There is a discussion to be had on loyalty for the CPG industry; is the concept of a packaged goods brand having its own loyalty program still seen as an insurmountable summit? How have the historical barriers to loyalty establishment changed, if at all? In today’s landscape, consumer behaviors are shifting as rapidly as the approach brands take to marketing. The amalgamation of innovative technologies and proven strategies means that CPG loyalty programs – which were once denigrated as unwieldly and impractical – are finally beginning to blossom. Is it time for your brand to begin adopting loyalty? With 1st quarter 2017 CPG sales $3 billion lower than during the same period in 2016 [1], can your brand really afford to ignore the discussion? If this sounds like foreboding forecast, we have good news: there’s a lot to be excited about in the realm of CPG loyalty. Let’s look at three reasons why the promise of packaged goods programs could revitalize the industry.
CPG brands don’t often have access to POS systems; in fact, this is one of the major barriers to getting a CPG loyalty program off the ground. POS integrations for a CPG are unwieldy, implausible, or downright impossible. It is simply too daunting a task for a brand to validate or recognize purchase this way. Up until recently, the only other solution was to alter packaging. For example, printing a separate code on each package, which consumers could use to enter online to collect and redeem points. This was a model that Kellogg’s employed for their Kellogg’s Family Rewards program. What they found, however, was that pin-on-pack mechanics didn’t sit well with consumers or their brand. Consumers found it difficult to read and enter codes, and the heavy machinery behind the scenes that managed the operations and costs for printing a pin-code on qualifying packaging became burdensome. For these reasons, Kellogg’s adopted a technology solution that created scale immediately; they leveraged our receipt processing system, called SnippCheck, that allowed consumers to simply snap a picture of their purchase receipt and submit on the KFR site. Regardless of the eventual solution your brand decides on, keep in mind the most important thing you can buy from your vendor – the opportunity to scale your initiative.
What’s more exciting than rewards? Everyone loves to win, everyone loves “stuff”, and yes, everyone loves anything that’s new. In the world of rewards and loyalty, these three concepts are at the heart of what’s making the world turn. Loyalty programs have always been at the forefront of bringing the most innovation to the rewards landscape for brands, but these developments have always been associated with huge programs with limitless overhead for experimentation, infinite budgets, and millions of program members. The great news for consumer packaged goods brands is that this is no longer strictly the case. Smaller programs can build in more expansive rewards profiles, offer more choice, and bring more inventive options to consumers that are hungry for what’s trendy. The decline of discounts means that value-add rewards bring a colorful palette of options that can be tailored to suit any demographic (a recent KPMG survey revealed that 80% of consumers prefer rewards that connect and build a personal relationship with the brand over mere discounts).[2] The universal appeal of technologies like smartphones means that digital rewards will be a mainstay of any CPG loyalty program; this carries a double-edged benefit, as aside from being relevant to consumers, digital rewards are inexpensive in bulk. Pushing beyond the boundary of digital rewards enters a world that many brands have never even encountered; from novel tech integrations such as earning rewards with wearable devices to trendsetting coalitions with companies like Lyft and Airbnb, there is a universe of possibility that promises to forever shape loyalty program rewards for CPG’s.
What is the true role of today’s marketer? Arguably, to perfect their brand and shape it according to the market environment to the best of their ability. But a different set of skills now falls into the mandate of savvy marketers: business development, future growth, and customer awareness, all led by access to powerful data. The importance of data is not lost to anyone in the industry. 79% of marketers reckon data analysis has become more important, while 74% believe brand strategy plays a bigger role for them than it did five years ago.[3] In fact, discussing “big data” at this point is almost a tired cliché. However, what is less obvious is the differences in data, and how to prioritize which information to collect. Consumer sensitivity is the name of the game right now; shoppers are becoming more vigilant about protecting their identities and warier of brands that try to pry into their lives. All these circumstances are actually creating the perfect storm to let CPG loyalty programs really shine. Let’s break it down: loyalty is synonymous with trust and rewards; a long-term connection between brand and consumer establishes a co-sharing environment where consumers derive tangible benefit in the form of rewards, and brands can examine the robust data profiles of consumers over an extended period of time. The very nature of a loyalty program means that a brand can see how a consumer evolves and changes, and can therefore personalize their offerings to cater to ever more specific facets of their demographic. Finally, a loyal consumer is a trusting consumer; they see their favorite brand as a benevolent presence in their lives and will share data without even batting an eye. These reasons are why loyalty data is superior to data from shorter term strategies such as promotions.
As with any innovation, initial challenges and obstacles will inherently arise. This should not deter CPG brands from entering the loyalty realm; in fact, now more than ever do CPG brands need to begin building loyalty with their consumers, as first movers and early adopters stand to reap huge benefits and gains. The challenges that face brands looking to initiate loyalty programs are surmountable with the right blend of creativity, strategy, and technology. Under this perspective, the right loyalty partner becomes an integral component of loyalty program success for CPG brands. Ultimately, putting the pieces together correctly will result in a winning program that keeps your consumers engaged, excited, and, of course, loyal.
[1] http://www.nielsen.com/us/en/insights/news/2017/dissecting-the-decline-factors-that-shifted-the-us-grocery-landscape-q1-2017.html
[2] https://www.granbymarketing.com/power-rewards-incentivise-customers-right-way/
[3] https://www.marketingweek.com/2016/05/09/importance-of-brand-strategy-data-and-customer-experience-have-grown-at-highest-rate-for-marketers/