5 Reasons Consumer Packaged Goods Need to Embrace Personalization


There’s no denying the devastating impact of the coronavirus pandemic, which continues to threaten both our health and economy. As the crisis unfolds, consumer packaged goods (CPG) manufacturers have found themselves in an essential role. Industry leaders have allocated significant resources to meeting upticks in demand, but they aren’t short-sighted in their approach. They understand how consumer packaged goods data can drive growth in the future.

Eventually, the world will return to normal or at least some version of it. In the near term, experts are predicting the largest quarterly decline in economic activity since World War II, in part resulting from a staggering 40 to 50 percent slump in discretionary spending. Future-thinking CPG businesses are already considering how their operations and products will need to adapt after robust virus-control measures are lifted.

In the face of recessionary behavior driven by the total collapse of consumer confidence, CPG companies may find hyper-personalizing customer experience is the key to unlocking their competitive edge and long-term sustainability.

The ‘new normal’ consumer

Why and how consumers shop has shifted drastically. New behaviors that have intensified include shopping online for basics, spending more on takeaway food and curbside restaurant pickups. Consumers are also having groceries delivered and using videoconferencing software for professional and personal purposes. Consumers are also increasingly participating in several other digital categories, such as online fitness and entertainment streaming.

These habits are unlikely to subside in a post-coronavirus world, with consumers indicating that new behaviors are here to stay long-term. For example, two-thirds of consumers that have switched to new brands or retailers intend to stick with them.

Meeting the ‘new normal’ consumer demands

Consumer demands are in a state of rapid transformation, but many of the trends are broad and sweeping, unspecific to your sector and your ideal customer persona. So, while emerging preferences like digital replacements and convenience are excellent kick-off points, creating a truly personalized experience is vital.

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Here are five reasons why CPG companies need to embrace personalization as we welcome the next normal.

1. The purchase path is no longer linear

Consumer loyalty in the post-coronavirus world will become fickle. Eighty-seven percent of all shoppers use smartphones, allowing them to browse several physical and digital channels to meet their specific needs.

Accurate, real-time customer data is required to develop a personalized path to purchase that caters to more fragmented shopping behavior. Using insights helps CPG companies expand into high-growth areas while harnessing the value of collaborating with retailers to speed up operations, improve communications and evaluate pricing.

2. Consumers expect a consistent experience across channels

The purchase path may not be linear, but shoppers still expect a consistent experience from start to finish – a result that can only be achieved through data-driven personalization.

While many companies have embraced digital technology, the data they use to determine customers’ needs is still often siloed. Disconnected data fails to give a clear picture of customers’ expectations throughout the buying process and can lead to significant problems:

    • Failure to deliver a rewarding experience
    • Limited ability to establish effective personalization to scale D2C initiatives
    • Lack of customer segmentation
    • Struggles to comply with regulatory requirements and privacy laws

By using connected data, brands can optimize their customer experience with timely, accurate information.

3. Consumers are more sensitive to price

Consumer confidence is low, leading to price sensitivity. A look back at the 2008 recession provides some guidance on how shoppers will respond to the looming economic crisis. During that period, consumers changed their shopping habits in several ways, including:

    • Spending less time outside of homes, with 63 percent of Americans reporting they ate out less
    • Fewer nonessential purchases, such as high-end luxury goods and cosmetics
    • Bargain hunting, with consumers becoming increasingly promotion-conscious
    • Switching to cheaper brands and private labels
    • Turning to value and discounted retailers

Personalization through consumer data empowers CPG companies to refine their messaging to meet price sensitivity and other changed shopping habits.

4. Competition from niche brands is rife

Niche brands have capitalized on the amount of consumer data available. They’ve successfully targeted millennial preferences with digital marketing tactics. Often hard to spot because they are sold online or in channels not traditionally used by the industry, they have a strong emotional engagement with their customers. This engagement makes the brands more likely to be noticed and appreciated by consumers.

5. Other businesses are becoming masters of consumer data

Large e-commerce companies such as Amazon and eBay have mastered using consumer data. As a result, they are attracting consumers across categories and have a profound impact on consumer decision journeys. Their aptitude forces CPG manufacturers to reassess their channel strategies and channel-management approaches.

Furthermore, retailers now prefer data-driven CPG partners. The battle for shelf space has never been more competitive, especially as companies prepare themselves for future uncertainty. More retailers are leaning on data-driven CPGs for insight on how they might sell their products more effectively. For example, if CPGs have data-driven insights on complementary products or price points based on demographics, it will have better negotiation leverage when vying for shelf space.

The benefits of CPG hyper-personalization

Connected Customer 360 data allows brands to offer a personalized and consistent experience across all touchpoints. This will drive loyalty and help improve pricing and promotional strategies.

Brands that embrace hyper-personalization through a connected data platform can potentially expect to see increased sales effectiveness and revenue. For more on how to make a successful shift to hyper-personalization, contact Reltio.

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