CPGs Ditch Middlemen To Connect Directly With Consumers

In Customer Engagement, Featured on App, Loyalty & CRM by Vaughn Highfield

Customer Loyalty, Loyalty one, Phaedra Hise, CPG, Consumers

CPGs have traditionally relied on retailers in their customer marketing efforts, but the tide is changing.

Today, more CPGs going directly to the customer to forge more meaningful relationships. In the process, CPGs are collecting their own transactional data and leveraging loyalty — the changing dynamic promises to be a win-win for both brands and retailers.

When it comes to loyalty, CPG and retailer relationships have historically been slightly strained, with each pushing for more benefit from the other. Retailers want CPGs to fund more product promotions, and CPGs want greater access to the retailer’s data banks of transaction-specific data. A new wave of CPG loyalty promises to bring the two participants closer together.

Leading CPGs are using loyalty fundamentals to engage customers, build relationships, and collect valuable information. They’re testing technology and partnerships to solve some of the historical problems with CPG loyalty, and relying on data to inform their conversations and initiatives with retailers. They’re also building some interesting models for the future.

One such CPG is L'Oréal Paris. The manufacturer recently ran a month-long promotion with Walmart and offered product with a special bonus code with each purchase. The promotion increased L'Oréal Paris's loyalty program awareness with existing Walmart customers who shop the category, and drove membership activation.

Jennifer Paganini, Vice President of Category Management, Hair Color and eCommerce at L'Oréal Paris, says retailers are now going directly to the manufacturer to brainstorm ways of integrating the program into their initiatives.

"That promotion helped us start conversations with other retailers," says Paganini. "It's a two-way dialogue now instead of promotions being a one-way push from the retailer."

As this new loyalty relationship grows, here are some tips to maximize the returns for both CPGs and retailers:

Stay targeted. Though current CPG and retailer initiatives occasionally must still be tactical in order to drive immediate sales, both retailers and CPGs are developing a more-strategic, profit- oriented mind-set and the tool kit to execute against the resulting strategy. Everyone wants to maximize the efficiency of their marketing budgets, and the way to accomplish that is to conduct fewer mass promotions and more targeted initiatives. Loyalty program data can help identify the most valuable customers that retailers and brands share. With that information, CPGs and retailers can build the right promotions, with the right long-term context, to target that shared segment.

Stay relevant. Taking a loyalty-program mailing list and throwing a bunch of cross-brand offers at it can be very tempting. But sending irrelevant offers and messages will dilute the power of the list you’ve worked so hard to create. Instead, segment that list to maintain a dialogue of highly relevant communications with customers, maintaining high engagement rates. For example, try building offers and content around life cycle or lifestyle management.

Explore partnerships. Co-sharing can boost earn for customers and increase data collection and engagement for brands. Choose like-minded partners— brands within your company or outside it—and ensure that the resulting promotions are on message. And remember that the most-effective initiatives will likely require some degree of data sharing.

CPGs and retailers are shifting from mass marketing and moving volume to targeted promotion and relevance — it’s a change that will pay off in customer engagement and increased profits. Today’s CPGs are determined to connect directly with their best customers, and retailers are willing to facilitate the connection, because they can see how it benefits them, as well.


Phaedra Hise 2

This guest post comes courtesy of Phaedra Hise, Editorial Director at LoyaltyOne – a consultancy group that specialises in finding out the facts about customer loyalty.

You can meet members from LoyaltyOne at this year's Europe's Customer Festival and at America's Customer Festival, LoyatlyOne's Bryan Pearson will be speaking.