Monthly Archives: August 2019

Boosting CPG Brand Loyalty Sales with AI

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It’s unlikely for a day to go by in a person’s life when they haven’t interacted with a Consumer Packaged Goods (CPG) brand. In a lot of ways, they have become an indispensable and omnipresent aspect of our lives

 

This makes it all the more surprising that this industry saw a decline in 2018. A Kantar Worldpanel report says that the Indian FMCG industry declined 1% in 2018 as opposed to a 7.5% rise in the previous year. However, a strange anomaly is that despite the slowdown in pace, a lot of new companies are popping up in the space. These smaller, agile players are eating into the market share of behemothian CPG brands through a combination of digital-first sales strategy and innovative customer engagement practices.

 

The tussle between these new entrants and the traditional players has made it evident that no amount of marketing dollars and branding can replace customer-centricity. As a result, CPG companies have started leveraging technology to realign their sales, engagement and communication strategy in pursuit of customer-centricity.

 

Here are some emerging trends and opportunities that CPG companies can leverage to stay customer-ready:  

 

  • Ecommerce growth of groceries is set to take off 

With the prevalence of eCommerce, it makes groceries and other products much more accessible to the average user. They are presented with a hassle-free, quick and convenient way to access and purchase groceries for their household needs.

 

  • The relentless rise of Amazon

Amazon and other major e-commerce players are pressurizing traditional CPG companies because of the way they’re offering high quality goods at discounted rates. This, when coupled with excellent customer service and speedy redressal of consumer concerns, make Amazon a force to be reckoned with. Prime Now in India and Amazon Fresh are two growing services that have been rolled out in select few cities. The basic premise is that the app allows you to make a purchase of groceries such as eggs, fruits, vegetables, milk, etc, and also have it delivered to your desired address in an hour or so. A survey from Coresight research found that Amazon saw 59.5% of its users purchasing groceries through the portal. 

 

  • The Future is Omnichannel 

Customers are accustomed to buying CPG products in person, and most of them prefer to experience the look and feel of the product and test its freshness before making the purchase – it can be quite a leap to expect them to get accustomed to shopping for CPG online. In such cases, it helps greatly if a retailer has an omnichannel presence. The brand recognition will allow loyal customers to find the brand of their choice and preference and accordingly shop for the items at their comfort and convenience.

 

  • Smaller, agile brands will fight for market share

It may be tempting to think that big names like Amazon and Whole Foods are the future of consumption, but truth be told, they are one part of a large group of brands that are vying for the consumer’s attention. Many smaller companies are popping up with similar sales and engagement strategies as Amazon, however,  these smaller players can afford to deliver a more personalised experience to their pool of customers. They also allow themselves the freedom, creativity and a nimbler approach to deliver a re-imagined consumer experience.

 

  • Subscription-based plans will increase

A report by e-marketer points out that only 16% of consumers buy their household needs and groceries on a subscription basis, but more than 1/3rd of them planned to take it up in the future. This is a rare case of a consumer segment presenting itself to the company to capture. However, this is a tricky one because only loyal and returning customers are the ones who are likely to take up the subscription plans – not the ones who are making a one-time purchase. According to a report by McKinsey, subscription based e-commerce is being led by startups like the Dollar Shave Club, Stitch Fix personal styling and Blue Apron meal kits. The McKinsey report also points out that 15% of online shoppers have signed up for one or more subscriptions that deliver products to them on a time-bound recurring basis. What these subscription services enable, is a convenient, personalised and most importantly, a low-cost way to buy what they want and need.

 

  • More mergers and acquisitions are likely to follow

According to the annual Global 50 report released by OC&C Strategy Consultants, New York, the number of M&A deals among the top 50 consumer goods brands had reached a 15 year high in 2017. This is a 45% increase from the year before that. The study was carried out in collaboration with The Grocer, a British magazine published by William Reed Business Media. The rise in M&A can be attributed to big FMCG companies responding to challenges related to driving growth in addition to mounting pressure from investors to increase margins. Thanks to the boom in these M&A deals, there was a dramatic recovery in revenue growth across the CPG and FMCG sector. It went from 0.5% in 2016 to 5.7% in 2017.

