Consumer packaged goods (CPG) companies should be eager to reclaim the customer relationship from retailers and innovate through strategies such as direct-to-consumer e-commerce, especially given heightened urgency resulting from COVID-19. Strategically collecting and understanding customer data creates value for all parties through direct feedback on consumer behavior. Consumers are better understood and served, while CPG companies improve efficiency by cutting out irrelevant initiatives. In order to win in the future, CPG companies must have direct access to their customer data so they can adapt their strategies to meet rapidly evolving expectations and needs.
Some big industry players, like Nestlé, have already begun reaping the benefits of the data-driven approach, with all signs pointing towards sweeping industry uptake. For Nestlé, data and analytics-focused groups within sales and supply chain provided advanced analytics to improve these functions. They used big data to identify new food trends and develop products, specifically from Freshly subscriber selections.
Intelligent, data-driven CPG companies know their business and their market through data and advanced analytics. This allows them to create a competitive edge while driving efficiency. Obtaining access and control over first-party data is the first step, but understanding how to get the value out of that data is where many CPG companies struggle. Data can be used in the following ways to drive value:
Deepen Relationships and Engagement With Consumers
The goal for tomorrow’s CPG company is to cultivate and maintain rich consumer relationships marked by deep engagement. Creating more personalized consumer experiences is a priority, and shifting from traditional ad campaigns to always-on engagement is key to becoming indispensable to the consumer; unlocking first-party data is a practical step to achieving this objective.
Nike’s Triple Double Strategy focuses on direct sales to customers and leverages partnerships to better collect and use first-party data. Nike has integrated its NikePlus membership program and apps into the customer journey. It uses its sales, its fitness app, and the personal data it collects to build products customers want and to provide personalized recommendations. Nike goes a step further, granting its Plus members exclusive access to Nike Live stores, which offer city-specific styles refreshed biweekly based on digital commerce data from local NikePlus members, further deepening engagement.
Create Better Products
In order to create products that resonate with customers, CPG companies must integrate data and analytics into their core product development processes. Not only should they analyze data to create better products, they should also have data-led approaches for product pricing, development of product assortment portfolios, and where they focus sales resources.
For P&G, consumer data is an integral part of product development. Kirti Singh, P&G's chief analytics officer, is focused on next-gen tech, big data, and behavior science as a means to better understand customers. Based on first-party data, P&G developed Secret Freshies and Japan’s Bold 3 chamber laundry pods, which both had successful launches. The CPG company has continuously created and enhanced products and experiences to meet rapidly changing consumer needs, and positively impact society. Part of this winning approach requires implementing systems designed for immediate, real-time response to shifts in customer behavior from both automated tools and various persons on the fly.
Optimize the Business Through Demand Forecasting
CPG companies can use data to more accurately predict consumer behaviors. With a more robust understanding of ever-changing behaviors and values, CPG companies can stay nimble and anticipate a range of market changes. Having advanced and real-time demand forecasting will inform production, promotion and strategy decisions.
P&G has deployed a smart demand planning tool that uses machine learning algorithms to automate demand planning processes. The tool adjusts and optimizes demand plans for new product launches, changes in master data or stocking strategies, and more. This capability enabled P&G to swiftly respond during the pandemic through flex site capabilities, taking only two weeks to bring idle equipment online to make Charmin. The tool also provides P&G with an understanding of natural disaster impact on both supply chain and demand, which positions it to make the necessary changes to the supply chain to keep products in store.
CPG companies looking to thrive in the future must tap into the power of first-party data. While obtaining this data is key, it’s only one part of the equation. Drawing the value out of first-party consumer data equips CPG companies with the knowledge required to make appropriate adjustments to their strategic operations and offerings, which will elevate the customer experience. Consistently positive customer experiences drive valuable business that CPG companies can’t afford to leave on the table.
Sabrina McPherson is managing director, management consulting consumer products lead at digital consultancy Publicis Sapient.
Sabrina McPherson is Managing Director, Management Consulting Consumer Products Lead at digital consultancy Publicis Sapient.
Sabrina leads Publicis Sapient’s Consumer Products Management Consulting practice. She has 20 years of experience partnering with CPG executives to drive shareholder value-based transformation. Specifically, Sabrina’s expertise lies in helping enterprises identify and quantify digital value pools in their core business and in new offerings/markets and partner with them to build the capabilities required to capture the value.