Weighing in on a new candy isn’t just fun for customers. For one consumer goods (CG) company that set up a pop-up shop in Manhattan’s Times Square, it was smart business. The company gathered real-time feedback on a promising new product. But more importantly, it also collected shopper data, grew product awareness, and bolstered loyalty with a memorable customer experience (CX).
This is just one example of how CX has become a key differentiator for brands. The COVID-19 pandemic reinforced that CG companies need to evolve how they engage with distributors, retailers, and end-consumers to drive growth and boost profits now and into the post-pandemic recovery.
We sponsored a report by Harvard Business Review Analytic Services to explore the changes that CG companies are already making — from investing in new digital capabilities, to updating business models, to making CX a critical competitive differentiator. Here’s what we uncovered.
CG companies engage with customers in new ways
CG companies now engage with consumers outside of traditional retail and distributor environments. In fact, 78% of CG respondents said the pandemic led them to engage with consumers in new ways. They learned that these direct interactions create an opportunity to collect valuable first-party data, like email addresses and product preferences, that they didn’t have access to before.
78% of consumer group respondents said the pandemic led them to engage with consumers in new ways.
Another 42% of CG respondents said they are adopting new business models, such as going direct-to-consumer (D2C). By offering coupons or virtual coins on their own websites, CG companies exchange special offers for data. This kind of direct access is key to delivering more personalized experiences based on shopping preferences and behaviors. A great example of this is PepsiCo, which launched two ecommerce sites in 30 days to support customers as quickly as possible at the height of the pandemic.
CG companies also get direct consumer feedback through these channels – including new products in development. Consider Specialized Bicycle Components, a U.S. maker of bikes and accessories that created an app that allows consumers to enter measurements and design preferences. The app returns customized, rider-specific recommendations for the bike, saddle, and clothing, which helps the brand refine its product line and quickly identify trends.
Engaging with customers in all of these new ways requires new data infrastructures, which can be a major investment and transformation for CG companies.
The CG industry invests in modern data strategies
CG leaders have historically relied on siloed technology systems, institutional knowledge, and gut feelings to make decisions. But today’s environment necessitates a customer-centric culture driven by a rich mix of data from an array of sources. Most critically, first-party data.
Fifty-eight percent of CG executives plan to invest in customer data across different functions — like sales, marketing, service, finance, logistics, and research and development — over the next two years. With the right digital tools, including a customer relationship management (CRM) platform, CG companies gain a complete, 360-degree view of the customer across touchpoints. They can aggregate and share data across teams to engage customers, identify selling opportunities, and help grow revenue.
42% of CG respondents said they are adopting new business models, such as going direct-to-consumer (D2C).
Imagine a customer orders allergy medicine online. Armed with data from a recent search query, the company can send a follow-up targeted marketing promotion with relevant product recommendations, such as facial tissue and soup from owned or partner brands. The company can promote products across its portfolio, instead of operating within a single brand silo, and help drive basket size and revenue growth.
CG companies use AI to interact with customers
Our research found that nearly half (48%) of CG executives said they are likely to invest in artificial intelligence (AI) and automation in customer interactions over the next two years.
AI enables CG companies to get the right products in front of the right customers at the right time — both in physical and digital channels. When AI is embedded into the business process, CG companies can better predict consumer behaviors, needs, and overall demand, and suggest timely product recommendations.
48% of CG executives said they are likely to invest in AI and automation in customer interactions over the next two years.
AI allows the brand to give retailers and away-from-home channel operators guidance on what products to carry to grow the category and channel. The more precise the forecast and understanding of demand, the less likely it is to avoid inventory shortages (excluding a black swan event). AI can also play a key role in identifying which new products will succeed given target demographics and geographical constraints. And it can use data to test new products before they launch. That’s a win-win for customers and for CG companies.
CG companies are modernizing their approach to CX
Everyone on the value chain wins when CG companies create a holistic strategy based on customer preferences and behavioral insights. But for CG companies, that means flexing a new muscle – and adopting new approaches that strengthen the CX.