Ritual engagement: The key for CPG value growth
All brand owners want strong, direct relationships with their consumers. The problem is most consumers simply don’t care enough to bother. Retailers sit in between the two, and their sales value/margin is too low to make changing this dynamic worthwhile. But is there a way to change this? We think so, and our experience with some of our clients proves it.
Thinking like a customer
The truth is that most customers, even repeat ones, will not read your emails or marketing comms. They may visit your website or watch a video to get a better idea of your product, but that is likely to be the extent of their relationship with you. Despite this, CPG martech spend continues to rocket as companies invest millions in tech stacks that promise to provide more visibility and insight into customers. The timelines of these programmes typically stretch to years and involve significant investment, with large-scale disruption to governance and workflows as different parts of the business look to focus on different requirements, functionalities and service levels.
The result? All too often, it’s ecosystems that may have great features but fail to produce the intended business outcomes. You may have more data on your consumers, but insufficient scale to make an impact, and a continuous need to invest in reach and recruitment initiatives to feed the machine.
So, what is the alternative?
Rituals and habits
Building direct, one-to-one relationships with consumers should be the number one priority for CPG businesses. But doing so means really focusing on what motivates action.
Our lives are made up of repeated rituals and habits, and they also inform how we think about products and brands too. Brand loyalty is often billed as being built on shared values and engagement, but it often boils down to habit. If a product works, it becomes part of the routine until either it stops working properly or something better shows up. These rituals are everywhere and can be an engagement goldmine for brands. Think about all the products you buy weekly – bottled drinks, snack bars, fruit juices, dairy products, cleaning products… how many do you buy on autopilot?
Brand loyalty is about becoming part of your customers’ habits, so they buy you on autopilot. But your marketing strategy should trigger ritual engagement – the nudge to trigger a conscious connection amidst this auto-pilot malaise. It means focusing on customers you do have and working to increase the quality of your regular interactions, at or around their product use.
Being able to do this effectively requires CPG brands to prioritise two critical enablers:
The first enabler is a value proposition that really motivates the consumer to do something. Successfully doing this allows brands to engage with each consumer. And connecting that engagement with each pack bought, and aligning that into your CRM database is the equivalent of connecting offline product sales with the customer profile. This essentially closes the sales loop and brings that business intelligence into the CRM data set.
The second is data. Specifically, first-party data. At Portera, one of our key messages to CPG brands is that they should be laser-focused on building up their first-party data. This is both true for D2C and B2B CPG sales. We find that many are aware of the need but are not entirely sure of the how. And very often they talk of failed initiatives in the past. But new technology is enabling improved strategies. The result is it is possible for CPG businesses to have a realistic expectation of building 50%+ first-party data on their consumers. No longer should the sector rely on third parties and intermediaries.
Quality over quantity?
We have success stories when it comes to building value propositions and digital experiences that help motivate consumers at scale to commit to regular, direct brand engagement. At the heart of our approach is optimising first-party data collection and analysis and bringing together online and offline data streams directly within the CPG business itself.
For one of our clients, a CPG business, we are seeing over 20% of all offline sales integrated into their CRM because the consumers are ritually engaging with the packs. Over 20% visibility on who is buying what, when, and how they are moving through their product cycle. The business value of this data is (almost) immeasurable.
This helps to create a highly engaged audience that drives repeated value and enables continuous improvements in business processes. It also optimises media spend, particularly around martech and D2C investments. It’s not a revolutionary approach, but it is an effective one that brings brands and customers much closer together.
Brand owners need to rethink the never-ending rush for new customers and instead focus more effort on engaging existing customers. It is here that the true value sits, and we can build the value propositions and digital experiences you need to take full advantage.