Digital CPG Blog

A recent report by the CMO council highlighted the increasing importance of loyalty marketing (discussion here and here).  It appears loyalty marketing is on the rise, with 80% of marketers in the study indicating their commitment to maintain or increase program funding.

With marketers of all stripes (including a great CPG example here) ramping up their loyalty marketing, I’d like to focus on a key ingredient marketers need to design and implement effective loyalty marketing: data, data and more data.

Why is data needed?  Here’s what consumers told the CMO that they hated about existing loyalty programs:

• Too much non-personalized spam or junk mail
• Difficulties in redeeming rewards
• Too many restrictions
• Lack of personalization

In other words, the quickest way to turn off your loyal consumer is to send communications and rewards that aren’t personalized to their specific needs.

Despite the key need to “know thy customer’ the CMO study indicated that only one-third of the marketers’ companies collect the data necessary for personalization such as participants’ product/personal preferences, satisfaction levels and brand loyalty.

Liz Miller, the VP of programs and operations for the CMO Council, succinctly highlighted the challenge marketers face: “The top concern customers have with the programs is that they’re inundated with irrelevant messages and spam e-mails,” Miller said, “but the number-one thing marketers want to increase is the volume of e-mails they send. So there’s a big disconnect.”

What’s the way out of this “big disconnect?”  As one commenter suggested, “to get loyal, you must get personal.”

Marketers need programs that seamlessly collect as much consumer data as possible and they need to leverage the data to design communications and rewards that speak to the individual customer.

The devil, of course, is in the details, but I think the obvious place to start is with a web-based platform (like Alice.com) that makes it easy (for marketer and consumer) to establish a direct, ongoing relationship.

Need further proof that web-based loyalty is the ticket?  Take a look at how leading CPG manufacturers—from P&G to General Mills—are beginning to turn their attention to the promise of web-based commerce and marketing to deliver a one-on-one relationship with each consumer.  Here are a few recent quotes, by way of example:

“The eventuality is a one-on-one relationship with every consumer, and obviously e-commerce needs to be a big part of that.” P&G CEO Bob McDonald (article here)

“The beauty of digital is it’s very effective–great ROI and very efficient–to talk directly to consumers and to give them customized and more relevant information about what the brand can do for them.” General Mills CMO Mark Addicks (article here)

Clearly CPG marketers are awakening to the power of the web to deliver engagement, and I suspect loyalty marketing will be a very big part of that investment in the months and years to come.