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May 3, 2013
Cracking the Brand Loyalty Code
 
Consumer packaged good (CPG) brands have had an off-and-on relationship with customer relationship marketing (CRM) and loyalty marketing over the years. Every brand attracts loyalists. Most brands fantasize about identifying, motivating, and rewarding them since they buy more, buy more often, and tell everyone they know about the brands they love. Every so often CRM becomes the flavor of the year in CPGland.
 
But CPG brands haven’t succeeded in CRM for three fundamental reasons.
 
Customer Ownership. Classically, retailers built relationships with brand advocates and CPG firms paid the bills. They sort of cooperated with each other to reach and engage customers. For many retailers, CPG is the cash cow behind their shopper marketing activities and many retail chains make a huge effort to optimize CPG contributions, often by including brands in promotions, circulars, and loyalty card reward efforts. But CPGs and retail partners don’t always have the same priorities or marketing objectives. Retailers prefer to set the marketing agenda and choose the tactics that CPGs subsidize. Retailers rarely, and then only selectively, share customer data with CPG partners..
 
Digital, social, and mobile media allow brands to side step retail relationships and develop independent relationships with their fans. New technologies can disrupt, circumvent or complement existing retail loyalty or CRM programs. But CPG marketers haven’t figured out how to work with or work around retail partners and are reluctant to compete with or alienate them.
 
Data Ownership. The pendulum, both in terms of customer sensibilities and CPG budget allocations, seems to be swinging toward building and sustaining direct consumer relationships. P&G, Nestle, Unilever, Kimberly-Clark, L’Oreal, and Kellogg’s have all initiated large-scale data mart projects aimed at centralizing efficient data collection in service to relationship building and marketing or loyalty programs. With little or no data sharing from retailers, these firms are starting fresh, although they have the budgets to buy or rent big data to get started.
 
These initiatives, which tend to provoke internal turf battles, turn on the ability to motivate consumers to opt in and create cost-efficient mechanisms to capture data and trigger personalized communications. Gaining access to consumers is easy. Convincing them to part with data, preferences, purchase history, and/or real time behavior is a serious challenge. So is figuring out what to do with the data they collect and getting multiple brands within a portfolio to play nicely together.
 
Relationship Perspective. CPG marketers see CRM as a cheaper channel to activate sales. These programs start with the premise that by communicating and couponing, they can inexpensively move more products faster. Control is a key factor. Nobody wonders about the kind, texture, or frequency of relationship consumers want to have with their favorite brand.
 
So what kind of relationship do consumers want with their favorite peanut butter, sour cream, hair gel, or breakfast cereal?
 
The evidence from social media suggests that strong brand relationships give consumers, not marketers, control. Consumers express preferences for channel, content, and frequency of contact. Loyalists want insider information, early warning, or access to new products and as many offers, deals, and freebies as they can get. In many cases, marketers see this as unfavorably subsidizing sales they would ordinarily get anyway.
 
If CPG marketers expect to eventually succeed at building genuine consumer loyalty programs, they need to commitment to a relationship building program over time, develop the infrastructure to support both corporate and brand level one-to-one communication, and surrender control to their best customers. Anything short of these monumental changes will just be another failed experiment.

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Danny Flamberg, EVP Managing Director of Digital Strategy and CRM at Publicis based in New York, has been building brands and building businesses for more than 30 years.Prior to joining Publicis, he led a successful global consulting group called Booster Rocket, as Managing Partner. Before becoming a consultant, he was Vice President of Global Marketing at SAP, SVP and Managing Director at Digitas in New York and Europe and President of Relationship Marketing at Amiratti Puris Lintas and Lowe Worldwide.
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