Today’s consumers don’t want to be talked to; they want to have a conversation. They want to be marketed to as individuals, not as faceless members of the masses.
Consumer packaged goods (CPG) organizations, in particular, recognize the value of these conversations. This dialogue – via loyalty programs, promotions, social media engagement and direct-to-consumer (DTC) efforts – can help them better understand consumers’ preferences and behaviors so they can form deeper connections with their customers.
As inflation still reigns and supply chains continue to be reconfigured, understanding changes in consumer behavior has become more important than ever. This is helping CPG brands get closer to their consumers to find new ways to personalize offers and drive loyalty.
Here’s how CPG organizations efficiently and effectively develop this understanding through advanced analytics and data collection and how your organization can do the same.
Personalization in action
Personalization shows customers that companies are listening to and reflecting their needs. And when consumers feel they are getting a personalized experience, they’re more likely to become repeat buyers.
Personalization can take many forms. Some companies provide in-store and online AI-enabled product recommendations. Others are operating behind the scenes using predictive analytics to improve sales and customer lifetime value performance. Combining tools like event stream processing with machine learning at the edge allows for a better understanding of consumer preferences in near real-time.
Another way CPG organizations can embrace the changing consumer is by creating new products and services designed to meet evolving needs. Think of the chocolate maker introducing customizable holiday tins for consumers who want to mix and match their candy selections.
Other CPG organizations are pursuing product premiumization, an innovation strategy that helps to justify price increases to consumers by providing additional value (i.e., price value proposition) based on a customer’s preferences for certain product attributes, such as convenience.
It’s not just personalization – it’s personal
Today’s consumers often let their values shine through their purchases. Now more than ever, they are looking for CPG organzations aligning with their beliefs. For brands to build loyalty and truly drive engagement, they need to listen to consumers wherever and whenever possible.
This often starts on social media. For CPG organizations, boosting recognition on social channels can’t be overstated. A recent study showed that 90 percent of people buy brands they follow on social media.
The DTC model also helps consumers make direct contact with a brand. This significance is underscored by recent alterations in consumer tracking regulations and technology, such as shifts concerning cookies and opt-in prerequisites, which have adversely affected customer acquisition and marketing expenses.
DTC areas outperform traditional retailers by engaging with consumers and gleaning feedback. As other channels change (think brick-and-mortar stores during the pandemic), DTC delivers a steady connection to more invested consumers.
Gathering data is the key to effective conversations
Data plays a pivotal role in facilitating effective conversations. Regarding CPG organizations, their understanding of consumers begins when the first piece of data hits their internal systems. With each new data point, CPG brands gain deeper insights, helping them fine-tune their products and marketing campaigns toward their target audience.
The first step to ensuring the success of a brand’s strategy is centralizing data gathered from various channels and silos. Although all channels can access the same version of the truth about a consumer, unifying the data produces a single view rather than disparate views or multiple profiles that can cloud the conversation you’re trying to have with consumers.
While centralizing data isn’t always simple, using the right tools – like a customer data platform (CDP) – can build a consistent, centralized database. CPG brands increasingly value such tools as they prioritize gaining a clear and comprehensive understanding of their consumers.
But, making the most of data requires analytics
To get the full potential of your data, you need analytics. At the heart of an effective CDP is sophisticated data analytics. CPG marketers use data analytics to make sense of large amounts of consumer data, using these insights to guide their product strategy, brand and marketing campaigns.
This can lead to more effective digital marketing tactics, personalized customer interactions, greater customer satisfaction, higher efficiency and bigger profits.
Bringing together data from various sources allows marketers to see the complete user journey in one place. For example, analytics can show leaders:
- How consumers arrived at their website (e.g., ads, social media).
- All of a customer’s interactions, such as inquiries or product purchases.
- The entire consumer lifecycle, from an unmet need and awareness of CPG organizations, products and services to interaction with the company, engagement and purchase.
With these kinds of actionable data, CPG marketing teams can more effectively align marketing campaigns and product features with customer expectations. This can minimize the churn rate and increase sales.
For example, Ulta Beauty uses SAS® Customer Intelligence 360 to re-imagine customer experiences and personalize marketing campaigns. SAS Customer Intelligence 360 can predict and determine what consumers want, leading to a better customer experience based on their profiles, purchase histories and browsing behaviors.
AI predictive models helped Ulta Beauty optimize print marketing campaigns by decreasing marketing costs without reducing marketing effectiveness. Automating and personalizing its marketing efforts helped the beauty giant achieve an impressive 95% sales penetration, meaning 95% of sales come from returning consumers.
Data analytics in digital marketing gives your organization a competitive advantage. With it, CPG organizations can better understand their business, consumers, and the surrounding environment. Organizations can use the insights to design marketing strategies, attract new consumers, keep existing consumers, discover which marketing campaigns are underperforming and focus on their most successful products. They can also use web analytics tools to gather information about competitors, which keeps the company up to date on the market to prepare for future challenges and adjust campaigns to market sentiment.
The retail market and consumer preferences continuously change. To achieve and sustain success, CPG organizations must remain agile and adaptable. They must continue to align their products and strategies with these ever-shifting preferences. Staying attuned to these changes ensures that CPG organizations can effectively cater to the demands of their target audience and maintain a competitive edge in the evolving marketplace.