Loyalty Efforts Hit the Mass Market

Expert Insight | Consulting Advisor, Andy Wright, Executive Vice President, Sales and Marketing Services, Carlson Marketing

Forget taste tests. Get over the highly paid celebrity endorsements. Forget the Super Bowl. It's all over. The real excitement in consumer packaged goods (CPG) marketing is in relationship marketing.

Wait! Don't reach for the page corner thinking this is one of those back-to-basics opinion pieces. Take a leap of faith with me here. Relationship marketing is the most exciting thing to happen in CPG marketing since soap operas and coupons.

CPG companies have always been involved in some kind of relationship marketing. "You give me information about yourself and I'll give you access to something." That's how the deal has always been struck. The "something" part of the equation has changed and that's the excitement. For the longest time the change was small: access to such things as hints about how to clean your house or tips on how to change diapers. I don't know about you, but I don't need to learn about these things from a product Web site.

What CPG companies are now willing to give customers in return for information and, more important, their precious time has changed from discounts, contests, and trite advice. It has gone from content to something more tangible. I can "spin and win" on a few CPG Web sites based on my purchase codes. But I can also vote on the next color of M&Ms. I can vote on the next flavor of Doritos. I can play games on the BudBucks Web site in the U.K. via my mobile phone. Put simply, CPG relationship marketing now includes unique experiences and exclusive products that fit the customer's lifestyle. This kind of "engagement loyalty" will revolutionize the CPG industry.

If we let it, that is. The value exchange in this equation has changed. Yes, code-based programs will still be important. The process of "consume product, enter special code on Web site, earn points" is effective on many levels. Innovative code-based programs from Pepsi, Coke, Snapple, Kellogg's, Budweiser (in the U.K.), and other brands are examples of relationship programs that are poised to bring some calm, efficiency, and vision back to a potentially chaotic marketing situation.

To my way of thinking, chaos is spending millions in production and media for TV spots without knowing whether I'm closer to my customer than I was when I started. To avoid that kind of chaos I see four goals CPG companies need to move toward if they want to approach sustainable relationship marketing:

Move toward experience: Points programs are an essential entry point to loyalty programs. They provide a logical way for customers to buy more goods to earn more points and more rewards. But there must be a next step. Customers who want to stay loyal to a brand will feel let down after the points program has become predictable. Companies need an experiential hook to get customers to stay with a brand after the points program has lost its initial fervor. That next step is experience. Give customers who have agreed to invest their time and attention an experience that amplifies your brand.

Understand market conditions: A loyalty program must compete in the market. I see a lot of CPG programs that seem to be out there for the sake of it. Not an acceptable expenditure of money in my opinion. Points-based loyalty programs can be extremely effective at generating brand magnetism, customer data, and incremental revenue. But it won't work if several brands are doing the same thing at the same time in the same space. Be smart. Be aware.

Calculate B2B relationships: Retailers and supply-side companies shouldn't take for granted the fact that points-programs can drive offline and online traffic. Budweiser's U.K. code program BudBucks.com, for example, raises the profile of the brand and gives customers a reason to buy a brand that is foreign to them. Anheuser-Busch U.K. is offering a consumer program that ultimately drives more sales for retailers. In response retailers need to bring in more Bud. That B2B approach is to loyalty what hops are to beer: the essential ingredient.

Make loyalty part of branding: Believe that statement. If you can't, your loyalty program is lacking. I've heard some former colleagues of mine say "advertising is making people connect and direct marketing is selling." All due respect, but that's a load of bull. Loyalty programs, points programs included, are branding. When a customer considers a loyalty program for beer, soda, aspirin, diapers, or anything else, that's an impression. It should be taken as no less than that. Loyalty programs in the CPG space are about creating intent to buy and brand awareness. All measurements of loyalty programs (apologies to anyone obsessed with measuring lift) should be calibrated toward brand awareness, engagement, impressions, and increase in sales volume. Isolating any one of those measurements is not accurate.

As marketers we are charged with the task of placing products and experiences in front of the right customers. It becomes tougher to do that every day, but when I consider the possibilities of relationship marketing, it becomes a more manageable task. Even in a category where products are aimed at the masses, it's the individual relationships that count. It need not be a chaotic process. It is as simple and as valuable as a conversation with a trusted friend.