This report details case studies of CPG brands that have launched successful customer loyalty programs; details five key insights surrounding the benefits of omnichannel marketing, including some pieces of data that are directly relevant to the CPG category; and details three key insights surrounding the consumer in-store shopping behavior in 2021, as they relate to in-store product interaction and buying, including some pieces of data that are directly relevant to the CPG category.
The following information details three case studies of CPG brands that have launched successful customer loyalty programs.
- Brand Description: BioSteel is a sports hydration firm that specializes in healthy sports beverages and hydration powders for both professional athletes and general health and wellness enthusiasts.
- Loyalty Program Goal: BioSteel operates in a highly competitive segment of the sports nutrition industry, and the brand needed to differentiate itself.They intended to do this through customer engagement and the development of closer ties with them.To do so, they created a loyalty solution, as they felt this was the best way to leverage their brand equity and existing ambassador network. According to Anthony Vlope, Director of Ecommerce at BioSteel, “What we wanted to do was create a platform and solution that would allow us to have a stronger relationship with people and add value beyond our products. So, when people are drinking BioSteel, we can give them access to the events that we have, the athletes that are in our roster, and a variety of other things that your general commodity brand can’t do.”
- Loyalty Program Contents: BioSteel created a comprehensive rewards program that allows them to connect with their customers wherever the customer buys the product. The loyalty program uses a receipt scanner, so even in-store purchases can be connected to the customer’s online loyalty account. Overall, the loyalty program allows customers to earn points with every purchase. These points can then be used to get rewards, including gift cards, free products, branded merchandise, and signed sports memorabilia. Customers can earn 1 point per dollar spent BioSteel products and get 15 points for free upon signing up for the program. They can also earn points by connecting with the brand on social media, signing up for the brand’s newsletter, and referring friends to the program.
- Loyalty Program Success: BioSteel reported increased sales, members, and customer engagement after launching the loyalty program. Director of Ecommerce at BioSteel, Anthony Vlope, stated: “Generally speaking, we’ve seen strong early adoption and engagement of the program. One of our strongest sales days of the year came with the launch of the program, and our strong sales were matched by a really positive customer sentiment. Our revenue has increased with a direct correlation to the rewards program, average order value, and orders per customer, and the frequency of purchases has also increased.”
- Brand Description: PETCO is a pet supply retail brand, operating over 1,500 locations in the U.S., Mexico and Puerto Rico.
- Loyalty Program Goal: Although PETCO has had a loyalty program in place for decades (the program is called P.A.L.S.), the company wanted to revamp it in order to better differentiate itself from its competitors and leverage under-utilized member data. To achieve this, the company added another tier to their loyalty program, reserved for their very best customers, and used data-driven insights to better target their offers and promotions.
- Loyalty Program Contents: PETCO’s P.A.L.S. loyalty program enables customers to gain access to exclusive products and services, such as wellness plans for their pet, special pricing, and exclusive perks. Customers can get rewards by earning Pals Rewards points; these points can be used as dollars for purchases. They can also be used on services. Customers get 5% back with every purchase; 1 point for every $1 spent. Members get access to exclusive resources, such as a digital care dashboard, personalized recommendations, and support at every stage of their pet’s life. PETCO added a new tier to their loyalty program called TOP DOG. This tier was designed to be difficult for PETCO’s competitors to duplicate and was designed to create strong customer relationships. The tier was designed to help make customers feel special while supporting PETCO. Upon launching, PETCO sent a direct mail teaser that announced it. A loyalty program newsletter was also created to serve as a key communication vehicle. The brand also uses the loyalty program to collect customer data which it then uses to guide its marketing strategy.
- Loyalty Program Success: The loyalty program revamp resulted in an average of 1 additional visit per year among customers, average of $25 in additional spending, 3.3% lift in sales, 5.5% lift in margin, 3.9% lift in transactions.
3: Jimmy Joy
- Brand Description: Jimmy Joy is a nutrition brand that targets busy people who want healthy, yet convenient, meal options.
- Loyalty Program Goal: Jimmy Joy wanted to launch a customer loyalty program as a way to increase customer acquisition and retention via word-of-mouth advertising.
