Why is personalization crucial for CPG brands?

Personalization can be a challenging subject for consumer-packaged goods (CPG) companies. The competition is tough and if your brand won’t meet customers’ individual needs then they will turn to your competitors. According to McKinsey,

1. Companies that excel at demonstrating customer intimacy grow revenue at a faster rate than their peers.

2. Companies that grow faster generate 40% more revenue from personalization than slower-growing competitors.

To build the coveted brand loyalty in this evolving landscape, businesses need to deliver customer-centric experiences and expand their marketing strategies to be more digital, targeted, and precise. According to the 2020 State of Connected Customer report, 80% of B2C and 85% of B2B consumers reported that the experience with a company is just as important as the product or service. By implementing hyper-personalization, businesses can drive repeat sales, and increase lifetime value by tailoring offers to meet individual customer preferences.

Fortunately, with the advent of direct-to-consumer (D2C) models, businesses now have direct access to valuable customer data which can be leveraged for more effective marketing, informed decision-making regarding new product launches, and ensuring consistent experiences across the customer journey. But capturing, analysing, and protecting the data can be a challenge. Why? Let’s dive in.

 

Why are CPG brands struggling with personalization?

• Insufficient technical awareness – Most brands are not aware of the technical capabilities to achieve their personalization goals and do not know where they fall in their personalization journey. The D2C strategy requires a solid foundation in technology to gather and leverage consumer data, as well as a willingness to rethink organizational priorities, IT investments, and skills.
• Lack of organizational alignment – This is one of the biggest factors that leads to personalization strategies failing is a breakdown of coordination across departments and teams. As per Salesforce State of Connected Consumer report, 42% of marketers say a lack of organizational alignment stands in the way of personalization.
• No well-defined data strategy - Not only is customer data fragmented, but the different bits are typically stored in their own systems — email, loyalty programs, digital engagements, on-site, etc. — and these systems don’t talk to one another. Manual attempts to connect them are notoriously time consuming and fragile, often falling apart when changes are introduced. As companies add new customers and new channels, the problem only grows more complex.
• Rigid privacy policies - CPG companies rely on third-party cookies to track user activities and provide targeted, personalized ads. However, privacy policies like the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), combined with the absence of third-party cookie data, have made it challenging to understand the user personas and tailor their experience, ultimately impacting revenue.
• Lack of single customer view- Customers engage across multiple channels, online and offline, resulting in a different identifier each time. Without a common key to link these interactions, it’s impossible to be sure that they all apply to the same person. That means no unified customer view, which in turn leads to errors in segmentation, insights, and personalization. This is bad for both business and customer experience.

Learn 9 steps to launching a future-proof personalization strategy.

Consumer brands that are winning the personalization game

• Amazon is a pioneer and has nailed the personalization game through its comprehensive product recommendation system. As per McKinsey, 35 percent of what consumers purchase on Amazon come from product recommendations. Amazon keeps track of everything you do on its platform. The AI-powered recommendation engine enables Amazon to leverage 'discovery,' showing people items they are most likely to buy (based on their on-site behavior data) while also shedding light on items they are unlikely to discover on their own. It does not take a 'one size fits all' approach, which allows customers to land on a homepage that is customized to their needs and displays only relevant, recommended items.
  

• Thrive Market has claimed the first spot in the Sailthru Retail Personalization Index 2022. It is a subscription-based service, that provides high-value shoppers with recurring delivery slots, grocery lists, and recipe ideas, as well as discounts on replenishment items such as milk and cereal. It is a wildly successful tactic pioneered by ecommerce-focused brands such as Amazon. It asks, "What did you think?" using collaborative filtering and post-purchase automated email campaigns to inform future, "We think you might like" recommendations.

  

  Source: Retail Personalization Index 2022

 

• Sephora polls customers on their preferences and customer satisfaction levels on a regular basis and then uses this data to make smarter recommendations in the next round of communication. Did you buy a hair straightener? Chances are you might be interested in heat-protective hair spray, or a moisture-locking flyaway gel. With more personally relevant offers you will purchase more, providing Sephora with more data to make the next experience even more personalized. Only 24% of retailers polled currently allow customers to set preferences for products and channels. As data becomes an increasingly important part of the value exchange, all brands should invest heavily in this area.

Discover tips to create winning strategies to implement personalization.

 

How to get started?

At Altudo, we can help you with our full-fledged solution Time-to-Value (TTV) for achieving your personalization goals on the go! Our team of experts will address and fulfill all your customer needs with the powerful combination of Sitecore Personalize & Acquia Personalization.

Our solution helps in quickly and efficiently lay the groundwork for personalization and therefore harnessing the marketing potential of your Digital Experience Platform (DXP). It includes a series of five workshops built with clear outcomes and quick wins for your website and enable marketing personalization in under 10 weeks. Our experts will help you chart the right digital strategy roadmap and personalization program to take your business to the next level.

Head over here to talk to us.