The consumer-packaged goods and retail (CPGR) sector has changed drastically, especially in the post-COVID period. Consumer preferences are changing, direct-to-consumer (D2C) brands are rising, and online shopping has increased exponentially. Given the highly competitive nature of the market today, brands have to overhaul existing business models in tune with the changing market.
This is clearly the era of personalized customer experiences. Personalization in CPGR is the process of creating individualized and unique interactions for consumers by steering their experience through pertinent consumer journeys. Product recommendations, marketing efforts, or products themselves are key to driving strong consumer brand loyalty and paving the way for business growth.
And at the heart of all this is the art of leveraging customer data.
Personalization Enabling the Data Journey
As in every organization, data is a major enterprise asset for CPGR organizations too. In CPGR, there are two forms of data: Consumer data – which includes transactions, demographics, consumer connectivity, and localization; and product data – comprising stock identification, localization, real-time control, and greater granularity.
For leading enterprises in this space, data not only serves as a foundational element for business but is incorporated across all business processes such as strategy, operations, marketing, and customer support. In the wake of new business challenges, there is a clear transition in the way data is being revisited to leverage a wider analysis of the customer journey.
Three factors have been critical in accelerating the data-driven consumer journey. First, access to vast pools of consumer data has enabled D2C firms to glean faster, better insights into consumer preferences and consumption patterns. Complemented by process agility and leveraging of technology, it has given D2C brands headway in charting customized messaging and personalization. In India, D2C brands are coming up fast and are estimated to grow to a $100 billion market by 2025.
Second, e-commerce platforms – backed by deep consumer insights and data – are hugely influencing purchase decisions. In 2021, a Statista survey revealed that 38 percent of product searches start via Amazon. Good or bad, these tech behemoths have redefined consumer shopping. As the first touchpoint in the value chain, they are clearly driving consumer choices.
Finally, contrary to popular belief, the percentage of consumers willing to share personal data for better experiences ranks very high across most consumer surveys. Globally, 30,000 new products are launched annually on average, per a Nielsen study. Therefore, the key differentiators to win customers are no longer traditional marketing tactics like strategic pricing, promotion, or product range but unique tailored customer experiences.
Addressing Challenges of Data Collection and Usage
Personalization is here to stay, and most brands are acutely aware of it. In a survey conducted by McKinsey, 95 percent of Retail CEOs said personalizing the consumer experience is a strategic priority. But the same survey said only 23 percent of consumers believe CPGR firms are doing a good job of it.
Though there is no single winning formula, CGPR brands should take some precise steps to build on their personalization agenda:
- Assemble Centralized Data Platforms: CPGR brands can capture and analyze data from multiple channels by collaborating with retail partners, via social listening, and by use of internal and even paid data. Several firms are moving to establish a centralized Customer Data Platform (CDP) with built-in ML automation, to build better insights from data faster and to combine assorted data to create a coherent and unified customer profile.
- Drive an Intersectional Approach across Teams: Customer personalization cannot be executed in silos. It requires cross-functionality across analytics, IT, marketing, and product development teams and is an iterative effort. For example, IT and marketing need to work together to rehaul a brand’s Martech roadmap for creating meaningful solutions, tracking performance, and creating a repository of every workable action.
- Overhaul the Process of Data Usage: To create trust among IT and business executives on data models and algorithms, the process of developing, processing and deriving value from data firms should be firmly established. This includes eliminating data silos by enabling the migration of data to the cloud and setting up governance systems to implement appropriate data-sharing protocols.
A Win-Win for Consumer Businesses of the Future
CPGR brands that use advanced personalization strategies see an ROI of $20 on each dollar spent. As the business environment evolves, CPGR firms will have to respond to changes by rapidly adjusting their business models. Personalization is key to enhancing the customer experience in CPGR and increasing revenue opportunities. And data analytics will be critical in enabling this.
The future of CPGR will be led by the use of data by businesses to advance customer personalization capabilities. It won’t just be a way for brands to win consumers; it will be essential for them to stay relevant. And while they do so, data analytics will be at the heart of these decisions.
Source:www.indianretailer.com