- Loyalty Program Contents: Jimmy Joy’s business model heavily relies on repeat customers and referrals. To this end, its loyalty program incorporates points, referral bonuses, and VIP tiers. For recommendations, Jimmy Joy discovered that giving cash was the most effective way to engage clients. After experimenting with free items, they saw greater program effectiveness when customers were provided a $10 referral bonus. They gave the same $10 referral bonus to those who made the referral as well as those who used it. Jimmy Joy then combined this with checkout page nudges. Their points system is called ‘Time Tokens,’ and members may earn them via various behaviors and redeem them for a variety of prizes, including percentage-off coupons, goods, and free things. Additionally, Jimmy Joy provides a number of methods to earn incentives, like following their business on social media, subscribing to their email, and reviewing items. Their VIP tiers correspond to their point system; they refer to this as ‘Your development.’ With each subsequent rank, participants go from Earthling to Astronaut to Time Traveler. This theme was derived from the fact that many Jimmy Joy customers refer to their products as ‘astronaut food’. Rewards increase as customers move up in tiers. Rewards include: a free sticker, a discount coupon (the percentage off increases as the tier level increases), the ability to vote for a limited flavor, a birthday present, and a secret reward.
- Loyalty Program Success: Jimmy Joy launched their program in 2018. Since then, the program has generated over 40,000 members, has generated over 72,430 in referral traffic, and over €1,000,000 in referral revenue.
Insights: Benefits of Omnichannel Marketing
The following information details five key insights surrounding the benefits of omnichannel marketing, including some pieces of data that are directly relevant to the CPG category.
1: Omnichannel Customers Generate More Revenue
- Omnichannel customers are the majority: A study published in the Harvard Business Review analyzed the shopping behavior of 46,000 customers. According to the survey, 73% of buyers used various channels during their purchasing experience. Only 20% and 7% were store-only or online-only shoppers, respectively. This data is from the pre-pandemic era, so this majority is likely even higher now with the given increase of omnichannel shopping spurred by the pandemic. This is also true of customers in the CPG category specifically, as data published by McKinsey found that the majority of CPG consumers (32%) are shopping for CPG products both on and offline. This is 2% higher than those who say they are only shopping for these products offline. Additionally, at least 70% of today’s customers purchase or conduct research on CPG items online. Omnichannel customers spend more money: According to the study published in Harvard Business Review, compared to single-channel shoppers, omnichannel customers spend an average of 4% more every time they shop in-store and an average of 10% more when they shop online. The study also found that with every additional channel the shopper used during the omnichannel experience, the shoppers spent more money in-store. For example, shoppers who reported using 4+ channels spend an average of 9% more money in-store compared to single-channel shoppers. This is also true for people who purchase consumer packaged goods. For example, a study of over 421 million shopping baskets in 2021 found that omnichannel grocery shoppers spend up to 20% more than customers who only shop in-store.
- Omnichannel campaigns reflect higher purchase rates: One study of omnichannel marketing analyzed over 2 billion messages. The study compared the effectiveness of marketing campaigns based on the number of channels used in the campaigns. The study found that campaigns using 3+ channels have an average purchase rate of 8.96%, while single-channel campaigns only have an average purchase rate of 2.56%.
- Customers that shop via omnichannel have a higher average order value (AOV): Additionally, the research referenced in the bullet point above discovered that clients interacting with a single-channel campaign spent an average of $58.70, but multichannel efforts achieved a 13% higher AOV. The average order value (AOV) for omnichannel campaigns utilizing three or more channels was $66.31 per order.
2: Omnichannel Marketing Increases Customer Retention
- Omnichannel-focused brands have higher customer retention: Companies that have a strong omnichannel strategy that focuses on customer engagement retain on average 89% of their customers, while companies that are weak in this area only retain on average 33% of their customers.
- Customers acquired through omnichannel channels have a greater lifetime value: Customers who purchase in-store and online have a 30% greater lifetime value than those who exclusively shop via one channel.
- Omnichannel-focused marketers have higher customer retention: One study of omnichannel marketing analyzed over 2 billion messages. The study compared the effectiveness of marketing campaigns based on the number of channels used in the campaigns. The study found that marketers that use 3+ channels in their campaigns have a customer retention rate of 66.2%, while marketers that use single-channel campaigns have a customer retention rate of 34.8%.
