BUILDING CONSUMER PACKAGED GOODS Brand Loyalty Through Digital Consumer Strategies Table of Contents TABLE OF CONTENTS Executive Summary . . . . . . . . . . . . . . . . . . . . . 3 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Turn Challenges into Opportunities . . . . . . . . . . . . . 6 Omnichannel Expansion . . . . . . . . . . . . . . . . . . . . . 7 Reallocation of Marketing Spend . . . . . . . . . . . . . . . . 8 Increased Personalization Efforts . . . . . . . . . . . . . . . . 9 Incentivization and Brand Loyalty . . . . . . . . . . . . . . . 10 The Evolving Path to Purchase . . . . . . . . . . . . . . . . . 11 CPG Brands Playbook for Digital Transformation . . . . 13 Hone Your Digital Consumer Strategies as You Learn About Your Consumer . . . . . . . . . . . . . 18 Conclusion / About Janrain . . . . . . . . . . . . . . . . 19 Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 2 Executive Summary EXECUTIVE SUMMARY We’re now in an era of digital marketing where Consumer Packaged Goods (CPG) brands have the opportunity to cultivate direct relationships with their consumers. Not just groups defined by demographics, but individual members. Loyalty and trust will flow to those brands who demonstrate they understand their consumers best. The key: Using richer consumer data in more nuanced ways. First- and third-party data from social networks allows brands to attain a degree of clarity about individual consumers that isn’t possible with traditional demographic information. Leading brands are already applying these insights to drive their expansion into omnichannel marketing, guide their budgeting decisions, enhance their personalization efforts, offer more relevant incentives and loyalty programs and tap into new paths to purchase. This white paper outlines concrete first steps borne out of our work with some of the world’s leading CPG brands. Kickstart your digital consumer strategy with these tested, trusted principles. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 3 Introduction INTRODUCTION CPG brands’ long-term success depends on building direct relationships with their consumers. Several trends fuel brands’ motivation: • Between 1999 and 2014, 25 percent of product brands fell off the list of top 100 leader brands. Over that period, consumer criteria for “leader brands” has shifted from “progressive, dynamic, innovative and up-todate” to “trustworthy, authentic, reliable and, increasingly, visionary.” • The challenge to keep up with consumer expectations is as valuable as it is difficult: perceived leadership is an important purchase consideration for over 70 percent of consumers.¹ • • U.S. retail store visits fell from 35 billion in 2009 to 17 billion in 2013.² • Looking ahead, competition for per-capita consumer spending and loyalty is expected to increase as population growth slows.4 The age of the consumer—in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful consumers—has defined the economy for several years.³ Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 4 Introduction The previous trends, among others, drive these five questions that we regularly hear from the CPG industry: 1. How do we earn loyalty and sustain it? In spite of their sizable, sustained investments in marketing and brand building, three quarters of packaged goods categories have suffered from a decline in ‘must-have’ brand loyalty since 2011.⁵ 2. How do we build trust and maintain it? As consumer access to information grows with competition for their attention, trust is the best way to maintain their loyalty.⁶ However, Millennials -now the largest living generation in the United States- dislike traditional advertising and put much more trust in information sources that are not actively focused on selling.⁷, ⁸, ⁹ 3. How do we create unique brand experiences that make consumers feel valued and keep them coming back? To stay in step with changing consumer behavior -and consumers’ emerging preference for experiences as a path to happiness- brands are beginning to experiment with experiential marketing.10, 11 4 5. and What type of data should we be seeking? Once we have it, what should we do with it? CPG brands are very sophisticated in the acquisition methods and quantity of data assets that they use to understand their consumers and the efficacy of their marketing. However, they haven’t historically needed a direct relationship with the consumer. We have found that 96 percent of consumers say they receive mistargeted information or promotions, an indication that brands may not have sufficiently personalized, timely consumer data.12 Find answers in a new model While the above challenges stump many CPG brands, early adopters have found ways to turn them into opportunities. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 5 Turn Challenges into Opportunities TURN CHALLENGES INTO OPPORTUNITIES Brands that best resonate with consumer lives and maintain the strongest presence in retail channels will be able to demonstrate profitable growth. Consumers’ increasingly connected and idiosyncratic lives make it more challenging for brands to maintain that presence and resonance. Here are five fronts on which we see leading brands rising to the challenge... Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 6 Omnichannel Expansion BRAND SUCCESS STORY: Coca-Cola Freestyle Originally introduced as a touch screen soda fountain to foster brand engagement and awareness, Coca-Cola Freestyle has matured into a coherent omnichannel experience. The iOS/Android Freestyle apps allow consumers to log in with their Facebook IDs, opening up valuable second-party demographic data to the brand. The data captured by the app—found locations, frequency of check-ins, OMNICHANNEL EXPANSION favorite drinks and mixes—gives the brand As individuals, consumers think of each CPG brand holistically. Though they’re engaging with brands on more devices, they expect a consistent experience and message. Omnichannel expansion isn’t just about meeting consumers on their preferred devices, channels and platforms. It’s more than that. It’s the transition away from siloed marketing teams, toward a holistic strategy centered around the consumer. individual consumer behavior and target an unprecedented opportunity to understand consumers in a myriad of ways based on their declared preferences. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 7 Reallocation of Marketing Spend REALLOCATION OF MARKETING SPEND Succeeding with an omnichannel strategy will take experimentation. In fact, experimenting is the only way to build the new organizational processes CPG brands need. Without experiments, there’s no chance to fail at a small scale and understand what works with consumers’ new behaviors and beliefs. This hobbles the ability to grow and innovate. The opportunities to foster consumer engagement are causing CPG brands to reconsider how they allocate their marketing budgets: • • • Clorox expects digital marketing to comprise 40 percent of its global media budget in fiscal year 2016, up from 30 percent the prior year.13 BRAND BEST PRACTICES • 2015, Coty cut out the media agency middle man entirely when it purchased Beamly, a digital marketing platform.14 Kraft-Heinz has adopted a zero-based budgeting framework for marketing. They reboot each year’s budget from the ground-up, rather than building upon the prior year’s budget.15 • This isn’t necessarily about spending more. It’s about optimizing existing spend: across channels and across the consumer journey. For example, shifting ad budget from awareness down the funnel to where consumers are already familiar could increase their lifetime value. Conversely, overemphasis on top-of-funnel awareness, such as driving demand with coupons, will crumble under commoditization and consumers’ expectations for deeper relationships. That’s the kind of precipice awaiting brands that don’t experiment. • Let your consumers influence your decisions. More sophisticated CPG brands are gaining unparalleled insights into what works on new channels and platforms by engaging their consumers on a more personal level. This feedback loop drives more informed decisions on media mix and spend. Make more small bets. Shifting relatively small amounts of budget from traditional channels to relatively new strategies— re-targeting or real-time bidding platforms— offer potential for outsized gains. Give agencies more room to experiment. Reallocating just 1 – 2 percent of a TV budget for digital experimentation would fund the chance to discover untapped strategies. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 8 Increased Personalization Efforts BRAND BEST PRACTICES • • INCREASED PERSONALIZATION EFFORTS Historically, CPG brands have relied on retailers for consumer insights. But, only 37 percent of consumers believe their preferred retailer understands them as individuals, and only 35 percent said the communications from their preferred retailers are “usually relevant.”16 The numbers are worse for “the average retailer.” As a result of mistargeted communications, we found that 93 percent [of consumers] take action that does long-term damage to brands (e.g. unsubscribe from—or delete automatically—emails, avoid the brand’s products, etc).17 In recognition of this liability, leading CPG brands are putting more effort into understanding their consumers. • Partner with retailers to share purchase data. By streamlining data that has historically been siloed—loyalty, digital offers, mobile data, etc.—CPG brands and retailers both gain unprecedented clarity around the consumer. Success from this partnership could help alleviate some of the trust issues that have hampered innovation. Inform personalized campaigns with innovative loyalty programs. Equipped with a holistic view of consumers, combine purchase history and predictive analytics to create highly relevant emails and digital coupons. Consider working with retailers who use ibeacon technology to send personalized coupons through your mobile app when a known consumer enters their store. Don’t reinvent the wheel. Your core proprietary IT resource investment should be on factors that distinguish you from your competitors: a recommendation engine, or innovative brand experiences on the consumer journey. Rely on best-of-breed technologies for the underlying infrastructure. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 9 Incentivization and Brand Loyalty BRAND SUCCESS STORY: Dr Pepper Snapple Group (DPSG) Through extensive social media campaigns, DPSG has cultivated a highly active online community of over four million fans. The brand found that offering social login INCENTIVIZATION AND BRAND LOYALTY garnered a 360º view of its fans by unifying rich permission-based social profile data with In the few cases where loyalty programs have been implemented with consumer brands, they have been optimized to help brands increase the spending of their best consumers. But there’s a more lucrative opportunity here: How do brands grow the ranks of their loyal consumers in the first place? previous promotions, campaigns and website A typical CPG brand hasn’t fully leveraged its loyalty program’s data. Combining that loyalty data with social data reveals a road-map to evolving brand experiences and cultivating the next generation of loyal consumers. fan insights have equipped DPSG to improve visits. For example, they track the promotions and contests each consumer participates in, so that they can recommend new promotions through email and targeted display. These campaigns and messaging, develop and share more relevant content, and engage with consumers in more meaningful ways. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 10 The Evolving Path to Purchase THE EVOLVING PATH TO PURCHASE: FROM BRICK & MORTAR TO ONLINE ONLY Digital technology such as smartphones, online outlets and social media are attributed for the rise of around-the-clock product promotion and availability, as well as the decline of retail foot traffic.18 While consumers have readily adopted multiple paths to purchase, the transition hasn’t been as easy for brands. For example, though brands can buy their way onto physical store shelves, they’re finding more competition on the digital shelf space. An above-the-fold position in an organic e-commerce search result page may only present consumers with six options, a fraction of the in-store experience. On mobile devices, the shelf space may dwindle to two options. The ‘online shelf’ is effectively smaller than its in-store equivalent, meaning steeper competition for brands. What’s more, the social networks’ allegiance to their users further compounds the challenge. They all measure daily and monthly active user numbers. To win on these platforms, brand content must engage users. If users care about a brand’s message, the networks will help them to share content and experiences. If users don’t care, unpopular messages will be filtered out. Finally, the traditional feedback mechanisms that CPGs have used to understand the path to purchase have weakened. Research, product discovery, engagement, purchase, subscription, and customer support all now happen in digital channels. Though this new ecosystem is more difficult to understand and map out, some leading CPG brands have already begun to experiment. BRAND BEST PRACTICES • • • Include social login in your loyalty program. By soliciting consumers’ preferences, brands clarify their understanding of the messages and platforms that will resonate best with those ‘known’ consumers. Complete consumer profiles over time. Rather than asking consumers for a lot of their data at once, try asking for just name and email to start. Then ask for a few more data elements at a time over future engagements. Consider gamifying the process to incentivize complete profiles. Pay attention to product reviews. More and more people are finding different online resources as influential on their buying habits.19 Today, it’s not uncommon to read reviews before purchasing a $.99 app in iTunes. As reviews’ influence on purchasing decisions grows, so does the importance of addressing negative reviews quickly and transparently. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 11 From Inspiration to Action FROM INSPIRATION TO ACTION We have helped hundreds of brands through the process of developing a bespoke digital consumer strategy. What works for one brand may not work for another. Each brand has to develop its own digital consumer strategy, be willing to experiment, and use those lessons to hone its actions. It’s time to begin. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 12 CPG Brands Playbook for Digital Transformation CPG BRANDS PLAYBOOK FOR DIGITAL TRANSFORMATION Because traditional channel relationships are more tenuous than ever, digital transformation is an urgent priority for CPG brands. Sustained success will depend on the ability to send consumers direct, relevant messages. Let’s begin that journey by answering the questions raised in the introduction. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 13 CPG Brands Playbook for Digital Transformation OUR SOLUTION: THE CHALLENGE: How do we create unique brand experiences that make consumers feel valued and keep them coming back? What type of data should we be seeking? Once we have it, what should we do with it? Build direct consumer relationships with rich opt-in data Savvy brands are putting their consumers at the center of their sales and marketing strategies and decision-making processes. To improve conversions and make better decisions with richer insights, consolidate all consumer data, including: demographics, psychographics, purchase history, preferences and engagement. We’ve seen brands start strong with these steps: 1. Seed direct relationships through opt-in registration. 