Opinion

Direct-to-Consumer Strategies in the CPG Industry

The CPG (Consumer Packaged Goods) industry, for the past 15 years, was set-up for scale – new products were introduced with big marketing campaigns, pushed into stores, and stacked high. But that’s no longer enough to win consumer engagement. CPG companies has struggled in recent years due to changes in consumer behaviour.

The advent of digital technologies, new competitors, and consumers who eagerly incorporate multiple shopping approaches into their everyday lives is disrupting, disaggregating, and dislocating the vertical’s once linear business model. Winning in this new economy takes more than new product lines or shelling out additional advertising bucks on outdated mass broadcast models. The CPG industry needs to revamp marketing and change the way it interacts with consumers, direct-to-consumer has become a prominent trend in this industry, causing many CPG companies to struggle to keep up to turn unknown consumer to knowns, and effectivity engaging them.

Forging direct-to-consumer relationships presents an opportunity to build new value and offer more authentic brand experiences based on knowledge of their consumers. With effective direct-to-consumer marketing, CPG brands have the ability to promote a product straight to their target consumers, bypassing intermediary trade channels.

Meanwhile, modern consumers demand true personalization, are discerning about what they spend on and crave unique brand experiences – both online and offline. They will prefer CPG brands that know who they are and connect with them on a mix of digital channels. The only way to fulfil this need is through the collection, harmonization and action of consumer insight data.

Many CPGs struggle on delivering consistent, seamless online-and-offline experiences, and growing consumer relationships. The challenges CPG brand marketers face are complex – loss of relevance and loyalty through lack of consumer behaviour understanding, shifts in demand drivers, fragmented and siloed data, and changes in buying journey.

Here are 5 ways to unlock the direct-to-consumer relationship and to improve consumer experience

A single source of truth

Without a single customer view and real-time insights, CPGs unable to deliver quality experiences that customers are looking for. Many CPGs are struggling with legacy systems, data silos, huge non-integrated martech stacks, quality of data etc. A single customer view enables CPGs to understand and better engage with customers by knowing who they are and what they are looking for. It’s a single source of truth about the customers and gives CPGs the ability to analyse past behaviour in order to better target and personalize future interaction and offerings.CPGs could leverage on the Customer Data Platform (CDP) in creating a single source of truth. A CDP integrates data from across all of your engagement channels to create a unified consumer view, providing CPG marketers with a single, accessible, and actionable view that can be used to drive meaningful cross-channel engagement with consumers.  

Turning unknown consumers into knows

Consumers today purchase CPG products through supermarkets or online intermediaries, almost never buying directly from the brand itself. CPG brands don’t know who their customers are and don’t know anything about them. Consumers are more aware than ever of the value of their personal and preference data. With the majority purchasing CPG products from third-parties, turning them into known data will enable marketers to craft persona mapping to all different consumer profiles like what compels customers to buy, their wants, desires, preferences, and the deals or discounts that would drive them to purchase and build loyalty. CPG marketers need to ask and offer the right value exchange such as loyalty reward tactics, to collect marketing opt-ins, purchase intentions and preference insights.

Collecting data and Insight at scale

Collect opt-ins and preference data required to turn unknown customers into knowns in the database to begin truly forging direct-to-consumer relationships. If you offer a compelling value exchange, consumers will share their preference data with brands —purchase intentions and motivators, accompanying their PII data, to improve personalization and help build up a picture of who they are.

CPG brands can deliver this through interactive experiences, accrue opt-ins and deliver an altogether better experience with a tangible value exchange for the consumer, in the form of added value (loyalty points, coupons, competitions, sampling, or content etc).


Date-driven engagement

Consumers today interact with brands on multiple platforms and channels. True data-driven messaging is about making every interaction with the customer meaningful and a moment of value. Having access to customer data helps to deliver exceptionally relevant experiences and loyalty, based on real-time analytics, and across all touchpoints, so consumers receive the right message at the right time.

Most of the modern messaging solutions should enable CPG brands to use customer data to deliver highly personalized and contextual communications across various customer engagement touchpoints. Its ability to launch campaigns across email, SMS, mobile wallet and apps take action from the insights and analytics gathered. These can then trigger actions at scale and drive meaningful results.

Rewarding customer and building loyalty

With CPG brands typically leveraging on retail partners for distribution, they cannot rely on traditional avenues to realize loyalty initiatives. At the same time, the retailers are typically not inclined to hand it over to CPG Brands as part of a loyalty program. Since CPG brands have invested significant effort to attain a customer, it’s essential for them to build a customer retention strategy.

Customer loyalty programs have been an afterthought of many CPG brands but if implemented effectively, will offer immense benefits. Not only do they make it possible for brands to identify their customers, but they also help brands to collect comprehensive data points to further those direct-to-consumer relationships. A loyalty program shouldn’t be one-size-fits-all — there is a need to consider a customer’s entire activity history to deliver personalized rewards. That’s giving special treatment to the best customers, delivering contextually relevant rewards. It’s about using data to deliver them the right offers and rewards at the right time.

CPG brands can do this by delivering personalized offers that use customer data to define, manage, tailor offers online, in-store with coupons, recommendations, and exclusive offers. Brands can also include customers’ entire activity history, including engagement with social and email, store/site visits, and more to deliver powerful rewards.

Developing an effective loyalty program is not easy. CPG brands could partner with a coalition loyalty programs to leverage on their platform. This allows brands to collect consumers’ data from purchase interactions with your brand, and other shopping behaviors within the coalition network. With the ingestion of the coalition comprehensive data, it enables CPG brands to develop personalized rewards, segment customer value and target potential members to be converted as customers. The coalition partnership also offers additional value, ensure a satisfying and differentiated experience with minimal cost implications to CPGs. If done right, it dramatically improves results and builds lasting loyalty.

The global pandemic has changed the way that CPG brands think about connecting customers to their products and nurturing customer relationships moving forward. Any growth strategy that fails to include a direct-to-consumer component will be unable to make a difference in this new economy. The good news is that lot of digitization capabilities and tools out there becoming more mature and easier to implement.

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This article is opinion from Adrian Hoon is COO / CMO of Global Poin Indonesia, the leading operator of GetPlus coalition loyalty program in Indonesia. A seasoned loyalty / marketing professional with over 20 years of experience in marketing and CRM technology in Asia- Pacific. Adrian lead his teams formulate tailored strategies and marketing solutions that drive marketing ROI and efficiency for industry-leading Travel, Retail, Media, CPG, Insurance and Telecom companies in Asia Pacific. www.gpi.id

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