- Omnichannel marketing efforts that engage customers increase loyalty in the CPG category: A study of over 421 million shopping baskets in 2021 found that 50% of grocery shoppers who shopped online abandoned the channel after one purchase, however, those who remained engaged with the brand after this became more loyal. The survey discovered that businesses will benefit from long-term loyalty in the new food environment by keeping online and multichannel consumers and encouraging in-store shoppers to make online purchases.
3: Omnichannel Marketing Results in Higher Rates of Engagement
- Omnichannel customers like engaging with multiple touchpoints, including those that are in-store: According to the study published in Harvard Business Review, omnichannel customers surveyed said they “loved using the retailer’s touchpoints, in all sorts of combinations and places.They not only used smartphone applications to compare prices and download coupons, but they were also frequent users of in-store digital tools such as an interactive catalog, a price checker, or a tablet. They either purchased online and picked up in-store, or they purchased in-store and had their items sent. Omnichannel campaigns reflect higher rates of engagement: One study of omnichannel marketing analyzed over 2 billion messages. The study compared the effectiveness of marketing campaigns based on the number of channels used in the campaigns. The study found that campaigns featuring 3+ channels had an average engagement rate of 18.96%, while the average engagement rate of single-channel campaigns was only 5.4%.
- Omnichannel marketing efforts improve CRM for CPG brands: Among GPG brands surveyed, 82% said that selling DTC improved their customer relationships.
4: Omnichannel Personalization Results in Higher Revenue and Happier Customers
- Personalization Increases Revenue and Satisfies Customers Personalization across all channels results in increased revenue: According to McKiney&Company research published in 2020, organizations who are able to tailor the consumer experience across physical and digital channels — omnichannel personalization — may boost revenue by 5 to 15% across their entire client base. Likewise, 40% of customers surveyed said they purchased more from a brand that provided them with a personalized shopping experience across every channel. Similarly, 50% of CPG manufacturers said their DTC approach resulted in increased sales for their channel partners.
- Customer happiness is increased via omnichannel personalization: According to a January 2019 Harris Poll study, 63% of customers in North America and the United Kingdom believe that they want brands and merchants to personalize their experiences. Additionally, 43% of respondents said that companies made them feel unique when communicating with the same consumer across several touchpoints.
- Omnichannel personalization helps customers feel in control: According to the same survey noted above, 42% of customers feel like an individual when a brand enables them to customize and control how, when, where, and why a brand interacts with them.
- Effective multichannel customization can assist in avoiding marketing mistakes that annoy customers. According to Harris Poll data, the majority of customers (73 percent) believe businesses are struggling to meet growing expectations for a customized experience, compared to 43 percent of marketers. Consumer dissatisfaction resulted from businesses’ occasionally subpar implementation of omnichannel marketing, which included receiving an offer for an item they had already purchased (37 percent) and not being recognized as an existing customer (33 percent).
5: Omnichannel Marketing Leads to Higher Purchase Frequency
- Omnichannel marketing results in more in-store shopping trips: According to a Harvard Business Review research, customers who utilized an omnichannel shopping experience made 23 percent more repeat shopping trips to the retailer’s locations and were more likely to suggest the company to family and friends than those who used a single channel. Omnichannel customers buy more often: One study of omnichannel marketing analyzed over 2 billion messages. The study compared the effectiveness of marketing campaigns based on the number of channels used in the campaigns. The study found that customers who engaged with 3+ marketing channels made purchases 250% more frequently compared to customers who engaged with just one channel.
Insights: Consumer Shopping Behaviors in 2021 (In-Store Product Interaction and Buying)
The following information details three key insights surrounding the consumer in-store shopping behavior in 2021, as they relate to in-store product interaction and buying, including some pieces of data that are directly relevant to the CPG category. All the data shown below has been taken from sources published in 2021.
1: Demand for Frictionless In-Store Buying
- As consumers have been increasingly exposed to digital shopping tools, they have increasingly lost patience for the pain-points that go along with in-store shopping, such as checkout lines and product shortages. Customers are looking for ways to blend online shopping and physical shopping to create a more frictionless experience overall. Adapting to this demand is critical for retailers, according to Forbes, as consumers have grown used to this style of shopping during the pandemic. Blended shopping experiences that start digitally and end in-store creates more certainty and efficiency within the overall shopping experience.
