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The Power of Loyalty for Consumer Goods

Traditionally, consumer packaged goods brands have struggled to establish direct relationships with their customers and have had to piece together disparate data from different retail partners to try to understand customer preferences, lifetime value and marketing ROI. Loyalty programs are a powerful way for CPGs to create direct relationships with their customers and reveal the identity of formerly unknown buyers. Other advantages of loyalty programs for CPG brands include: 

  • Direct customer communication
  • Proprietary database ownership
  • Customer retention and cross-sell
  • Increase share of wallet
  • Customer and marketing insight
  • Elevated brand perception
  • Elevate customers to brand evangelists

In this blog post, we’re taking a closer look at loyalty strategies and program examples to showcase how CPGs can create stronger, more profitable customer relationships. 

As mentioned, one of the biggest challenges for CPG brands is that they don’t know who their customers are since they don’t have a direct purchase channel. Loyalty programs are a great solution for CPGs because they incentivize customers to reveal themselves. Once a customer has created a profile, brands have the opportunity to gain access to rich first-party data that will give them an understanding of the products customers tend to purchase, through what retailer, and so much more. The benefits of collecting this customer data are numerous:

  • The ability to gain new product feedback without the constraints of the retail market
  • The ability to learn who the customer is and what their preferences are
  • The ability to to entice consumers with more compelling ways to buy from you
  • The ability to convince the consumer to share more data about themselves over time

By understanding their customers’ retail preferences, CPGs can tie campaigns to specific partners and provide reporting and attribution back to the partner to track efficacy. 

Old CPG loyalty programs rely on a basic rebate model or standard retail promotions. These approaches lack mass penetration, range of data capture, speed and millennial appeal. Modern CPG loyalty is evolving to include strategies like receipt scanning, which can be an effective means of capturing transaction, or mobile-based programs, which enable CPGs to validate purchase/customer details and condition the customer to participate fully in the program. Below, we’ve outlined some real-life CPG brands that are reaping the benefits of these modern loyalty strategies.

Program Examples

PepsiCo

When a member purchases an eligible drink and snack, they’re rewarded with a fixed amount of points. Once they reach the reward threshold, $2.00 is automatically distributed to their connected PayPal or Venmo account. The points left over provide members with a boost towards their next reward. While members can only earn rewards for bundled purchases, in order to broaden the enrollment funnel the program does award a small amount for a single product entry only on a member’s first-ever purchase.

Huggies

The beloved diaper brand used to have a loyalty program that required customers to save pin codes from diaper packages and manually enter them on the website. In 2016, Huggies modernized their program to be mobile-first by allowing customers to collect points and submit orders from within an app. Customers use receipt capture to upload a photo of their receipt in the app. This type of program enables CPGs to gain visibility into SKU-level purchase data and insights into customer purchases and engagement.

L’Oreal 

L’Oreal’s Color&Co is a service that connects hair colorists with clients via video chat technology in order to build a custom color that’s delivered right to consumers. Color&Co offers a Colorists Rewards Program allowing them to earn a commission for each customer that places an order based on their personalized recommendation. 

CPG marketers face numerous challenges. In order to take the lead, they must prioritize being digital first. With a digital focused loyalty program, brands can start collecting customer data that they can leverage in order to deliver personalized experiences when it matters most. By connecting with customers at moments of impact, CPG brands set themselves up to gain significant revenue, cross-sell and upsell opportunities.