CPG companies have a large opportunity to drive sales by encouraging their existing consumers to spend more, either by buying more of their current brands or by purchasing from new brands or categories.
P&G in particular is focusing on share of wallet to improve US sales growth. In a recent Wall Street Journal article, Melanie Healy, the new head of P&G’s North American market, said, “Our whole organization is focused on how we get more P&G households to carry more P&G products.”
According to the article, P&G has launched at least two core programs to capture these extra sales. Last year, P&G started its “Just One More” program which includes a strategy of targeting its best customers, in particular the 8% of North American households that, on average, use 10-11 P&G products. P&G is bundling related products, issuing coupon books, and adding bonus products in its packaging to move its existing customers up the loyalty ladder (so that more of its households buy at 10-11 level) and getting its best customers to buy 11-12 products instead of 10-11. With P&G’s scale, these moves could be worth $2-6 billion in incremental revenue annually.
More recently, P&G kicked off a “Have You Tried This” campaign to get its customer to try more of P&G’s new products. The campaign features 18 new products and includes a consumer website with reviews and product information and an upcoming coupon booklet with more than $113 in discounts.
CPG companies have not traditionally done much with loyalty programs, preferring instead to use mass media such as TV ads and coupons in the Sunday newspapers. Digital technologies, however, have made it easier for CPG companies to build deeper relationships with their consumers at a cost and with a reach that was impossible even a few years ago. As a result, brand marketers are beginning to find out what leading loyalty marketers have known for years: you can often drive more sales by better targeting the customers you already have then spending to acquire a new customer.
Based on an analysis of best-in-class loyalty programs and our own experience, we believe there are three key factors to creating long-term consumer loyalty. A winning program must:
- Deliver the right rewards and incentives for loyal behavior. My Coke Rewards, P&G’s Gifts to Grow, and Stonyfield’s myStonyfield rewards programs are good examples of loyalty programs that reward consumers for buying more items and engaging with the brand. Increasingly, loyalty initiatives must tap social media to broaden reach and enhance word of mouth.
- Provide deep insights into consumer behavior. Use the data captured – including demographic data, attitudinal data from surveys, purchase data from codes on pack or electronic proofs of purchase , coupon behavior, and other factors – to identify and better understand target customer segments.
- Personalize the consumer experience. Tap the data captured to deliver relevant offers and content to consumers to get consumers to buy more of the brands they already buy and to try new brands and products across the portfolio.
Critically, CPGs must build loyalty directly with consumers AND through key retail customers to engage consumers across all potential touchpoints, including at the “moment of truth” – when consumers are shopping for products, and making buying decisions.
As P&G is showing, the world of brand marketing is rapidly changing and the winning CPG companies long-term will be the ones that put in place the technology and programs to continuously build deeper relationships with their consumers.