 

  • Growing focus on brand authenticity

Consumers these days are watching closely brands.  They are more likely to buy from a brand and stay loyal to it if they believe that the brand’s values match up with theirs. In a recent survey carried out by Nielsen among 29,000 respondents, it was found that 50% of global consumers are more willing to pay more for goods and services from companies that have implemented programs to give back to society. Across age groups and genders, the percentage of consumers willing to pay a higher price has increased. Respondents under the age of 30 are most likely to say they would spend more for goods and services from companies that give back. “While cause-marketing programs seem to resonate most strongly among younger respondents, the rapid change in sentiment among middle-aged consumers expands the cause opportunity for brands,” said Nic Covey, vice president of corporate social responsibility at Nielsen. “Today, brands can confidently focus purpose messaging on both younger and older consumers,” the study quoted him as saying.

 

How is technology enabling the functioning of CPG companies?

 

Data is a big differentiator for companies and the ones that lead the way are those who invest in specific capabilities. On one side, the company must continue to invest in functional expertise (for example, in-store shopper insights) and on the other, they should also invest in securing exhaustive data from retailers.

 

Data in this context is an enabler. It enables most forward-looking CPG companies to better understand how they can expand into high-growth areas. Some of these high growth areas include specific channels (such as omnichannel retailing and regional grocery chains), demographic groups (such as millennials) and consumer segments (such as those customers who are particularly value-oriented)

 

A brand needs to make assertive moves when it comes to these high-growth areas. This is how winning companies strategize and blur the lines between sales and marketing. Some companies have taken the extra step of forming a commercial development team whose role is essentially to serve as an integrator to the function of sales and marketing.  

 

Increasing CPG Sales using Artificial Intelligence

 

Thanks to the continuous development of the Artificial Intelligence sector,  it has become a powerful technology to increase sales in the CPG industry. A survey carried out by the Promotion Optimization Institute (POI) detailed in its report that 16.7% of CPG manufacturers have invested in Artificial Intelligence solutions – a 5.7% increase from 2018. Based on the fact that a majority of companies are actively working on incorporating AI-based tools into their workings – this is a clear indicator of the growing cognizance of AI’s transformative power.

 

However, the question still remains – how will CPG players run a profitable trade promotion with the help of AI technologies? While AI-based trade promotions have been proven to be effective, it’s altogether possible that companies do not achieve satisfactory results if a solid implementation strategy is not present. There is no doubt that AI is a powerful technology tool, given the fact that it has higher cognitive and analytical capabilities than humans. However, the key is to combine AI with its respective, AI-compatible tools and human knowledge in order to develop a deep and thoroughly comprehensive sales strategy.

 

One thing we need to remember is that for decades, both sales and marketing domains have been entirely reliant on human efforts. Now thanks to AI, companies can leverage customer-generated data to gain insight on consumer behaviour, brand loyalty, and trends in the industry. We should also note here that AI has the innate ability to analyze data and churn out insights based on hidden information which a salesperson may not be able to recognize. 

 

It’s not just sales opportunities that AI can recognize. AI can also play a vital role in devising an effective trade promotion strategy that can help bring down operational costs and increase profit margins. CPG companies also now have the choice of opting for AI-driven predictive customer analytics tools and use them to drive better outcomes and maximize the impact of their sales and marketing campaigns. This can result in higher levels of brand engagement and increased customer satisfaction.

 

It’s not just the sales practices themselves, advanced AI platforms are also capable of increasing the efficiency of sales professionals. AI chatbots can carry out customer interactions and conversations and AI can help provide valuable human insights on how to execute day-to-day tasks more efficiently. Another advantage that AI offers is that it can work 24×7 without breaks, adding further value to an organization operating in an industry that is so specifically customer centric, like CPG.

