Digital disruption is creating a host of challenges for consumer-packaged goods companies. Consumer preferences and shopping habits are changing as technology evolves. More than 90 percent of consumers now own a smartphone and mobile shopping is on the rise. Research firm Forrester estimates that U.S. consumers will spend $93.5 billion in retail purchases on their smartphones this year and $175.4 billion in 2022. Shopping is happening anywhere and anytime, driving a 16 percent growth in e-commerce in 2017.
Popular startup brands like Dollar Shave Club and RXBar, which have designed their products and business models around digital channels, are on the rise and continue to attract customers while adding more competition to the CPG landscape.
In light of these trends, legacy CPG brands are re-thinking their approach to brand building and customer engagement. However, they continue to be challenged by data. They either lack customer and transaction data, which is typically owned by retailers, or the accuracy and validity of the data they do have
CPG marketers can succeed in this environment by employing the following data best practices and techniques:
Identify gaps in your data. A brand’s entire marketing team should meet and assess the data sets they have and use. It’s important to sit down and honestly answer these questions:
- Identity – Are your customer IDs connected to a verified name and address? What percentage of your customer file can you deliver a message to on a verified online ID (otherwise known as reach)?
- Consumer profiles – How many people-based profiles do you have? What granularity of transaction data is available? For example, can you see SKU-level transactions?
- Persistency – What percentage of the individuals can you maintain an ongoing connection with over a 12-month period?
After the gaps and opportunities are acknowledged, the marketing team can focus on building and maintaining an accurate and stable data set that drives effective customer engagement.
Read: Other questions to ask DMP vendors.
Focus on first-party data
For brands, the strongest and most accurate data sets are connected to real people rather than device-level data. (Note: this data is either submitted knowingly by the customer or captured in known interactions.) Focusing on data
Use custom audience models to find the best prospects. Retailers and their data partners have made strides to provide CPG brands with greater visibility into who is purchasing their products, how often, the most popular SKUs, etc. by sharing in-store purchase data. Some data partners have the ability to connect that retail-level data to U.S. households. From there, CPG marketers are able to create custom audience models that hone in on the best prospective customers they should be engaging with. Custom audience models use data about a brand’s existing shoppers, shoppers in a specific product or brand category, shoppers who purchase with competitors and more to identify those that are most likely to shop their brand.
Keep in mind, these data sets only go as deep as the household level it should be the individual level. Marketers should ask their partners for detailed information about the data they’re providing – does it map back to a household or individual? Is it connected to real people?
In summary, CPG brands will continue to make marketing and customer engagement more data-driven and personalized. While they may lag behind other industries in terms of their ability to leverage data at scale, progress is being made and will move the industry forward. CPG brands can set themselves up for future success by ensuring they have the most accurate and robust data set possible to activate and measure against. A strong data foundation is the key to effective marketing and will support long-term growth.