Tracking Consumer Loyalty in CPG Industry
While the CPG industry spends billions of dollars in advertising spend to enhance consumer loyalty towards its brands, it does not have a meaningful way to track and utilize loyalty information. The primary reason for this has been the reluctance of retailers to share the transaction level sales data with CPG organizations. In this blog, we explore a possible approach for CPG companies to track & utilize consumer buying data and reward loyalty for target brands.
This approach eliminates the dependence on Retailers for collecting consumer buying information. While it removes the dependence on retailers for the buying information, it will need to depend on consumers using a form of registration of purchase on their own will and hence needs to incentivize the consumers to register the purchase, and at the same time, make the process of registration as easy as possible. Also there is need to make this process be able to register genuine purchases only and hence would call for some level of changes in packaging of the consumer products. Thus in the current form the model will only justify the investment for atleast slightly higher-end products.
The proposed approach relies on leveraging the eco-system of social media and its integration with the mobile platform. The penetration of mobile phones around the world and the advent of social media platform, there a unique opportunity to leverage these 2 platforms and build a framework to enable consumer loyalty tracking in a very easy to use and relatively less expensive way.
Any consumer loyalty program has to address 3 parts -
· Consumer identification and registration
· Registration of product purchase
· Analysis of consumer buying pattern and models to influence future buying
In this blog, we will discuss a possible approach for the first 2 aspects, as CPG organizations have good handle on the 3rd aspect.
Consumer Identification and Registration -
Unlike consumer durables, where after sales service is a big part of the overall consumer experience, CPG products do not necessitate post purchase consumer engagement and hence the need for registration. But for any loyalty tracking, registration of consumer is an essential first step. With the advent of social media platforms, this task has got relatively simplified. CPG organizations can use the likes of FaceBook to create a fan-page which will can involve registration. This can generate a unique ID/number which can be used for tracking the consumer buying and other analytics
Registration of Product Purchase -
This is an area where the big challenges come in. In order to allow registration of genuine purchases only, there needs to be some level of unique IDs created within the product packaging which will be visible only to consumer after deciding to use the product. The most simple way could be a simple bar-code on the inside of the product packaging. With the advent of camera phone and availability of apps for scanning of bar-codes using camera phones, this can be a very simple step for a consumer. In fact even better would be for CPG companies to provide app on consumer's smart phones to scan the bar code and also seamlessly submit the purchase registration request. The registration may or may not involve scanning of the retailer invoice number (again the bar code on the receipt). This would make the registration process simple for a consumer as well as provide the appropriate checks to allow registration of genuine purchases only.
The only issue could be the amount of overhead it would add for providing a unique ID on the inside of the product package (in form of a bar-code) and the cost associated with it. Due to this it could mean that this process could be used only with relatively high value products/premium products. But in a sense these are the kind of products where CPG companies would like to track and incentivize loyalty, more strongly.
With the above 2 steps, the CPG organizations would have the right framework and solution in place to capture the consumer loyalty data and will have all the information needed to drive intelligent analytics to analyze the loyalty pattern. They would also have the right platform in the form of the 'fan-page' and the 'smart phone' app to distribute individualized promotions to reward loyalty and also influence 'point of purchase' behavior (Note I am saying 'Point of Purchase' which indicates the product display isle, vesus the 'Point of Sale' by which time the purchase decision has already happened)
