Loyalty Proven Critical to CPG Sales Growth

September 9, 2011
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Traditional methods of CPG shopper marketing may be losing steam, as described in this article in Ad Age the other day.  Citing Catalina Marketing research, the article describes how the top 100 brands saw lower demand from 46 percent of loyal consumers during the past year, in the process “exacting a steep toll on sales.”

Traditional methods of CPG shopper marketing may be losing steam, as described in this article in Ad Age the other day.  Citing Catalina Marketing research, the article describes how the top 100 brands saw lower demand from 46 percent of loyal consumers during the past year, in the process “exacting a steep toll on sales.”

The loss of loyal consumers was defined as “shoppers who bought 70% of category purchases from brand prior year, then reduced to buying less than 70%.”  That’s a steep reduction in demand, although results varied by category.  While no root cause for the loss of business is cited in the article or presumably in the research, you can assume economic factors played a role.  However, it also suggests that the time is ripe to re-evaluate long-standing methods of shopper marketing strategies and tactics, which historically have been shown to support a high percentage of CPG sales activity.

To reach their findings Catalina analyzed anonymous frequent shopper data.  Basing shopper marketing decisions such as trade promotion spend allocation based solely on this data could be a fleeting approach to confidently driving retail sales.

Instead, as the article points out:

“This is a call for brands to continue to move to a consumer-centric marketing model and away from mass-marketing thinking…Most of CPG and [over-the-counter] marketing is built around measures of efficiency.  This data would indicate we would be better suited to move toward looking at customer lifetime value and that real revenue growth could be found in small groups of consumers who offer infinitely higher revenue potential.”

To best understand the characteristics of those small groups, CPG marketers should consider establishing direct relationships with consumers.  The way to achieve this is via pull, or opt-in marketing strategies that cut across all the ways and channels consumers interact with brands – including in-store, on the go and via digital communication channels such as social media and email.  Only recently has the technology emerged to enable this cross channel insight and action that, when blended with shopper data sources, will most certainly power the next generation of CPG shopper marketing.

I think the research portends a future where it will be difficult for CPG to consider shopper marketing technology investments apart from those designed around direct consumer relationships.  Considering loyalty is the target of now in-vogue Facebook marketing, there’s already overlap in the objectives of consumer and shopper marketing.  It’s conceivable that these become one-in-the-same, and successful CPG marketing will be defined by insights stemming from individually recognized consumers all the way through transactions.  What do you think?

Gib Bassett is an employee of SDC sponsor Teradata.