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How CPGs Can Counter Decreasing Brand Loyalty

How CPGs Can Counter Decreasing Brand Loyalty
May 03, 2017

Digital channels present an incredible opportunity for CPGs to connect directly with consumers and build lasting relationships, powered by engaging loyalty programs.

Customer Loyalty is Slipping Away

The CPG industry is in a state of flux – thriving ecommerce, economic pressures, and the proliferation of private labels and store brands have led to complexities. These, in addition to the inability to keep up with changing consumer expectations, have contributed to the decline of customer loyalty to brands across 12 of the 14 mega-categories.

CPGs are realizing that they can no longer build strong, profitable customer relationships relying on traditional avenues alone. Today’s shoppers use mobile devices for in-store activities, seek recommendations from friends on social media, check user reviews online, and leverage real-time price-tracking apps before making purchases.

New digital channels and social media are creating opportunities for CPGs to establish direct-to-consumer relationships.

Leveraging Digital to Drive Brand Loyalty

Loyalty programs make customers feel recognized and valued, thereby ensuring customer retention and brand loyalty. Millennials, representing the largest section of the U.S. population today, have shown greater brand affinity than previous generations.

Successful brand loyalty initiatives must be able to engage them at every digital touch point. Although CPG’s mobile spending share continues to be lower than other industries, analysts expect mobile initiatives to account for 47% of digital spending. This is a much needed course-correction for an industry where 37% of consumers use mobile apps for shopping, and where 40% want even more digital interactions than what brands are providing.

With shorter attention spans, whatever the brands ask customers to do in exchange for customer loyalty points and rewards needs to be quick and simple. Mobile simplifies tasks, enabling interactions through a single swipe, check-in, upload or hashtag. Recent implementations include:

  • Upload a Receipt: Engaging real-time promotions such as click-to-win motivate shoppers to take snapshots of their printed paper receipts to claim discounts, rebates, customer loyalty points or rewards. Kellogg’s Family Rewards encourages customers to upload a picture of their receipts to add points to their accounts.
  • Scan/Enter a Code: Brands can print and distribute dynamic QR codes and on-pack promo codes as part of promotions.
    • QR codes are cost-effective and allow customers to scan for immediate information about the brand, product, and offer at the point of purchase. P&G and Walmart placed QR codes on specific bus stops and food trucks to encourage on-the-go consumers to scan and buy products instantly.
    • Promotions using alphanumeric codes printed on or inside product packaging can generate extensive consumer data as well as deep levels of consumer engagement. Coke Rewards loyalty program is built around on-pack codes which are located under caps and product wraps.
  • Gamification: As confirmed by 27% of millennials, competitive games have been particularly effective in driving consumer interaction and ensuring consumer engagement. Klip, began inserting virtual coupons into mobile games, which popup as rewards and are redeemable for free bags of Popchips.
  • Smart Devices: Emerging technologies such as retail iBeacons and geo-fencing, along with wearables like Fitbit and Apple Watch, offer intriguing possibilities for loyalty programs –
    • iBeacons can prompt customers to launch an in-store locator with a map indicating the location of the products and promotions
    • A healthy snack brand could reward customers wearing Fitbits based on steps tracked, or for check-ins at their gym
    • CPG brands can utilize geo-fencing to deliver alerts when consumers are within a pre-determined proximity of specific retailers. Walgreens sends a push notification to the Balance Rewards members entering their parking lots, which makes accessing their rewards card convenient.

Build Ecosystems

Partnerships are becoming a key differentiator in CPG loyalty programs. Data collaborations help produce comprehensive digital profiles that capture social data and track consumer engagement across channels. CPGs and retailers are “natural partners", as their individual loyalty programs help identify the valuable customers they both share. Consequently, they can build the right promotions to target the shared segment.

A Win-Win for Consumers & Brands

For CPGs, the data gathered from customer loyalty programs – coupled with that gained from traditional external sources – is extremely useful towards more targeted spending in promotions and campaigns.

Purchase decisions made at-the-shelf have risen – accounting for 51% of all purchase units – creating an opportunity for CPG companies to influence unplanned purchases. A loyalty app can help CPG brands engage their customer loyalty program members in real-time at the point of purchase. 70% of shoppers revealed that coupons or promotions sent to their mobile phones when near or inside stores triggered unplanned purchases.

In Summary

Today’s consumers are constantly on the lookout for the most rewarding offers and best deals, but they also choose to be loyalists and feel kinship to brands that engage them in interesting, fun, and meaningful ways.

Today's consumers are constantly on the lookout for the best offers and have a range of tools to discover them

Data and shopper insights will play a critical differentiator in helping brands build two-way relationships with consumers, as success will come from a process that prioritizes listening, learning, and acting with greater precision.