CPG Industry Trends
Although the consumer packaged goods industry is quite familiar to most people, it is going through a great deal of change because of the increasing prevalence of online shopping. In the diagram below, we present some of the top five tactics that can be utilized in order to adjust to the changes in the CPG industry this year.
1. Omnichannel strategies.
It’s essential to provide a completely cohesive experience over all customer contact points. No matter the type of interaction, a patron anticipates uniformity in their journey with your company, be it in-person or on the web.
Having a unified customer profile that works across all devices in your Customer Data Platform is extremely important. Furthermore, all communication should create a steady and continuous dialogue with the customer.
2. Subscription models.
Subscription plans make the payment process simpler and smoother for both buyers and sellers on the internet. The rise of CPG product subscriptions is due to the convenience of automation in the buying process, allowing customers to save both time and money.
It provides the commercial aspect with a dependable source of income from ecommerce purchases, simplifying stock management and lessening the cost of the sale. In order to reach this model, CPG brands need to provide an excellent product and a straightforward journey from start to finish, as well as constructing solid relationships with their customers in order to retain them.
3. Personalization.
The utilization of personalized data allows us to manage the way content is relayed to consumers during their entire experience, through digital sources and further.
By having a greater comprehension of what your customers yearn for and need, you can more easily meet these demands through the online interface.
It is essential to introduce a customer data platform and execute an individualization capability survey to gain a full understanding of your organization.
4. Branding.
Having a consistent brand image is essential for conveying your brand to current and upcoming online customers. Having creative materials that are absorbing and adapt easily on different systems and communications is indispensable to the prosperity of your business.
Additionally, creating a successful brand allows a recognizable image for shoppers to associate with, ensuring that your business is characterized appropriately in terms of appearance.
Strategies to Initiate CPG Sales Growth Online
In recent years, ecommerce chances in the CPG sector have increased exponentially due to the quick expansion of enormous retailers like Amazon and Walmart. Whole Foods has been obtained by the mentioned “former” which has led to same day delivery groceries being the most quickly advancing segment, with progress rates of more than 40%. Considering this, here are four strategies that could prove beneficial for CPG businesses to increase their online sales.
1. Offer a subscription model to tap into recurring revenue.
“Subscriptions: Take the thinking away from tedium.”
— Myles Shipman, VP of Business Development, BORN
Subscriptions can make life easier for those buying frequently used goods, saving them both time and money, and not having to remember to buy them all the time.
Most CPG products are purchased in periodic intervals. As an illustration, the typical purchaser may require a new toothbrush and toothpaste every eight weeks and a package of tissues every four weeks. Some people find a subscription model highly appealing, as they can benefit from more economical rates when buying in bulk, and there is less time spent at checkout. They are reassured that their consumable items will be delivered promptly and without any issues.
Taking into consideration the fact that a shopper understands they need specific CPGs no matter what conditions, subscriptions can be utilized to individualize a direct-to-consumer (DTC) association and acquire an entire year’s worth of acquisitions using only one click.
The repeating pattern of CPG sales support the adoption of subscription plans as part of consumer brands’ online selling strategies, and many innovative companies have effectively tapped into the advantages of this model. Removing the hassle and boredom of any recurring processes will greatly contribute to conversion and revenue for any thriving DTC business.
2. Pick your best brands and double down on content.
Go with your most reliable companies and create content to advertise them.
— Myles Shipman, VP of Business Development, BORN
CPG companies face the classic conundrum in economics: scarcity. CPG companies may have a large range of different products that require attention, yet dedicating the same amount of marketing and promotion to all of these brands is not necessary and could cause an excessive amount of money to be spent.
Instead of focusing on many brands, choose to specialize in a few and make them the main anchors of your organization. It is a no-brainer to concentrate on your most powerful products and create a powerful digital footprint and abundant content. These techniques have the strongest influence on people and will help keep importance and name recognition.
However, another suitable way is to check how in-demand products that are not available in vast quantities are. Put money into these companies and initiate guerilla advertising efforts that are unrelated to your main brand. This has the potential to result in exclusive, and remarkable services that can target particular groups and audiences beyond what you are currently focusing on.
3. Use your mission to your advantage.
The opinion that bad publicity is a good thing has some truth to it, but it is important to keep in mind that it could drive up brand recognition but also cause a major drop in sales and damage the business.
A successful brand should be built upon a mission that reflects and aligns with the values and morals of its customers. By creating sustainable and ethical CPGs, you can benefit and reduce the risk of boycotts or bad publicity.
4. Build a connection with your customers.
“Humanize your brand and tailor to your consumer.”
— Paula Gadsby, VP of Client Services, BORN
Giving your CPG brand a personalized touch is another essential method of constructing its soft power. Products in the pet food category are providing considerable customization, presenting different choices dependent on what the buyer wants.
