In light of the ongoing pandemic, the increased focus on privacy that has resulted in a crackdown on third-party cookies
, and the emergence of increasingly powerful “walled gardens” around data, consumer packaged goods (CPG) companies are redefining their relationships with retailers and shoppers. To thrive, brands are building deeper relationships with customers and forging new bonds with retail partners through innovative approaches and digital interactions.
The outcome of deeper relationships—emotional loyalty—has never been more important, but CPG brands are often more challenged than other industries in building strong, one-to-one relationships with their customers. As consumer expectations continue to evolve alongside rapid digital acceleration, brands are working to cultivate direct, more resilient connections with customers that lead to increased participation
. Ultimately, brands with greater participation will rise to the top and those without will struggle to move forward.
Unique roadblocks to emotional loyalty
For CPG brands, emotional connection and loyalty often come from nostalgia—things that people grew up with and feel connected to through shared history, experiences, and celebrations. These could be childhood cereals, games, or toys—but those connections aren’t always easy to cultivate, and the results can be hit or miss. Additionally, because CPGs are so much a part their daily lives, consumers often take them for granted. It might not be until something is out of stock that a consumer realizes a preference even existed.
Because CPGs tend to be low price point items, with varying degrees of purchase frequency, where price changes are often noted and barriers to switching are low, existing CPG loyalty or rewards programs may see only slow redemption and customers may see low return on value. CPGs are commodities with tight revenue margins—in an already competitive landscape— so loyalty must be driven by forces other than convenience and value.
These challenges can all be stumbling blocks for brands, but the biggest obstacle CPG brands face in building emotional loyalty with consumers is the lack of a direct connection to the customer—unless they're digitally native and do not rely on intermediary retail partnerships. Because of this “arm’s length” relationship, CPG brands rely heavily on TV ads, social media, out-of-home advertising, direct mail/coupons, and email campaigns to reach and engage with their audience. However, these channels don’t always produce the level of engagement brands seek and might require customers to go out of their way to cut box tops, scan a QR code, or mail something in.
Building direct connections with consumers
This is where leveraging partnerships, such as grocery retailers and subscription delivery services, really come in. Think about taking a trip to Costco, where you have the option to sample a variety of products. It’s an effective way for food CPG brands to get in front of customers and offer an experience in the moment rather than convincing the customer to purchase the product first and then take it home and try it out.
Some CPG brands have partnered with grocery retailers to include samples of products carried in-store within a customer’s pick-up order, creating a similar experience to onsite sampling. It's a great way to encourage discovery while focusing on getting one product directly into the hands of the customer. Other CPG brands also partner with meal-kit delivery brands to include samples as well. These samples usually are accompanied by coupons that asks customers to visit a website.
While physical experiences, like browsing the aisles and sampling, are still a consumer favorite, customers are increasingly turning to digital channels. It’s crucial that CPG brands consider where digital fits into their omnichannel strategy. With the global pandemic now reaching the two-year mark, the need for brands to continue innovating and providing value to consumers through digital channels is likely to continue its upward trajectory.
Personalized messaging for better connections
Consumers have more flexibility than ever when it comes to how they engage with brands and they expect experiences, omnichannel or not, to be more personalized to meet them where they are in their shopping journey. However, with retailers most often being the ones receiving data on customer purchases and preferences, it is difficult for CPG brands to incorporate personalization into messaging. This year will challenge CPG brands even further, when third-party cookies go away, making it even more difficult (and expensive) for brands to verify accurate measurement of engagement and response of their messaging.
Overcoming this challenge will require brands to lean into partner relationships even more—with the walled gardens that retailers already built around consumer data, gating valuable insight, they will be protected from much of the impact of third-party cookies deprecation. It is not feasible for most CPG brands to quickly develop channels that support zero- and first-party data collection, and all CPG brands will need to rely heavily on contextual marketing. Leveraging partner relationships will help CPG brands better understand customers and better deliver the products and messaging that match customer preferences.
Working with an integrated agency partner with deep capabilities
across marketing, communications, technology and transformation services will elevate your brand’s ability to deliver on consumer expectations and help you mitigate roadblocks before they impact your business. By encouraging participation with your brand in a way that is relevant and personalized, the right partner will guide you—through a deep, data-driven understanding of what your customers are thinking, feeling, and doing.
To learn more, download our recent CPG white paper, Emotionally invested customers crave more from consumer packaged goods brands.