The benefits of customer retention are indisputable. It’s five times cheaper to keep an existing customer than to acquire a new one. Increasing customer retention by as little as 5% can boost profits from 25% to 95%. So, in order for today’s customer to be tomorrow’s customer, too, CPG brands should be looking at innovative ideas for customer retention.
CPG Brands Need to Go Above and Beyond to Retain Customers
Hotel chains and airlines were some of the first industries to pilot loyalty programs as an answer to maintaining their customer base amid increasing competition. CPG brands and retail stores were soon to follow. Yet, with so many loyalty programs available to consumers, simply having one is no longer enough to drive customer retention.
In fact, recent studies indicate:
- 54% of loyalty program members do not use the programs they signed up for.
- 28% of consumers leave a program before redeeming a single reward.
The basic elements of consumer loyalty have not changed over the years. Provide a quality product or service. Price it fairly. Deliver on your promise. Provide friendly customer service. Demonstrate ethics and reliability. However, the CPG brands gaining rapid market share are the ones that understand the importance of going above and beyond these fundamentals to forge an emotional connection and cultivate a long-term relationship with their customers.
Keeping pace with the latest innovative ideas for customer retention will ensure you maintain a loyal base, evolving your CPG brand to new heights.
3 Innovative Ideas for Customer Retention
#1. Leverage Augmented Reality
By 2020, 100 million consumers will use augmented reality (AR) on their shopping trips. Utilizing AR via shoppers’ mobile devices will be the easiest path forward because it’s cheaper and easier than designing unique VR headsets. It’s also more convenient for your consumers, as most are already comfortable using phone apps to augment their shopping experience.
AR improves in-store experiences for consumers across the board by allowing them to independently search the shopping aisles. It also provides a marketing opportunity for brands, as AR strategies encourage product interaction. Mobile phone integration is a strategy Shopkick implements to guide in-store traffic and boost customer engagement with a brand or product. By offering consumers kicks (rewards points) for scanning product UPCs with their phones, Shopkick is able to guide these shoppers right to the shelf, and further incentivize them to handle products physically. This unique combination of incentive and proximity marketing helps a brand build customer retention while also delivering a message while they’re in a purchase mindset.
#2. Reward Customers
The best incentives vary by retailer but 70% of consumers surveyed say they want gift cards from online retailers as rewards and 56% say they’d like gift cards from brick-and-mortar stores. Rewards in the form of gift cards encourage greater spending. Research suggests at least 59% of gift card users spend more than the card is worth—an average of $59 more, in fact! Gift cards are an appealing reward due to their ease of use and immediacy. Shoppers are most loyal to brands that offer simple reward programs with points that are quick and effortless to redeem.
With Shopkick, shoppers willingly interact and engage with CPG brand partners to earn points toward gift cards of their choosing. Some of the top gift cards offered include Amazon, Target, Walmart, Starbucks, Best Buy, Sephora, and Lowe’s. CPG brands that offer rewards for purchasing their products at some of these locations could feasibly see some of this gift card money back in their pockets at redemption time.
#3. Be Visible
Private label brands are excelling where traditional CPG brands falter. According to Forbes, private label brand sales rose 4.4% in 2018 to $128.6 billion, compared to the modest 1.1% increase in national brands. Warren Buffet recently expressed disdain for his investment in legacy brands, pointing out that Costco’s Kirkland brand introduced in 1992 did $39 billion in sales last year compared to over 100 years of marketing by Kraft-Heinz, which did a combined total around $26 billion.
As Forbes explains, retailers’ private label brands are excelling because:
A) Not only is the price cheaper, but consumers have tried these brands and perceive value;
B) Retailers use horizontal data to offer precisely what shoppers want, including more premium selections;
C) Private labels represent an easy, trustworthy choice among an overwhelming plethora of options;
D) Shoppers like experiential retail and friendly service. (In other words, it’s no longer effective to bombard consumers with TV advertising and hope to reel them into stores.)
Shopkick helps consumers navigate crowded supermarket aisles to find products more easily. Users trust the app to direct them to quality products that offer big rewards for their loyalty. Today’s shopper is aware of the many CPG brands vying for their dollars, and the investment goes to the brand that goes the extra mile to personalize the shopping experience and build a relationship over time.
Shopkick helps consumers navigate crowded supermarket aisles to find products more easily.
By leveraging augmented reality, incentivizing purchase behaviors, and remaining visible in the shopping aisles, CPG brands create a shopping experience that becomes more than an exchange of money and goods—it becomes a relationship that retains customers.
Image courtesy of Antonio Guillem