2. Use progressive profiling to collect more data over future engagements. 3. For greater detail, combine that first-party data with third-party data drawn from social login. 4. Connect that consumer data to existing marketing platforms. 5. Segment consumers to enable personalized marketing experiences across devices and channels. Industry best practices recommend sharing data on a datapoint-by-datapoint basis, not ‘all or nothing.’ THIS ENSURES COMPLIANCE WITH: The terms to which consumers agreed when they opted in. Any social network’s terms to which your brand agreed in order to access consumer data. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 14 CPG Brands Playbook for Digital Transformation OUR SOLUTION: THE CHALLENGE: How do we earn loyalty and sustain it? Focus on consumer lifetime value Think beyond purchase history, product registrations and sales inquiries. With richer consumer data and relationships, CPG brands can now attribute value to the ripple effect consumer engagement—likes, shares and follows across various channels—has on their social networks. This approach to engagement opens the path to new strategies to earn and sustain consumer loyalty. It’s not just about acquisition and media spend; it’s about each individual consumer’s lifetime value. It’s not just about granular detail; brands need to achieve a higher level of scale in the way they collect, organize, share and act on consumer data. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 15 CPG Brands Playbook for Digital Transformation OUR SOLUTION: THE CHALLENGE: How do we build trust and maintain it? Nurture your consumers continuously Registration is the moment a consumer’s relationship with your brand begins. In that moment, you’ve earned their trust. Be candid about how you’ll use their data. For example, if you’re collecting mobile numbers on the registration page, you may offer an explanation such as: “Provide your mobile number for in-store offers,” or “Provide your mobile number so we can contact you if you’re the winner!” To sustain that trust, show consumers that you’re making good use of their data with personalized engagement that demonstrates you ‘get’ them. Your loyalty program may be the easiest jumping-off point. In working with industry brands that have sophisticated programs—Coca Cola, Dr. Pepper Snapple Group, and Philips—we’ve found this can be a natural extension to find new opportunities for connection. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 16 Description of an Ideal CPG Brands Playbook for Social Content Curation Digital Transformation Technology Toolset OUR SOLUTION: THE CHALLENGE: How are we going to pay for this? Monetizing consumer lifetime value The majority of CPG brands get suboptimal ROI on poorly targeted digital advertising and on-premise consumer data storage. By moving that storage to a cloud-based solution, and using it to optimize ad costs, brands can fund digital transformation initiatives with budget reallocation rather than budget expansion. For example, a beverage brand may analyze consumer profiles from first-party data they’ve collected, and learn that a substantial segment of their consumers like soccer and comedies. That data could influence a change in their advertising spend. They could put more money into witty commercials during soccer matches instead of other sporting events. In addition to strategically reallocating marketing spend, CPG brands have an opportunity to derive more value from experiences and marketing campaigns they’ve already invested in. Compared to the initial setup effort and investment, it’s relatively easy to improve those existing touch points for richer consumer data. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 17 HoneBuyer’s Your Digital Consumer Guide for Strategy Companies as You Learn About Your Consumers HONE YOUR DIGITAL CONSUMER STRATEGY AS YOU LEARN ABOUT YOUR CONSUMERS The challenge to implement a consumer digital strategy will be unique for each CPG brand. But the imperative is universal. And pressing. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 18 Conclusion CONCLUSION “The most successful consumer companies are already looking beyond the seamless integration of their sales channels and are focused on the integration of their entire ecosystems, with their consumers at the very center.”20 — Consumer Goods Forum Consumers’ unprecedented choice and control drives them to explore and refine their preferences, and adapt the possibilities to suit their lifestyles. In the process, they’re honing their expectations for brand engagement. This transformation of the consumer relationship will cause new winners and losers in the product landscape. Traditional methods to activate and engage with consumers will give way to untapped models. Marketing professionals at CPG brands still have time to explore questions of loyalty, trust and brand experiences, while experimenting with