Establishing a genuine relationship with your clients gives you a competitive edge over companies that do not.
What is customer retention?
Retaining customers is an important part of any business, which includes not only getting them to come back more often, but taking advantage of their loyalty to increase the overall value of the business. The objective of customer retention is to guarantee that a client will make multiple buys, be content with a business’s administrations, and won’t divert to another organization.
Why is customer retention important?
You desire to guarantee that the clients you labored so strenuously to procure remain with you, have an outstanding customer experience, and persist to realize worth from your commodities. Focusing on customer retention has a number of benefits:
Higher average order value
A solid customer loyalty suggests that individuals have confidence in your items and your business. That implies, they are apt to purchase additional items from your business on each occasion.
A study from Bain & Company indicated that the longer a patron was in contact with an eCommerce retailer, the higher their expenditure in a particular period. For instance, those shoppers who regularly purchase clothing spent 67% more in their 31st to 36th month of the relationship compared to their first six months.
Increase profits
Those who have been loyal to a specific firm for a lengthy period of time are much more open to trying other goods from that business they have faith in, as well as any associated companies. Customer satisfaction that is higher will lead to a rise in profits for all the goods and services you offer.
The Bain & Company survey discovered that consumers who buy items from the web would make multiple purchases from the same internet vendor. Seven out of ten Gap online customers said they would think about buying furniture from Gap.
Better relationships with brand ambassadors
Your longtime customers are also your brand ambassadors. People still consider talking about something to be one of the most effective ways to promote it.
Examine the Dropbox example to validate the veracity of this statement. In 2008, marketing a service such as Dropbox posed a challenge as people weren’t familiar with the concept of cloud storage and it was tough to convey the idea. Despite only having 100,000 users at the onset, the referral program enabled their user base to expand to four million in just 15 months.
More cost-effective to sell to existing customers
It is more economical to keep your existing customers than to seek out new ones.
Customer retention rate metrics that matter
Gaining an understanding of the essential elements is vital in order to enhance your customer loyalty rate. But what are these metrics? How do you measure them? More importantly, how do you improve them?
Responding to these queries will provide you with the resources you require to create a client preservation plan that has a strong and continual influence on your business’s profitability. Let us take a look at three of the pivotal customer retention measures and figure out why they are significant.
1. Repeat customer rate
Repeat customer rate is the backbone of customer retention. It calculates the proportion of consumers who are inclined to buy from you again. Calculating the rate of repeat customers is a great method for determining the efficacy of your retention plan. The more elevated this measurement is, the more customers will be eager to come back to your shop.
When it comes to assessing performance in terms of customer retention, it’s easy to get overwhelmed by the complicated calculations involved. Thankfully, calculating your repeat customer rate is fairly straightforward and only requires two pieces of information:
Number of customers with more than one purchase
This refers to the amount of customers who have bought something more than once within a given length of time. I suggest taking a look at an entire year to gain an overview.
Number of unique customers
This is the amount of unique customers who bought items from your store in a specific period of time. Note that this is different from number of orders.
Luckily, your Shopify reports take care of computing this for you. If you would like to complete this task manually, simply divide the amount of customers who have made multiple purchases by the number of distinct customers.
When you write out this equation, it looks like this:
Number of customers who bought more than one item divided by the total number of distinct customers.
2. Purchase frequency
Shopping frequency reveals how regularly customers are returning to your store to make purchases. It is especially noteworthy that returning customers can generate a considerable part of a store’s yearly income, which can vary from one item type to another.
Figuring out the amount of times clients buy from your store is analogous to computing the rate of recurrent purchases. Within the same period of time you decided to measure your repeat purchase rate (such as one month), divide your store’s total amount of orders by the amount of distinct customers.
When you write out this equation, it looks like this:
# of Orders Placed / # Unique Customers
3. Average order value
Once the concepts of repeat purchase rate and purchase frequency have been understood, it is necessary to optimize the amounts each of those purchases are valued at. The average order value is the sum of money that a customer spends in your store in a single transaction.
The same length of time employed to work out the rate of repeat buying should also be used to work out the average value of a single order. The next step is to calculate your yearly revenue per order by dividing your total annual income by the total number of orders taken by your shop. Shopify reports also calculate this number for you.
When you write out this equation, it looks like this:
Total Revenue Earned / # Orders Placed
4. Customer lifetime value
The purpose of retention marketing is to grow the usefulness of customers, either by making improvements one after another or all at the same time. The last step to consider is customer value, for it provides an insight into how beneficial each customer is.
To figure it out, you must first be aware of how often you buy things and how much you typically spend on each purchase. By calculating the product of these two figures, you can appreciate the results of your hard work and comprehend the effectiveness of loyalty promotion.
Customer Value = Purchase Frequency x Average Order Value
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