There is no denying that competition for customer loyalty is tough for all brands today. Along with technology, customer expectations are rapidly evolving. People now have more choices, as digital and social technologies have given consumers more power, and the entire customer engagement landscape has become increasingly complex and segmented.
This is a growing reality for brands across almost every industry, and it is especially true for purveyors of Consumer Packaged Goods (CPGs). Faced with changing consumer tastes, new product offerings, and fluctuating prices, many CPG retailers are desperately searching for better ways to acquire and retain customer loyalty.
To combat these forces, personalized customer engagement is now a vital component of success. And this idea was further substantiated by the results of a new independent study from Kantar Retail that assessed Catalina’s personalized Customer Value Campaigns (CVCs).
Catalina, a personalized digital media platform, created CVCs to help retailers target and personalize coupons and promotions. CVCs attempt to build customer loyalty by personalizing thousands of unique and retailer-specific coupons for every household. Catalina accomplishes this task by modeling and segmenting customers into groups, which are defined by a number of variables including typical spending amount, basket size, consistency and frequency of visits, and more.
The objective of the independent analysis was to determine the actual effectiveness of the CVC approach, and the overall summation was that personalization drives “significant increases” in retail sales and customer loyalty.
Specifically, CVCs typically generate an incremental increase of $16 per consumer. Furthermore, by leveraging the power of CVC personalization, the average retailer can expect to receive over $10 million in incremental sales for every 800,000 consumers.
“As the shopper and retailer landscape becomes more fragmented, retailers need creative new ways to drive shopper loyalty and conversion,” said John Craig, Executive VP of Consulting at Kantar Retail. "Personalized pricing and value is one trend that appears to be working. The results of this study demonstrate definitively that Catalina's Customer Value Campaigns effectively increase shopper loyalty by helping retailers personalize value based on specific shopper needs.”
Further study results showed that most of the incremental sales increases were due to more frequent individual shopping trips. During a typical CVC campaign, individual sales increased, on average, from $14.03 to $19.05 across every group studied.
“Personalizing value based on the needs of every customer is a cornerstone of loyalty marketing and can help drive significant profitable growth for retailers,” said Steve Prebble, Group VP for Catalina’s Retail Solution Group. “Catalina Customer Value Campaigns get the right offers to the right customers to positively influence shopper behavior with minimal purchase subsidization. The result is a significant payback on the retailer's investment.”