Food brands are getting to know consumers, and at times it’s like an awkward first date: Communication is a little uncertain, and next steps are unclear.
2020 may have accelerated the direct channel between consumer packaged goods (CPG) companies and shoppers, but capitalizing on this channel requires customer data platforms (CDPs) that churn through the process of learning about shoppers as individuals. It’s a capability that’s new to food manufacturers, and one that’s critical to master quickly: In the quest for brand relevancy, there’s often only one chance for a second date.
DTC’s sudden takeoff for food brands
It’s no secret how we got here. As consumers turned to online shopping during the global pandemic, the economics of the direct-to-consumer (DTC) channel suddenly shifted for food and beverage brands, and what began as modest efforts to acquire consumer data became lucrative revenue streams. Brands responded with rapid rollouts of services, such as PepsiCo’s launch of Snacks.com and PantryShop.com in 30 days. Enrollment in food and beverage subscription programs surged 25%. CPG brands experienced more absolute growth in 2020 than in the four-year period from 2016 to 2019.
Now comes the task of continuing the trajectory and doing so profitably. Managing assortments for DTC is key for food brands, including optimizing SKUs and basket sizes. So is the introduction of differentiated pricing models, such as subscriptions and premium pricing for channel-exclusive offerings.
Most challenging — and vital — is creating ae marketing engine that makes the economics of DTC work. Understanding customer lifetime value and retaining customers is the foundation to profitable DTC growth, and it’s where CDPs come in, enabling food manufacturers to control the post-purchase experience and keep their brands relevant among fickle consumers.
When it comes to building out CDPs, however, food brands are on a learning curve. Most already maintain data management platforms (DMPs) in which they house second- and third-party data, the large, anonymized pools of information that CPG advertisers and agencies traditionally rely on to improve ad targeting. But it’s the value of first-party data that has the potential to create unified views of individual consumers, and that takes a CDP. Think of DMPs as core to the adtech stack, and CDPs as core to martech.
While brands can gain 360-degree customer views without building CDPs — cloud technologies and open systems also provide unified views and unique IDs — CDPs offer those advantages and go a step further. They add real-time unification and decisioning capabilities. By ingesting customer data from multiple enterprise systems such as CRMs, mobile app logs and ecommerce platforms, CDPs generate powerful customer insights that brands can use for real-time activation of personalized content and messaging to orchestrate the desired experience. The result is a path to connect directly with consumers and boost brand relevance in ways that food brands have not had until now.
If data is currency, first-party data is the bitcoin for food brands. Like bitcoin, which just became a trillion-dollar asset class, first-party data is scarce and has a significant store of value for food brands. If leveraged effectively through a CDP, it can yield the higher customer lifetime value that the DTC channel requires for success.
How brands use CDPs to boost relevance
As the race to acquire first-party data heats up, food brands are building and refining CDPs and exploring the platforms’ ability to work in tandem with DMPs. The DMP’s broad demographics and location details enrich the personal preferences of the CDP for smarter customer communication, and the tailored nature of the CDP’s first-party data helps sharpen the DMP’s ad targeting.
Brands are already reaping the benefits of CDPs. Winning CPG manufacturers are twice as likely to have a robust CDP that integrates data from multiple sources, including retailers and syndicated data. Yet building a dynamic CDP has inherent challenges for food brands. Within most organizations, data is often siloed and fragmented due to functional, technology or geographic boundaries. The brand silos that exist in large multi-brand, multinational food companies further add to the woes.
But the opportunity to view the total value of consumers across the enterprise and capitalize on it is a major motivator for brands. For example, Kellogg is using data and analytics capabilities across the consumer journey to capture and retain new cohorts, engage across occasions, and deepen relationships to grow its share of wallet and loyalty. To create more targeted communications with consumers, the company is combining data from 33 million US households in its family rewards loyalty program, which is first-party data, with its Keystone platform’s tracking of social, point-of-sale and contextual data.
Similarly, Jack in the Box combines first- and third-party data in the digital customer platform we created for the San Diego-based hamburger chain. The solution connects customers’ front-end experience to the brand’s back-end operations. The mobile app our team developed — the company’s first ever — improves business insight and decision making by integrating with the chain’s kitchens and CRM tools. Same-store sales increased 2.7% in the first quarter the app was released. By adding our Evolutionary AITM capabilities, which use AutoML to refine the model in real-time based on performance, Jack in the Box curates personalized offers and maximizes its response rate and profitability.
Nutritional and tilling takeaways
With the rise in DTC volume and associated first-party data, food brands now have a significant market opportunity to drive brand relevance by building CDPs that deliver key capabilities:
Experience orchestration. Define what matters to your brand and customers, and then make the desired experience possible.
Activate content and messaging. Create plans to deliver inbound and outbound content, messaging and offers across channels.
Decisioning. Determine the best content, messaging, offers and channels across journeys.
Data. Capture and unify audience information and behavior and generate insights in real-time.
For food brands, answering the question of what drives relevancy for customers means acquiring data sets, understanding consumers’ needs and applying behavioral insights. CDPs let brands get to know consumers, one conversation at a time — and create the stickiness that delivers customer lifetime value.
This article was written by Anup Prasad, Vice President & Market Leader in the Retail and Consumer Packaged Goods practice at Cognizant.