- According to Forbes, it is vital for businesses to infuse the consumer experience with a seamless checkout procedure. Nonetheless, many shops continue to lack critical links to the actual store that allow shoppers to keep their cards in their wallets.
- One such type of frictionless in-store buying method is the use of mobile point of sale apps that let consumers pay for items via any aisle in the store, allowing them to skip the line.
- Although consumers want these alternative payment options, many still want to be able to make their purchases in-store, rather than online. Among surveyed consumers, 27% say they feel most secure paying in-stores.
- 45% of consumers say they are looking for speed of purchase when shopping in-store. Younger generations, in particular, value the quickness and efficiency of physical stores.The ability to purchase and return items quickly is more important to Millennials (purchase: 72%, return: 36%) and Gen Zers (purchase: 70%, return: 40%) than it is to Gen Xers (purchase: 65%, return: 30%) and Boomers (purchase: 60%, return: 30%).”
- A survey of consumers asked which pandemic shopping behaviors they are most likely to continue utilizing in 2021. Of those surveyed, 20.4% said they will use a contactless card or digital wallet, 18% said other touchless options/card on file, 16.7% said BOPIS ordering from a kiosk.
- When asked which attributes are most important when shopping in physical stores, one of the top answers respondents gave was the ability to pay via contactless methods (17%), as well as while click and collect service (14%).
- Touchless features, shoppers believe, enhance the in-store experience. When it comes to in-store technology, contactless payments and purchase online, pick up in-store (BOPIS) alternatives are unquestionably the most popular. 81 percent of customers say that the availability of BOPIS has enhanced their shopping experience, while 61% agree that contactless payments have also enhanced their shopping experience in physical locations. The majority of customers (77 percent) would want to see BOPIS alternatives implemented permanently in retail establishments, coupled with contactless payments (62 percent ).
2: Use of Mobile Phones and Digital Features
- According to a Forbes article from 2021, people expect digital experiences throughout the customer journey and want to see integrated sales channels that leverage digital technology to enhance the in-store experience and vice versa.
- According to PWC, smartphone shopping has already grown by 2% for in-store purchases since March 2021, and has more than quadrupled since 2018.
- Although QR codes have not yet taken off, they are connecting with customers. While just 48% of respondents have used QR codes while shopping, 79% of customers who have, either online or in-store, report that the technology enhanced their shopping experience.
- 57% of shoppers say they read reviews while shopping in-store. This is especially true for CPG categories including beauty/health (83%), home and garden (67%), grocery (47%), and baby (40%).
- “Some 60 percent of consumers won’t shop in stores that fail to offer touchless or contactless experiences,” and many of these experiences incorporate the use of a mobile phone. Among consumers surveyed, 28% say they have done an inventory check with a mobile phone, 26.4% have used mobile order-ahead, 19.3% have used a mobile phone to locate products in store, 18.3% used QR scan payment, 16.5% used mobile purchase without a cashier.
- When asked which attributes are most important when shopping in physical stores, one of the top answers respondents gave was the ability to quickly and conveniently find the products they want (38%).
3: Physical Experiences and Try-Before-You-Buy
- One study found that the top reasons people shop in-store are to physically experience the products (62%) and to try/test things in-store (53%).
- When asked which attributes are most important when shopping in physical stores, one of the top answers respondents gave was the ability to see and touch the products (45%).
- 72% of respondents prefer to purchase groceries in-store at neighborhood supermarkets (Kroger, Stop & Shop), 59% prefer to purchase goods in-store at retailers (Target, Walmart), and just 30% prefer to purchase groceries online. The results are significantly more favorable for in-store goods, most likely because consumers like to see and handle the fruit they purchase.
- In 2021, 71% of consumers say they want to be able to try clothes on again, while 36% say they want to be able to test beauty and wellness products again.
- One survey of consumers in 2021 found that 95% want to bring back food sampling in-store.
- Compared to 2020, sales of trial size products are up 107% in 2021.