current trends and consumer data. Omnichannel expansion will shake the traditional marketing budget to its core and inspire a more nuanced approach; one that puts the consumer at the center of new incentivization and loyalty strategies, and reveals new paths to purchase. To take the lead, CPG brands must place strategic bets on high-growth categories like digital consumer strategy. ABOUT JANRAIN Janrain makes it easy to know your customers and personalize every interaction. Our Customer Identity and Access Management Platform helps companies build a unified view of their customers across all devices by collecting accurate customer profile data to power personalized marketing. The platform encompasses social login, registration, customer profile data storage, customer segments, customer insights, single sign-on, and engagement. Janrain powers customer identity management for brands like Pfizer, Samsung, Whole Foods, Fox News, Philips, Marvel, and Dr Pepper Snapple Group. Founded in 2002, Janrain is based in Portland, Oregon, with offices in London, Paris, and Redwood City, CA. For more information, please visit www.janrain.com and follow @janrain. Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 19 Endnotes ENDNOTES 1. PwC: Bonfire of the Brands (2015). Retrieved August 12, 2016 from http://www.pwc.com/us/en/cis-brandscape/ assets/pwc-cis-bonfire-of-the-brands.pdf 2. Maxwell, J. & Sviokla, J. (2016) 2016 Retail And Consumer Products Trends. Retrieved August 12, 2016 from http://www.strategyand.pwc. com/perspectives/2016-retail-and-consumer-products-trends 3. Gazala, M., Bernoff, J., Condon, C., McNabb, K., Ryckewaert, E., & Trafton, R. (2015, April) Winning In The Age Of The Customer. Retrieved August 12, 2016 from https://www.forrester.com/report/ Winning+In+The+Age+Of+The+Customer/-/E-RES119546 4. Dobbs, R., Manyika, J., Woetzel, J., Remes, J., Perry, J., Kelly, G., Pattabiraman, K., & Sharma, H. (2016, March) Urban World: The Global Consumers To Watch. Retrieved August 12, 2016 from http://www.mckinsey.com/global-themes/ urbanization/urban-world-the-global-consumers-to-watch 5. Deloitte: The 2015 American Pantry Study. (2015) Retrieved August 12, 2016 from http://www2.deloitte.com/us/en/pages/ consumer-business/articles/2015-american-pantry-study.html 6. KPMG: Seeking Customer Centricity - The omni business model. (2016, June). Retrieved August 12, 2016 from https:// home.kpmg.com/sg/en/home/insights/2016/06/seekingcustomer-centricity-the-omni-business-model.html 7. Fry, R. (2016, April) Millennials Overtake Baby Boomers As America’s Largest Generation. Retrieved August 23, 2016 from http://www.pewresearch.org/facttank/2016/04/25/millennials-overtake-baby-boomers/ 8. KPMG: Seeking Customer Centricity - The omni business model. (2016, June). Retrieved August 12, 2016 from https:// home.kpmg.com/sg/en/home/insights/2016/06/seekingcustomer-centricity-the-omni-business-model.html 9. The McCarthy Group: Engaging Millennials. (2014). Retrieved August 23, 2016 from http://themccarthygroup.com/what-we-do/millennials_survey/ 10. Howell, R., Pchelin, P. & Iyer, R. (2011, December) The Preference For Experiences Over Possessions. Retrieved August 12, 2016 from http://www.tandfonline.com/doi/full/10.1080/17439760.2011.626791 11.Schultz, B. (2015, August). Not Just Millennials: Consumers Want Experiences, Not Things. Retrieved August 12, 2016 from http://adage. com/article/digitalnext/consumers-experiences-things/299994/ 12. Janrain: 2015 Janrain US Consumer Research. Retrieved August 12, 2016 from http://www.janrain.com/resources/ industry-research/2015-janrain-us-consumer-research/ 13. Faw, L. (2015, December). Clorox Launches Agency Review. Retrieved August 12, 2016 from http://www.mediapost.com/ publications/article/264191/clorox-launches-agency-review.html 14. Coty: COTY Announces Acquisition of Leading Global Digital Marketing Platform Beamly. (2015, October). Retrieved August 12, 2016 from https://www.coty.com/news/coty-announcesacquisition-leading-global-digital-marketing-platform-beamly 15. Seeking Alpha: The Kraft Heinz (KHC) Bernardo Vieira Hees on Q3 2015 Results - Earnings Call Transcript. (2015, November). Retrieved August 12, 2016 from http://seekingalpha.com/article/3655716-kraftheinz-khc-bernardo-vieira-hees-q3-2015-results-earnings-call-transcript 16. IBM: 4 Out Of 5 Consumers Declare Brands Don’t Know Them As An Individual, According to IBM and Econsultancy Study. (2015, April). Retrieved August 12, 2016 from https://www-03.ibm.com/press/us/en/pressrelease/46454.wss 17.Janrain: 2015 Janrain US Consumer Research Consumer Identity and Mistargeting. Retrieved August 12, 2016 from http://www1.janrain.com/us-consumer-identity-research-na.html 18. Maxwell, J. & Sviokla, J. (2016) 2016 Retail And Consumer Products Trends. Retrieved August 12, 2016 from http://www.strategyand.pwc. com/perspectives/2016-retail-and-consumer-products-trends 19. Krishnan, N. (2016, May) The Changing Landscape of Consumer Packaged Goods. Retrieved September 2, 2016 from https://www.cbinsights.com/research-cpg-trends-transcript Copyright © 2016 Janrain, Inc. All rights reserved. | www.janrain.com | US 888 563 3082 | Europe +44 208 973 2561 | 20