Cpg Loyalty Final
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Transcript of Cpg Loyalty Final
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8/8/2019 Cpg Loyalty Final
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taBLe o coNteNts
Introduction ...................................................................................................................... 1
The Current State: Marketer Stability And Frustration ............................................................ 3
The New Approach ............................................................................................................. 5
Loyaltys New Value Proposition .......................................................................................... 8
Back Through The Chain .................................................................................................. 10
About Carlson Marketing .................................................................................................. 11
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1 Carlson Marketing 2010
INtroductIoN
As any competent consumer packaged goods (CPG) marketer would do, lets start with some
numbers. PriceWaterhouseCoopers reports that the consumer packaged goods industry took
in $2.2 trillion in 2009, a 10 percent increase over the
previous year. P&G alone generated sales o more than
$77 billion in 2009 and in February 2010 announced our
new major product line upgrades. It is admittedly hard to
say that CPG sales are broken. And its also tough to say,
thereore, that CPG marketing is broken.
However, look to some outside sources and it becomes
evident that some pressure points are squeezing the
packed goods industry. Several analysts have noted that
consumers are starting to spend again but are attracted to
heavy price discounts.
In act a recent Morningstar analyst report predicts some
acquisitions in the CPG space because o price pressure.
We view this as a sign that consumer products companies
expect growth to be muted over the near term and so are
taking advantage o potentially depressed prices to bulk up
on brands, the Morningstar report states.
Other analysts have predicted a need or change as well.
A Nielsen report encouraged CPG companies to innovate
rom the supply chain right through consumer marketing,
saying that 2009s increase in coupon activity needs
to be ollowed by changes that will hold margins. CPG
manuacturers will look or more efcient and eective
ways to reach consumers vs. traditional trade spending,Nielsen says. Time will tell i new product innovation will
be enough to drive shoppers back to traditional brands.
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2 Carlson Marketing 2010
The mid-term and long-term growth prospects are not the lock they once were or CPGcompanies. Change is needed to keep marketing costs down as well as to deal with other
challenges that this white paper will outline. Those challenges are customer-centricity, private
label competition, price erosion, and lack o media efciency.
Current marketing approaches lead to grinding out those ew percentage points o growth each
quarter. They deliver predictable results, but those results will become more expensive to
achieve. As the retail, fnancial services, pharmaceuticals, and technology sectors have ound
new ways to present products and drive eective customer strategies, CPG as a category has
relied on traditional marketing strategies or a short-term win, thus overlooking the customer
experience in avor o product tweaks. It avors message over dialogue. It leaves the customers
attachment to the brand at a slim margin when loyalty is threatened by private label brands,struggling retailers, and desperate competitors.
A brighter uture is attainable or CPG brands and or CPG brand managers. That uture can be
ound in a strategy that many CPG companies have tried and discarded because o improper
execution. That strategy is customer loyalty. Using direct-to-consumer transaction tracking
techniques, new approaches to analyzing customer data, and the latest digital marketing
strategies have taken loyalty programs and relationship marketing to a new level. This new
technology and customer relationship ocus have given loyalty marketing a bright new uture and
can give tired marketingand weary marketersnew juice or their brands and customers.
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3 Carlson Marketing 2010
the curreNt state: marketer staBILIty aNd
rustratIoN
Beore laying out loyaltys new approach and promise, lets detail the problem that complacency
will incite. In February 2010, the CMO Council reported that most marketers (61 percent)
believe that loyalty program participants are the best and most proftable customers. So it is
not surprising that an almost equal number o respondents (65 percent) view customer loyalty
program investments as an essential and valuable part o the marketing mix. Unortunately, only
13 percent o respondents believe they have been highly eective in leveraging loyalty andbrand preerence among club members, and nearly 20 percent dont even have a strategy
or this. Another 25 percent admit they have not mobilized brand loyalists to become active
advocacy agents either.
There are two key problems hindering CPG marketing today. The frst problem is CPGs reliance
on advertising and promotions. Although it makes a brand managers job easy, its long-term
sustainability is questionable. It is much easier to buy another print or TV ad than it is to truly
connect with customers and generate customer value. Almost all major brands advertise online,
and experiment with social and mobile media. In act, Coke and Pepsi, to their credit, opted
or community-building social media programs around the 2010 Super Bowl instead o their
traditional $20 million or $30 million game expenditure.
However, even these innovative programs are not aimed at customer loyalty. They will
indeed build engagement, attract customer data, and generate some dialogue (which are all
improvements over the traditional stale approach), but they are not automated or sustainable.