Decoding Saudi Arabia’s Digital Consumer

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Over the last few years, rapid digitization has made a significant impact on the Saudi consumer’s lifestyle. Today, a whopping 88% of Saudi Arabia’s population use the internet at least once a day and 59% of the population are now present in at least one social media platform.  While the growth in digital usage in Saudi Arabia wasn’t really a surprise, what has befuddled even the experts is the absolutely staggering growth rate.

 

While the level of internet penetration and smartphone usage in Saudi Arabia is comparable to other countries in the GCC, the country is an outlier when it comes to consumer demographic.  With a GDP per capita of USD 20,028 and a median age of 29 years, the typical Saudi consumer is wealthy and extremely tech-savvy. It’s also the sole country in the GCC where the locals account for 72% of the population.


This young, tech-savvy and wealthy population in Saudi Arabia serves as the perfect substrate for eCommerce growth and are changing the digital consumer behaviour, and the number of online shoppers in the region is expected to reach 17.1 million by 2020.

 

Smartphones are increasingly becoming the preferred device for online shopping with 69% of Saudis preferring it over a desktop. However, offline promotions and engagement remain a critical aspect of the purchase journey with  35% of Saudi consumers preferring to research about the product through offline channels prior to purchase.

From a business perspective, the region is not without its share of challenges. Socio-economic shifts in the region like fall in oil prices, the introduction of Value Added Tax, and an exodus of expats have had a negative impact on consumer sentiment in the last few years. Amongst these, the biggest impact was from the introduction of 5% VAT.  While a relatively low rate, it resulted in a significant shift in consumer behaviour. The average Saudi consumer became more cost-conscious than ever before and the trend is expected to continue at least for some more time. However, there are positive signals that the situation is being reversed.

 

Customer confidence levels in the Kingdom for the month of June 2019 was 62.1; placing it at the top 3 next to China and India (the global average is 43.3). The economic recovery, supported by higher oil prices and other internal social changes like expanded women’s rights, are further expected to have a positive impact in shaping consumption and market dynamics in the coming years.  Brands that can crack economies of scale, and provide value-add or greater convenience, will reap the rewards.

 

Key Takeaways for Brands :

 

1. Localization is critical to survive and grow in the region
2. There is a growing interest for western apparels, both for online and offline shopping
3. Consumer spending has slowed; brands will have to innovate using personalized promotions and provide value-add to stay ahead
4. The new breed of GCC consumer expects a highly personalized experience.
5. The shift towards price-consciousness is expected to lower brand loyalty among consumers
6. Ecommerce will continue to grow at a steady pace; especially from mobile devices
7. Offline customer engagement will be a critical factor in influencing purchase decisions and brand loyalty

 

To know more about the event, register here: https://www.capillarytech.com/know-how/stayready/riyadh/2019/sep

 

Customer Engagement Strategies for 2020 & Beyond

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In today’s world, a customer is accosted by brands at every step he takes. Every direction he turns in, he either sees brands or a product that’s screaming for his attention. This has led to a hyper-competitive market across every industry – be it food delivery, fin-tech, e-commerce, or retail. Customer engagement is what makes or breaks a business in such a fast-paced, heavily commodified market. 

 

This was not always the case. When brands were emerging in each of their sectors, the rate of competition was relatively low as reigning brands had a monopoly over the markets they chose to make their presence felt at. The range of products (and product innovations) that were available to consumers was also fairly narrow, so the businesses often took on a ‘take it or leave it’ attitude. 

 

In short, we are witnessing the rapid shift from ‘brand-centric’ business philosophy to that of a ‘customer-centric’ one.

 

In today’s world, a brand that does not engage with customers or a brand that doesn’t cater to all of the customers’ needs are instantly dismissed and forgotten forever.

 

Impact of Customer Engagement on Revenue 

 

A study by Hall & Partners suggests that two-thirds of a brand’s profit may be dependent on consumer engagement. To put that into perspective – take e-commerce giant Amazon. In April, Amazon reported revenue of $59.7 billion dollars. That would mean 2/3rd of that amount is roughly $8.95 billion dollars. Amazon is a classic example of superior customer engagement strategies can fend off intense competition to build long-lasting customer loyalty, even in markets where they faced off against well-entrenched competitors.  

