Personalization at scale is every marketer’s dream. With the rise of artificial intelligence (AI) and conversational interfaces like Facebook Messenger and Amazon Alexa, this dream is now becoming a reality. According to Gartner, 25% of brands will integrate virtual customer assistants (VCAs) or chatbot technology across engagement channels by 2020.
At Heyday.ai, we see an increasing number of Fortune 500 consumer-packaged goods brands inquiring about conversational marketing and broader AI opportunities. CMOs are actively looking for ways to connect with the ever more mobile consumer.
As data becomes the cornerstone of any sound AI strategy, there’s one thing that’s keeping them up at night: data ownership. Most CPG brands don’t own the customer relationship, their retailers do. In a data-driven world, where customer insights are becoming the foundation of seamless, personalized shopping experiences, CPG brands need to find ways to regain control over the customer relationship, their data, and ultimately, their destiny.
Direct is the new disruption
Going direct to consumer is changing the game beyond the CPG category and in retail in general. Past years have shown a plethora of blockbuster brands with disruptive D2C models, from Casper’s booming online mattress business to Warby Parker’s ultra-popular, affordable glasses to the growing popularity of meal kit companies like Blue Apron. Cutting out the middlemen is a tremendous opportunity to build more personalized, data-rich relationships.
In the CPG category, Unilever’s billion-dollar 2016 acquisition of Dollar Shave Club confirmed the industry’s changing dynamics. Brands have been taking notes ever since and are starting to explore direct-to-consumer business models with M&As, strategic partnerships or new product launches. For example, in the food category, Oreo recently partnered with Amazon to launch a subscription box. Adopting a direct-to-consumer business model is a brilliant strategy for brands to start collecting quality data and eventually achieve personalization at scale.
Great relationships start with conversations
Going direct not only changes the way brands commercialize their products but also the way they communicate with customers. According to J.D. Power and the International Advertising Bureau, two-thirds of all U.S. consumers expect direct connectivity to the companies from which they buy goods and services. As messaging apps become the dominant communication channel for millennials, CPG brands can transcend the role of mere brands to that of virtual friends.
Direct, on-demand, one-on-one communication with customers on their platform of choice will allow CPG brands to foster deeper relationships by assisting customers throughout their entire journey – from product discovery to transaction to product consumption. CPG brands can then unlock powerful insights that will educate their strategy over time. This consumer proximity would be impossible to achieve as long as CPG brands are kept in the dark by retailers who keep troves of customer data to themselves.
Many brands are exploring new ways to personally connect with their customers. For example, Clarins turned to a chatbot to push relevant content to customers while offering coupons and driving in-store sales. Absolut Vodka also ran a promotional campaign to reach millennials with a Messenger bot, which resulted in an impressive 4.7-fold sales lift. While still in its infancy, conversational commerce is already a game-changer for CPG brands. In fact, after purchasing Echo smart speakers, research found that customers’ Amazon purchases increased by 29%, especially within the CPG category.
Data is the ultimate currency
Consumers are increasingly sensitive about how their data is shared with and used by businesses. That said, they are still willing to use it as social currency to obtain an elevated level of service as part of a utilitarian value exchange. A Columbia Business School study showed interesting results that truly capture this new mindset: 75% of those surveyed said they’re more likely to want to share pieces of personal data with a brand they trust. This type of personal data includes sensitive data like name, address, cell phone number and date of birth.
The real value of going direct is about capturing psychographic data to truly understand your customers’ intentions, preferences, motivations, and interests. You can then enrich your CRM with highly personalized, declared data that will help further educate your communication strategy to personalize your messaging at scale. In the end, it’s about creating a seamless, tailored customer experience that leverages the full spectrum of online and offline interactions, from the initial conversation to in-store conversion to product consumption.
Making personalization at scale a reality
According to Walker, a CX consulting firm, 2020 will be the year customer experience will surpass price and product as the key competitive differentiator. For CPG brands, personalization should no longer be on the distant radar, but rather a core pillar of your strategy moving forward.
In the words of Ryan Watson, Head of Media Platforms and Marketing AI at Kraft Heinz,
“We are laser-focused on leveraging data and advanced technologies like machine learning to enable ‘personalization at scale’. What that means for consumers is a 1:1 conversation that feels authentic and provides them with identifiable value.”
Direct 1:1 customer conversations are the starting point that can give you crucial data to effectively scale your personalization efforts and shift toward a solid AI-driven strategy. There are a number of ways CPG brands can get started. You can go the way of Clarins, with an interactive marketing campaign and coupon reward for customers, or take your cue from Campbell’s, which partnered with Amazon Alexa to create Campbell’s Kitchen, a hands-free voice controlled recipe guide. Danone, a client of ours, decided to use an automated chatbot as a customer service assistant to streamline common product FAQs, educate users on Danone’s Activia product lineup, plus a few fun extras.
Mobile and conversational AI technologies have rewritten the rules of communication and commerce, changing the relationship between brands and people forever. For the first time in the history of marketing, brands have the opportunity to create bespoke, one-to-one customer relationships through personalized conversations. Brands who are quick to seize this opportunity will gain an entrenched competitive advantage for the future.