They are event driven. They speak more to the shiny object syndrome being attracted to the
latest marketing ad. The key to converting marketing activity into sustainable customer loyalty
is to view the campaign as a long term strategic initiative.
The second problem is in the reward/reciprocity, or lack o it. Customer loyalty is currently
disappearing aster than the polar ice caps. Carlson Marketing research shows that 52 percent
o highly loyal customers in 2007 either reduced their loyalty or completely deected rom their
CPG brand in 2008, and predictions or 2010 suggest a continued slide in brand loyalty.
Expect no mercy rom retail partners. CPG companies have made a predictable science out o
trade promotion spending, advertising support packages, and in-store slotting ees. At the same
time, retailers such as Kroger, Saeway, and Wal-Mart are aggressively expanding their own
private labels while removing or constricting the presence o national brands on their shelves.
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4 Carlson Marketing 2010
The list oten changes by the month, but brands such as Glad, Hety, and even some Coca Colaproducts, have had trouble keeping their shel space at Wal-Mart. CPG companies are in a stable
position or the short term but should be wary about the long term. Mass media continue to raise
their rates without guaranteeing competitive rates or perormance. Categories such as health and
beauty, beverages, and household cleaning continue to rely on these media as the oundation o
marketing eorts when the customer wants a stronger value-oriented relationship.
Much o this mass market spending is done in the spirit and with the intent o supporting retail
channels that are ready to launch private label competitors while demanding more merchandising
dollars or the products they currently stock. Those merchandising dollars are tough to track. CPG
brands have continued to design sweepstakes and coupons to generate customer and sales data,
but access to that data or the brand is ar rom guaranteed. By working through channels, CPGbrands have no ability to connect to their most loyal and proftable customers. The bottom line
is that retailers currently need CPG brands much less than CPG brands need retailers.
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5 Carlson Marketing 2010
The New ApproAch
A new approach to CPG marketing is clearly needed. We are not suggesting that loyalty programs
become a substitute or eective retail promotions. We are not saying the loyalty program should
replace eective advertising, including the mass media awareness building that is still essential
or CPG brands. We are saying that it is vital to level the playing feld in channel relationships by
giving the CPG brand, its retailer, and most importantly its customers, the touchpoints needed
to build meaningul relationships. Our research oten shows a 20 percent or more share increase
among consumers participating in sustainable CPG loyalty programs, with volume increases o up
to 12 percent year-over-year. Add to that the cost osets in the millions o dollars rom strategic
partnerships, and brand managers can rediscover the value in this new breed o loyalty programs.
CPG loyalty programs can and should be accessible, automated, efcient, and powerul
strategies.
Like any business strategy, customer loyalty marketing has key elements or success, including a
sound fnancial plan, the ability to capture and track consumer transactions, a communications
plan, and data analysis to understand customer needs and provide customer intelligence built rom
individual shopping behavior. Understanding that behavior and turning that insight into concrete
actions will help CPG marketers win in their markets. But it cannot be a set and orget plan.
Points and redemptions, or example, are not right or all CPG brands the economics on both
sides o the equation must work. Targeted, timely, and relevant communications to loyalty program
members are sometimes enough to drive retention, cross sell, and organic growth but they must
be inormed by customer purchase data. Individual customer needs and drivers help inorm the
rewards/oer mix and stretch dollars to their ullest potential. Some brands in a companys portolio
have higher emotional connections and attract higher customer value than others. Considering
these actors, it is evident that even within the same umbrella company (Unilever, P&G, etc.) one
size does not ft all brands. When determining the specifcs o your loyalty program, the ollowing
elements must be taken into consideration:
cliin . i g: Coalition programs come in various orms. There are
wide-based programs such as Nectar, Aeroplan, or Upromise that count all purchases
toward rewards and industry-specifc programs such as supermarket rewards. There are
coalitions ormed within a brand (the advantages being shared customer data and costs
o administering the program) and programs designed around a type o product (personal
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6 Carlson Marketing 2010
care, beverages, pet ood). Regardless o the type o coalition, it is important to choose theapproach early and stay ocused on the customer. Proprietary programs are intended or a
sole brand or product. When it comes to coalition vs. proprietary programs, ask the
ollowing questions:
Can my brand fnancially support the fxed operational costs o a proprietary program or
do I need to fnd partners to help me amortize these costs?
