, a database, and email all in one package."

About a year ago, Ochoa started developing Gundlach Bundschu's home-grown CRM application. He developed it by customizing an existing Domino application called Business In A Box, which he had used before and which is provided by Tech Frameworks' business partner, Emerging Technology Solutions, a Denver, Colorado, hardware, software, and services provider. Somewhere along the way, somebody must have mentioned the Internet, and the application's development took a turn that would eventually lead toward the Wine Club Advantage.

"It became clear, with the Web site development, that we wanted to give wine club members access to their own site, where they can get access to the specials and deals, and order and reorder online," Jeff Bundschu said. "I was looking for relationship building before that. When we started looking at Web-enabling the application, that's where the wine club became the focus."

Ochoa was an experienced Lotus Notes developer, but these new requirements posed a challenge. This new application that Jeff Bundschu had in mind would combine the elements of the original customer information management system with a new e-commerce Web site. Ochoa realized that customer-facing e-commerce functionality wasn't necessarily Domino's biggest strength, and with counsel from Emerging Technologies, he sought new tools. Eventually he decided to develop the customer-facing components of the application using IBM's WebSphere 2.0, which wasn't Big Blue's latest Java technology but nevertheless provided the functionality he needed, including Java servlets, cookies, and session authentication. Ochoa would augment the core Domino database application with WebSphere for managing the transactions that would occur over the Web.

The application that Ochoa built for the Gundlach Bundschu Winery would eventually be named the Wine Club Advantage. The winery went live with the application last fall when Tech Frameworks loaded it onto an IBM Netfinity 5000 server running Windows, which hosts the Domino Web server, in its Benicia, California data center. Members can access the application from the Gundlach Bundschu Web site by clicking on a link, which brings them to a secure Web site where they can see what wines they've ordered in the past, view new wines or special offers, and, of course, order more wine for delivery. The application is also accessible from a computer kiosk in the winery's tasting room.

Where the application really shines, however, is in the back office. Winery employees can easily update the site with new content, can track individual wine club member's buying habits, and present them with discounts their track record shows they would be apt to take--a substantial improvement over the winery's previous e-commerce system, which required phone calls and manual interventions to offer individual discounts. The application has become the heart of the company's marketing activities.

For most wineries, calculating return on investment is a process that can take anywhere from years to decades. As wine improves with age, its value increases, and the winery reaps the rewards of what was a good year. At the same time, the effect of a poor grape harvest one year may not be felt until years later. The whole process is a drawn-out one, time-tested by millennia of vintners.

But Jeff Bundschu didn't even need a year to figure the winery's return for its investment in the Wine Club Advantage. Since the site went live last September, 1,000 additional people have signed up for the winery's club, yielding $5,000 in incremental wine sales each month. By the end of 2001, the winery had recouped its initial investment, and estimates it will bring in about double its initial investment by this September. "I've always felt that the Internet brings the marketing sales capacity that is akin to big business," Jeff Bundschu said. "It seems that we're doing things right."

In fact, the Wine Club Advantage proved to be such a good fit for Gundlach Bundschu that Tech Frameworks and its partner, Emerging Technologies, decided to sell it to other wineries as well. "We've had pretty good success going out and peddling this as an application," Tech Frameworks Ochoa said. "It's been well-received."

Next week we'll take a closer look at why the Wine Club Advantage might be the first killer application in the niche winery industry, and how Tech Frameworks, Emerging Technologies Solutions, and the third business partner it brought in to help sell the application--Key Information Systems--earned an IBM Beacon award for the way they're working together to make the application a success.