A BRAND NEW BRAND WORLD?
Working in the Consumer Packaged Goods (CPG) industry today is a challenge. Regardless of the category, the market looks very different compared to just 20 years ago. Brand offerings (and competitors) have exploded, retailer power has strengthened, selling channels have shifted, marketing options are overwhelming, and the end consumer? Confused would be putting it mildly.
The job of CPG marketing and selling was never easy, but today, it is more complicated than ever. The world is increasingly digital in terms of information, connections, and transactions. The key to understanding and tackling the changing landscape is a data-driven marketing approach we call CPG 1PD.
WHAT IS CPG 1PD?
It is a strategic operating model for CPG brands using first-party data as a foundation to create the most valuable relationships between brands and buyers. The CPG 1PD approach consists of two essential parts: High-quality first-party data growth combined with efficient and effective marketing that delights.
Simply put, first-party data is any data a company owns. First-party data includes email subscriber and marketing data (declared or observed), website traffic statistics, e-commerce interactions, and any content published and promoted on brand-owned sites. Said another way, first-party data is entirely within your control.
USE CASES FOR FIRST-PARTY CPG DATA
This data can be used to build your brand, solve problems, and deliver better customer experiences. This data can become even more valuable through augmentation and enhancement when combined with other data sources.
CPG brands using first-party data as a foundation to create the most valuable relationships between brands and buyers (CRM programs) are seeing significant growth. Multiple studies prove that CRM members purchase at a higher rate than non-members – often by substantial margins. According to IRI historical data, the annual sales uplift for engaged households ranges from 5-12%. Beyond the brand impact, program members also help drive category growth, making this audience valuable for retailer partners, too.
A systematic CPG 1PD approach that seeks, mines, and optimizes relationships via a first-party data-driven approach offers the most significant opportunity for CPG brands.
DATA-LED MARKETING FOR CPG
There is significant untapped value for CPG brands to leverage data to enhance marketing tactics. The most successful CPG brands currently use data on the front and back end of marketing activities. Data-led insights better inform marketing choices upfront. Data-driven measurement helps better analyze initiatives and predict the success of future activities.
Yet, advanced analytics and tactics leveraging artificial intelligence remain a mostly untapped resource for CPG companies.
While there are numerous reasons for this, it is an even more significant issue in the current economic situation. Amidst store closures and considerable uncertainty in general, consumers have swiftly readjusted their shopping behaviors to be more digital-first.
In this environment, CPG brands must do a more effective job obtaining and analyzing data to better understand shoppers online and offline. Based on Google and BCG research, the value of advanced analytics and AI can drive more than 10% of sales growth.
A 10% growth is significant in CPG in any environment. But, the promise of 10% growth is just that – a promise. Not many CPG executives will create capabilities, hire staff, and invest in tools on the promise of growth alone.
Here too, BCG helps provide a model to understand the value of data for CPG marketers. This model is useful for both online and offline performance but varies based on category and data type.
CPG DATA VALUATION MODEL
Use cases for this valuation model include:
- Helping CPG brands project value for a potential CRM program
- Determining how much a CPG brand should invest in building capabilities
- How much brands should pay for external data
- Valuing the benefit of data for partners (including retailers)
- Assessing the value of other partnerships
An ON-GOING APPROACH TO MEASURE CPG DATA-LED MARKETING
But, the BCG model is only a model. We recommend implementing ongoing measurement. All CPG brands first test new initiatives before rolling them out on a larger scale to allow for a higher likelihood of success.
Any testing phase should include multiple assessment models across several audience segments to compare the effectiveness and identify what resonates best. Brands can use insights from the testing phase to inform the broader rollout of CPG data-led marketing.
Verified, relevant sales metrics allow for calculating tangible value and offering insight into future business performance.
Today’s winning CPG brands follow a data-led marketing approach. Such an approach requires a clear understanding of the value of data across the business to be most effective.
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Through a special arrangement, the above is a summary of a two articles from the Response Media blog, see here and here for the original posts.
