As brands look to strengthen relationships with their best customers and get creative in new ways to do so, CPG brands often have a more difficult time building those connections than most. From an ongoing pandemic, supply chain shortages, limited access to data, and more, consumer packaged goods (CPG) brands traditionally have had challenges in building one-to-one relationships with consumers. Having to adjust by properly balancing transactional, habitual, and emotional behaviors from customers to drive customer loyalty further, CPG brands are finding that emotional loyalty is the key to success in 2022.
In this insightful whitepaper – Emotionally Invested Customers Crave More from Consumer Packaged Goods Brands – from Lauren Sutherland and Denise Holt, ICF Next, readers can learn the four macro trends that CPG brands can leverage to retain and grow their customer base, expand market share, and gain a foothold amidst the competition.
To learn more about this whitepaper, we at Loyalty360 interviewed Lauren Sutherland to better understand the concepts introduced and how they can benefit a variety of brands looking to increase emotional loyalty.
Q: Traditionally, why has it been so difficult for CPG brands to build emotional loyalty with consumers?
For CPG brands, emotional connection and loyalty often come from nostalgia—things that people grew up with and feel connected to through a shared history and celebrations. This could be childhood cereals or childhood games/toys, particularly. We saw nostalgia marketing, in particular, take on a whole new life during the pandemic when consumers sought, more than ever, the comforts of the past, but those connections aren't always easy to make. The results can be hit or miss.
Also, because CPGs are so much a part of consumers' daily lives, they can be taken for granted, and it might not be until something is out of stock that there is a realization that a preference even existed. Also, these tend to be low price point items, leading to a lack of value associated with them. Within existing CPG loyalty or rewards programs, the low-price, low-frequency of many CPG items can result in slow redemption for or slow value-return to the consumer, making it even more difficult to attract members and keep them engaged. Because of these dynamics, most CPG marketing today is also still very activation-based or focused on driving awareness—with one-and-done or seasonal campaigns.
These challenges can all be stumbling blocks for brands, but the most significant obstacle CPG brands face in building emotional loyalty with consumers is the lack of a direct connection to the customer—unless they're digitally native or direct to consumer brands. Because of this "arm's length" relationship, CPG brands rely heavily on TV ads, social media, out-of-home, direct mail/coupons, and email campaigns to reach and engage with their audience. But these channels don't always produce the level of engagement brands seek and still might require consumers to go out of their way to cut box tops, scan a QR code to visit a website, or mail something in.
Q: What are a few ways that CPG brands can build a direct connection with the consumer who buys their products?
This is where partnerships really come in—leveraging both grocery retailers and subscription delivery services. Think about when you go to Costco, and you can taste test so many items. That's a great way to get in front of customers and offer that experience right then, right there rather than trying to get the customer to buy a product, take it home and try it out. As foot traffic returns, brands should look to employ this tactic in new ways, incorporating digital aspects and capturing response data.
For example, some CPG brands have begun partnering with grocery retailers to include samples of products carried in-store with the customer's pickup order, creating a similar experience to onsite sampling. That's a great way to encourage discovery and it really puts the focus on that one product that's being sampled and gets it directly into the customer's hands in a convenient way. Other CPG brands have also partnered with meal-kit delivery brands to include samples as well. These samples usually are accompanied by coupons that ask customers to visit a website.
So much discovery now happens on social media, and there is great opportunity there to work with influencers and leverage their reach to get your brand in front of a large audience. But it's your product and a million others. The customer's attention is fractured when they are on social media— they're watching TV, texting with friends, or making dinner. Breaking through the noise is difficult in the always-on social environment. We are seeing many direct-to-consumer brands that started digital now opening up brick and mortar stores because social can only take a company so far—it can be a great preliminary acquisition tool, but the ROI decreases over time and social is not necessarily a great retention tool.
Q: How are CPG brands changing their overall marketing messaging to the public in order to better connect with them?
Personalization is an expectation of today's consumers. Still, with retailers often the ones receiving data on customer purchases and preferences, it is often difficult for CPG brands to incorporate personalization into messaging. This upcoming year will challenge CPG brands even further, when the deprecation of third-party cookies is likely to make it even more difficult or expensive for brands to verify their messaging is getting in front of the right people or get an accurate measurement of engagement and response. Overcoming this challenge might require brands to lean into their partner relationships with retailers even more—with the walled gardens retailers already have around their consumers' data, they will be protected from much of the impact. It is not feasible for many CPG brands to quickly develop channels that support zero- and first-party data collection, and all CPG brands will need to rely heavily on contextual marketing. Leveraging retailer relationships will help CPG brands better understand their customers and deliver products and messaging that match their preferences.
Q: Are CPG brands becoming more aware of how consumers are looking at them from a corporate responsibility focus, and how are they adjusting to that heightened attention?
Over the past few years, CPG brands have certainly shown they're aware (and are becoming more aware) of how closely consumers measure responsibility efforts against their own values. Companies simply cannot afford to stand idly by when it comes to corporate responsibility and social justice issues—savvy consumers are aware of where brands stand and how they are responding (or not responding) to the events around them. To prevent backlash, brands should work to integrate transparency across the value chain and invest in actionable, purpose-driven solutions that benefit communities. Brands that lack transparency, are seen as going against a movement or trend, or don't reflect the values of the majority of their customer base are likely to get publicly called out by consumers, which can negatively affect their reputation.
Q: What are some ways that CPG brands can transform in-store experience into improving digital and online experiences for consumers?
In the past, CPG brands relied heavily on in-store experiences, like sampling, to bridge the gap between them and their customers. These experiences worked to raise brand awareness, promote discovery for new products, and encourage loyalty. But with foot traffic still not back to pre-pandemic levels and the digital acceleration spurring ever-more online transactions, brands are looking to connect with today's consumers via new digital experiences. Whether it's leveraging influencers to share product experiences with their audiences to help brands stay top of mind or be discovered, or including product samples with contactless pickup orders and marketing material that asks consumers to log on for a digital experience, CPG brands need to employ new, innovative tactics to connect with consumers and keep them engaged.
Download the full whitepaper, Emotionally Invested Customers Crave More from Consumer Packaged Goods Brands, here.