Can my consumers individual annual value to me allow me to both communicate
consistently and oer them rewards or incentives?
What do I stand to gain by aligning my brand with other partners: More consumers?
Better brand equity through association? The ability to oer my consumers a better value
proposition?
How can I group my customers according to value?
How does that value correlate to individual brands or groups o brands?
What will motivate that group o customers to spend more money with those brands?
h . bnf: Hard benefts are easy to calculate. They defne the transaction and
the currency o many loyalty programs. For example, the consumer earns 1,000 points rom
buying CPG brands and receives something tangible in return such as ree goods or discounts
toward other products. This process can represent a breakthrough in CPG loyalty because the
program can be automated, sustainable, and a driver o positive customer value. It is never
stale i the oers and rewards are resh.
Sot benefts (recognition, events, recommendations) can be part o the program as well,
although they are harder to measure. Example: I a loyalty program or diapers and baby
care products oers moms access to newsletters and expert inormation rom the brand,
the program will have to track back to incremental purchase behavior among that customer
group. It can work very eectively and once again is a key consideration in designing a loyalty
program.
When determining hard vs. sot benefts, ask the ollowing questions:
Will the customers I am targeting spend more with my brand to achieve tangible goods?
What are those goods and what will the cost be to my brand?
Do I have enough emotional equity in my brand to be able to engage my consumers with
content or inormation?
Can I operationally deliver sot rewards (like special treatment and recognition)?
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7 Carlson Marketing 2010
Lng innin . iixinin: The biggest dierence between
CPG loyalty circa 2000 and CPG loyalty uture
are market networks o partners. I a brand can
rely on one partner or all planning, execution,
tracking, and automation activities that
program is more likely to strengthen customer
relationships and become as sustainable and
valuable as any series o network TV spots.
When considering the longevity o your program,
ask the ollowing questions:
Is my current loyalty program primarily
designed to drive customer acquisition
and awareness or customer retention
and growth?
Am I really using the data I am collecting
to aect these consumers retention and
growth or is the data just going into a
database or uture consideration?
Is my current loyalty program active rom
a customer point o view?
Is it subject to a longterm plan?
Do we have a partner that can help answer
those questions?
c o k e r e w a r d s
c a s e s t u d y :
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8 Carlson Marketing 2010
LoyaLtys New vaLue proposItIoN
As discussed earlier, CPG brands and their agencies have given points-based loyalty programs
a good run and sometimes ound them expensive, hard to administrate, or lacking in short-term
results. Perhaps the disappointing results were the natural outcomes o too narrow an approach.
It is also likely that a number o brands have tested loyalty programs and are now sitting on an
unused loyalty inrastructure, or even a data warehouse flled with outdated consumer records
and purchase data. These dead zones are a testament to the need or a dierent approach to
this kind o marketing. Loyalty marketing should be a business strategy not a marketing tactic.
It is sae to assume that consumers will make a frst purchase because you oer points. However,
the same eect can be derived rom a coupon or another advertising buy. So why consider a
loyalty marketing strategy? The answer is, because loyalty marketing is about sustainability and
organic growth. It is about encouraging consumers to make the 2nd, 3rd and 4th purchases.
This approach to loyalty marketing can be recognized through a ew distinguishing characteristics.
In: Loyalty programs live and die by their ability to generate and manage
consumer data. The system that supports the loyalty program should not only allow or
transaction and behavior tracking and point issuance and redemption, but also individualpurchase transaction analysis and member segmentation. The system should be able to
identiy the right customers at the right time with the right oer to encourage an incremental
purchase. Without this kind o ocus on the relationship continuum, money is wasted and
consumers can be alienated by a poor relationship or reward experience.
mli-nnl niin:Consumers learn about, interact with, and purchase
brands through many dierent media today. Loyalty programs should mirror this by oering
consumers the opportunity to engage and interact with the program whenever and wherever
they are. In order to achieve this type o embrace with consumers, loyalty programs o the
uture need to include not only an engaging Web site, but mobile, and online ads, and other
emerging digital touchpoints. Valuable consumers will continually engage with the brand, and
even the proper channels, i their communications and rewards are available through digital
touchpoints. Enorcing the point is the Mobile Marketing Associations prediction that mobile
coupon usage will rise rom 200,000 in 2009 to 70 million by 2013. Seventy-nine percent
o mobile phone users are interested in receiving coupons via mobile phone.