 

Furthermore, research from Gallup has revealed that a fully-engaged customer represents 23% more revenue than an average customer. These are numbers a business cannot afford to ignore. It goes to show that if your company doesn’t have a solid customer engagement strategy, you could be missing out on opportunities to convert an occasional/visiting customer into a loyal, returning customer, hence effectively building a relationship with them in the long run. Building customer engagement is also a great way of building the customer’s trust in the brand. Trust and loyalty are intangible, yet invaluable assets for a brand to possess. 

 

Top Customer Engagement Strategies

 

  • Lush Cosmetics’ Social-first Strategy: Lush Cosmetics leverages its social media channels, especially Instagram, to engage with customers directly. This enables them to directly address customer grievances, acknowledge when a customer mentions them in their social media handles and also enables them to answer any queries they might have.
  • Ulta Beauty’s Insights-led Engagement Strategy: Ulta Beauty’s biggest asset was its customer insights. They closely studied them and created accurate personas of their consumers to narrow down on their preferences and needs. These analysis and insights led to the launch of their one-stop-shop for ‘all things beauty’ – an all-inclusive store that stocked both high end and affordable drugstore products under the same roof to improve the customer’s buying experience.

 

Latest Trends in Customer Engagement

 

  • Voice Search: Thanks to the likes of Apple’s Siri, Amazon’s Alexa and Google Home, consumers are becoming increasingly accustomed to having a way of literally, directly speaking to a company. Future-first brands will need to understand and analyze the potential engagement opportunities in voice search to stay ahead.
  • Socially Conscious Brands: Customers are more likely to be drawn to a brand if they feel that the brand is socially responsible. A study titled “From Me To Us: The Emergence Of Purposeful Brands” was conducted on December 2018 period more than 30,000 consumers participated in the study and 62% of those who were surveyed said they wanted companies to have meaningful stances on social-cultural and environmental issues. While we agree that being socially conscious is more of a brand philosophy than a customer engagement strategy, it’s impossible to ignore the fact that these brands spark more conversations and positive word of mouth which directly boosts the overall engagement levels.
  • Predictive Engagement: It’s one thing to speak to a consumer when they reach out to you, but it can be a game-changer when a company reaches out to a consumer, having anticipated his/her needs. The time is now for companies to be proactive and use data mining and AI-powered customer analytics to predict customer needs and preferences even before he/she reaches out to the brand.  Additionally, the convenience that you offer to the customer will boost loyalty and make your brand more sticky.

 

The Future of Customer Engagement

 

The Third Edition of the State of Sales report has some interesting insights on what a customer expects from businesses in the future

 

  • 75% of customers expect companies to use new technologies to create better experiences. With the emergence of connected devices and smart technologies, it’s not just an expectation, but it’s a given that a brand has to keep up.
  • 62% of customers are open to the use of AI to improve their experiences — up from 59% in 2018.
  • 59% of consumers agree that AI will revolutionise how they engage with a business.

Why is engaging with a consumer and improving his experience so crucial? 

 

A CISCO report titled “Customer Experience in 2020” reveals that 70% of purchasing decisions that customers take, will be based on their consumer experience. Another Freshworks customer engagement report states that, in comparison with the last two years, in 2019, 47% of consumers worldwide have higher customer service expectations from their favourite brands.

 

A part of the reason for this is because in the future, thanks to easy access to information, potential customers will be more aware than ever. This awareness will also help them pick and choose between the brands that best live up to their expectations. In fact, the same Freshworks report points out that in the last 12 months, more than 56% of customers globally, switched brands after just one bad customer service experience.

 

Due to these factors, the big future trend in customer engagement will be omnichannel communications. For brands, being an omnichannel business is no longer an option – in the future, it is compulsory in order to be able to match up to and exceed customer expectations.

 

If you have any questions or queries, don’t forget to drop a comment, and we’ll get back to you.