Even pre-pandemic, the most profound change in commerce was the shift to digital shopping. Digital disrupted commerce in books, entertainment and consumer electronics, followed by apparel and more recently CPG. For many established CPG, Durables and Fast-Moving Goods brands, this digital revolution exposed vulnerabilities created by their heavy reliance on a brick-and-mortar retail distribution network.
Acxiom is helping these companies gain new advantages by bridging brand user insights gaps between the digital and physical distribution networks, fighting off competition from store brands and neutralizing the customer insights advantage of digitally native brands.
Consumer packaged goods (CPG)
Building loyalty to a CPG brand has always been a challenge due to its promotion-driven, commoditized environment with low barriers to switching, in which creating a persistent emotional bond is very challenging. Historically, this was exacerbated by a lack of personalized communication because brands were mostly in the dark on the identity of their buyers. Therefore, they often had to rely on linear TV, out-of-home and in-store ads to reach and engage with their audience.
In the digital age, cookie- and device-based CPG adressable audiences enabled some degree of tailored messaging, but this was rarely accurate due to low match rates and still relied on panel and survey data rather than retailer loyalty or individual-level first-party data. The delay of the third-party cookie deprecation until 2024 enables brands to accumulate first-party data and makes the shift to true people-based marketing with a solid identity graph achievable, but no one can afford to procrastinate. Luckily, Gen Z and Millennials, most of whom are digital and social media natives, present an opportunity for personalized engagement due to their greater willingness to share PII and because of their comfort with digital touchpoints like apps.
The silver lining of the pandemic for traditional CPG brands was a much-needed accelerated digital transformation and greater shift to a DTC business model, which planted the seeds for building rich customer portraits that allow the cultivation of more resilient connections. This will keep digital-native CPG brands at bay and reduce reliance on traditional mass advertising methods that are gradually becoming less efficient. The opportunity to interact directly with customers is not limited to digital touchpoints but also covers connected packaging via QR codes and other technology that offer the ability to track the product through the value chain and inform customer behaviors. All this arms CPG brands with intelligence to compete with store brands and value retailers (with almost exclusively private label products), which are expected to add further pressure in this inflationary environment that forces buyers to make budget trade-offs.
It is important to recognize and nurture customers as unique individuals across all digital and offline channels to strengthen brand equity and cross-sell other variants. However, in the dash to adopt DTC and other new channels, the complexity of ethically collecting, ingesting, and consolidating data from disparate sources in compliance with privacy regulations should not be underestimated. Acxiom is standing by to provide expert guidance.
Durables and fast-moving goods
Customers expect the brands they do business with to understand their preferences, needs and desires. Yet, many manufacturers struggle to recognize customers across channels and see their buyers as devices, clicks or stick figures drawn with basic demographics rather than as unique portraits.
Manufacturers of many consumer durables and fast-moving consumer goods experienced a boost during the pandemic, especially recreational goods and home improvement brands. However, the pendulum is swinging the other way in 2022 with travel and other services making a comeback. Yet, manufacturers can keep up the momentum through forging an emotional bond that persists across the entire customer lifecycle by enabling customer recognition and personalized communication across all touchpoints. Seventy-one percent of consumers expect companies to deliver personalized interactions, which drive performance and better customer outcomes, according to McKinsey.
COVID-19 demonstrated the need for manufacturers to reduce reliance on brick-and-mortar retailers. This vulnerability accelerated the shift to a DTC e-commerce model, enabling manufacturers to plant the seeds for rich first-party customer insights and more resilient customer connections. This required brands to identify customers by transforming the clicks, likes and dollars into people based on a unified identity, enriched with third-party data in a privacy-conscious way:
- Known data like customer support sign-ups, warranty and loyalty registrations, newsletter subscriptions, discount vouchers, call center records, e-commerce checkout, CRM and historical purchase data.
- Anonymous data like web analytics, first-party cookies, social media interactions, Consumer Internet of Things (CIoT) data. Manufacturers are increasingly tapping into a wealth of CIoT data, which can yield rich and granular insights to enrich the customer experience but is a potential privacy minefield that requires the assitance of expert advisors.
Even with DTC accounting for a greater share of business, manufacturers need to overcome distribution blind spots due to retailers keeping customers at arm’s length. Technologies like QR codes on product packaging boost customer recognition, signups, and app downloads, which help complete the customer portrait.
Acxiom offers a range of privacy-compliant solutions to enhance the customer experience across their omnichannel journey. Those customers will spend 140% more than those who had a poor experience. As a bonus, happy buyers will also refer people to your brand, lowering your costs of acquisition.