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9 Carlson Marketing 2010
m g ni: This is a big upgrade rom the programs CPG brands mayhave tried and ound rustrating. Many programs that were launched in the past were
ashioned directly ater airline or credit card loyalty program models that oer members
impressive travel and merchandise rewards in exchange or loyalty. With the average annual
value o individual consumers at one tenth or less than that o those industries, CPG
companies quickly realized that they could not sustain the costs or their loyalty program
designs. Todays successul CPG loyalty programs include much more creative and fnancially
appropriate rewards solutions. They are designed and managed by partners who understand
the individual consumer economics and have the talent to leverage the brands awareness,
reach, and brand equity assets to secure program reward options. Finding a partner that
understands this and can deliver the needed solution is a critical ingredient to the success o
todays CPG loyalty marketing.
t h e c a r L s o N m a r k e t I N G p r o c e s s :
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ming b i: 1) n--n lini bli bn gn n i g in, 2) nin i g n nlz, n 3) l i
li g iin b n l nil l iin li
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bn n bing g - ing n n -lign i
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Codesmadeavailabletocustomerswhentheypurchaseaproduct.
Thosecodesareenteredelectronicallyatthepointofsaleandareconvertedintopoints/credits
n l in iniil b n.
Thosepoints/creditscanbeusedtoacquirerewards.
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10 Carlson Marketing 2010
Back throuGh the chaIN
Lets take it rom the top. There are a number o aults in the traditional stale loyalty program
model; however, loyal customers are proving more valuable now than ever beore. There is an
opportunity or real competitive advantage i CPG brands get it right. Instead o leaning on mass
marketing to drive a questionable ROI or a 10 percent sales increase, loyalty programs can
decrease media costs and potentially drive an even greater increase. Instead o only speaking
at customers, the programs can hear back rom them. Instead o fghting channel partners
or a shrinking share o shel space with no customer connection, loyalty program automation
can drive sales, make the case or more shel space, and push promotion through to the most
valuable or growable customers. Finally, instead o the stale approach o traditional media,
all this can be dynamically communicated through digital media, which is more efcient in
the long term.
In the past, the missing piece o the loyalty program puzzle has been long term vision and
consistent loyalty program partners with complete and versatile skill sets. With customer loyalty
on the line in a $2.2 trillion business, a new approach deserves a long term commitment and
partners committed to making it a long term strategy.
*inl pn #6,039
In accordance with this invention, there is provided a method or processing one or more product marketing rebateclaims submitted by a consumer in satisaction o one or more rebate oers having a value, each rebate oercomprising an oer to provide a cash value in return or a purchase o one or more designated products. Purchaseo the one or more designated products occurs in one or more qualifed transactions, each qualifed transactionhaving a transaction serial number assigned thereto. The transaction serial number is recorded in a point-o-saledata processing and storage system and recorded on a receipt issued to the consumer. The rebate processing methodcomprises providing a designated site connected to a global computer inormation network and accessible by theconsumer. A rebate claim is received on the designated site, the rebate claim comprising (i) at least one transactionserial number corresponding to a qualifed transaction, and (ii) identiying inormation corresponding to theconsumer. A data record is stored, comprising at least one transaction serial number and the identiying inormationcorresponding to the consumer. An electronic fle transer is received rom the data processing storage system.The electronic fle transer comprises at least one purchase data record comprising at least (i) the transaction serialnumber corresponding to the qualifed transaction in which at least one designated product was purchased by theconsumer, and (ii) an identifcation o each designated product purchased by the consumer. Each stored data recordis associated with a corresponding purchase data record having an identical transaction serial number, and thestored data record and the corresponding purchase data record associated therewith are then processed to validatethe rebate claim. Then, the value o the rebate claim is transerred to the consumer. The designated sitemay be accessible to the consumer by a computer connected to the global computer inormation network or via atelephone connected to a computerized telephone answering system connected to the designated site and accessibleby calling a designated telephone number.
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11 Carlson Marketing 2010
aBout carLsoN marketING
Carlson Marketing is the worlds leading relationship building company. As the largest
independent agency in the U.S. and the 15th largest marketing company in the world,
Carlson Marketing designs and delivers loyalty and engagement programs or some o the
worlds best known brands. Carlson Marketings two global service oerings Brand Loyalty
and Engagement & Events are supported by six core capabilities: Strategy & Brand Planning;
Creative and Communications; Decision Sciences; Award Services; Technology Services and
Customer Service. Carlson Marketing owned by Groupe Aeroplan, the global leader in loyalty
management employs 2,500 marketing proessionals across 17 countries.