From the toothpaste that kickstarts our morning to the packaged foods that fuel our day, our lives are heavily dependent on Consumer Packaged Goods.

Behind this dependency lies a vital industry which is one of the fastest growing industries in the world. According to data from Allied Market Research, the worldwide market for the CPG industry is expected to project an annual revenue of USD 18,939.4 billion by 2031.

Yet, in this sector, only 60% of customers stick around over time. This poses a problem as it leads to higher costs for acquiring new customers and a decrease in the overall value a customer brings to the business throughout their relationship with the brand. This is only one part of the challenges faced by the CPG industry. With a couple of more significant challenges in their way, CPG industries are struggling to create a mark for themselves in the hearts and minds of their customers and drive higher growth for their businesses. But what if I say there’s a solution to overcome these challenges?

In this blog, we look at some major challenges that the industry faces today and how well-designed, AI-driven loyalty programs can provide a clear-cut way to overcome them. 

1. CPG industry lacks a proper database on what, why and how their customers are purchasing

Since CPG companies rely on third-party retailers and in-store sales, they grapple with the challenge of a limited customer database. The decentralized nature of transactions makes it difficult to collect and analyze valuable data points. Surveys and other data collection processes fall short of deeply understanding consumer behavior and preferences.

When strategically implemented, loyalty marketing acts as a bridge over this data gap. By enticing customers to join loyalty programs, CPG brands create a direct channel to gather crucial information. Capillary Technologies’ Customer Data Platform helps in leveraging this data for CPG brands by:

• integrating data points from transactions in an offline store, the online e-commerce platform, and even social media
• collecting and analyzing real-time data
• targeting critical purchase behavior and transactions to deliver personalized customer strategy

With a first-party data collection module like Capillary CDP, brands can get a 360-degree understanding of the customer, allowing for targeted marketing strategies that resonate with individual preferences.

2. Consumer preferences change from time to time

Consumer preferences are dynamic, and ever-shifting, and staying aligned with these changes is a constant challenge for CPG companies. People are quick to switch brands owing to this dynamic behavior and CPG brands need to stay on top of their game with loyalty programs to adapt to the ever-evolving consumer preferences. 

By activating a real-time tracking and feedback mechanism, CPG brands can get a continuous stream of insights into changing consumer preferences. Capillary’s Insights+ can help brands collect and analyze this real-time data. This will ensure that CPG brands hop early on any trends or patterns among their consumers.

Pepsico, a popular CPG brand is well known for using advanced analytics for capturing real-time data of its customers using their loyalty program. They were able to reduce their purchase capture time from 11 days to a few seconds and unlocked unprecedented cross-bucket customer data. 

3. Omnichannel Marketing: Navigating the Digital-Physical Confluence

Creating a seamless experience for consumers across online and offline channels has become a necessity in the age of omnichannel marketing. By adopting omnichannel marketing, CPG brands can educate, empower, and engage their customers and it goes a long way in nurturing customer relationships. By staying active in the right channels where your customers are present, CPG brands can improve their brand recall and visibility. 

As tedious as this task may sound, Capillary’s Omnichannel Loyalty solutions make it extremely easy to execute this task. It creates a significant improvement in the experience of the end customer’s journey through hyper-personalized content and campaigns across channels where the end customers are most active. The final result?

• Increased customer lifetime value
• Boosted Repeat sales
• Increase in ROI

4. CPG brands have limited option for engaging with customers

Customer engagement poses a unique challenge for Consumer Packaged Goods (CPG) brands, given the often transactional nature of their products. With numerous options available in the market and limited opportunities for direct interaction, establishing a meaningful connection with consumers can be challenging. 

Loyalty programs emerge as a necessity to address the challenge of customer engagement in the CPG industry. By offering tangible rewards, personalized experiences, and exclusive benefits, these programs incentivize customers to choose a particular brand consistently. The interactive elements, such as gamification and social media integration, make the brand more accessible and enjoyable for customers. 

Loyalty programs go beyond the transactional aspect, creating a sense of belonging and value for the customer. A great example to quote for this would be the Pampers Rewards Program. Apart from exciting rewards and offers, the members of the program also receive personalized content and tips based on their child’s age and development stage. This includes useful information about baby care, and parenting advice tailored to their child’s specific needs.

The data-driven insights derived from these programs enable brands to understand customer preferences, tailor offerings, and refine strategies, enhancing the overall customer experience. Capillary’s AI-powered product suite is equipped to efficiently handle end-to-end customer engagement, thus converting your customers into brand advocates. 

5. There is cut throat competition in CPG industry

With several brands offering different product variations and aggressive discounts and offers, the CPG industry has one of the most competitive landscapes. The chances of consumers switching brands are very high in the CPG industry. In this fiercely competitive space, companies, both big and small, vie for the attention of consumers and coveted shelf space. But with the help of loyalty programs, brands can create a sense of trust and emotional connection with their customers thus increasing the chances of getting their product picked every time.

By offering unique and compelling rewards, brands create not just loyalty but a competitive edge. Capillary’s data-driven insights refine these programs, ensuring they not only attract but also align with the evolving needs of the consumer. In a market where products may be similar, the experience provided through a well-crafted loyalty program becomes a defining factor, setting a brand apart from the competition.

Conclusion

In conclusion, loyalty marketing emerges not merely as a marketing strategy but as a cornerstone for success in the CPG industry. The strategic adoption of loyalty programs is not just a choice; it’s a necessity for those aiming to lead in the CPG industry. As the market evolves, loyalty marketing stands as a testament to a brand’s commitment to understanding, engaging, and growing with its customers. Integrated with advanced analytics and AI-driven solutions, Capillary’s loyalty platform can become an indispensable tool to propel your CPG company into a future where adaptability, precision, and customer-centricity reign supreme. Get in touch with our expert now

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With a knack for creating engaging content and crafting effective social media campaigns, Anjali wants to make it her mission to leverage the power of content as a strategic marketing tool for businesses. While she is not working, she is either binging movies or writing about them on her blog.