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.