Developing a Task Force
Can Improve Collaboration
True collaboration among trading partners has long been the Holy Grail of loyalty marketing. To get to that point, says one marketing consultant, try forming a loyalty task force. Each partner’s team would have a dedicated leader as well as common benchmarks that must be met.
“A multi-cross functional task force, comprised of representatives from the retailer and one or more manufacturers – typically non-competing – is the starting point,” said Donna Zambo, Vice President of Analytics for Consumer Comprehension, consultancy based in New Brunswick, N.J. “The task force will also enable internal collaboration among your own teams and will ensure your marketing and category managers are aligned. It is also beneficial to include a third-party syndicated partner such as Nielsen or IRI and each respective partner may wish to include an agency member.”
Zambo stressed that the functional areas represented should
include customer marketing, research, merchandising/category management, and store operations/retail service. It is critical, she said, that a comparable number of representatives from each
partner, as well as the total number of team members, should be kept moderately low. She believes that a “small and nimble” approach typically works best when collaboration between partners is getting started.
Leadership, she stressed, is of the utmost importance.
“A high-level management sponsor from each partner is necessary and will keep all members motivated. Co-project leaders – most critical assignments – should be assigned from each partner with the responsibility of keeping the task force on track and moving forward,” she said.
What is the state of collaboration today? Zambo believes there is much work to be done.
“In most instances, collaboration is limited and inconsistent, with each party focused on their own goals and initiatives,” she said. “Occasionally, each trading partner will ‘present’ their respective goals to one another, but collaboration often ends after the first introduction meeting – and neither is prepared to take the next step.”
In speaking about what expertise each trading partner should ideally bring to the table, Consumer Comprehension’s experience cites manufacturers as having the responsibility of having an inner-knowledge of specific brands and how consumers interact with them. Consumer insights related to their products – ranging from top-level general insights, to deep attitudinal and behavioral consumer insights – is also of high value, Zambo said.
“The retail partner,” she continued, “should bring the expertise of their respective stores, and most importantly, the expertise of their customer as opposed to the typical customer. “Customer-specific insights, ranging from general demographics to deep purchase behavior data by customer segment, are also key.”
The greatest benefit of collaboration is that both parties can gain a deeper knowledge of the customer. She believes that the collective thinking that results from such an effort leads to the discovery of common goals.
The positives achieved by both sides cannot be understated.
“The benefits from sharing or integration of insights can be
extremely powerful,” Zambo said. “A fuller comprehensive exploration of your brand, integrated with respective retailer-specific insights, will lead to better decisions focused on the customer – a definite competitive advantage.”
Certainly there are many obstacles that remain, and Zambo specifically warns against internal disconnects. Whether on the manufacturer or retailer side, she believes that the misalignment of the brand manager and sales representative; or the marketing executive and the category manager – or any combination of the four – can lead to a rapid breakdown of collaborative goals.
But in pinning down perhaps the most difficult roadblock to collaborative success, she cited “time constraints on both sides” as the great barrier that must be overcome.
“It is important for meetings and tasks assigned, to not be over-burdensome or overwhelming and goals set are realistic given most participants schedules,” she said. “Smaller milestones are important to ensure all stay motivated. It may be beneficial to seek third-party assistance to help facilitate meetings, agendas and assignments.”
Keeping in line with the “smaller is better” approach, the consultant points out that the larger, national partners for collaboration may not necessarily be the best approach.
“It may be tempting to achieve a big win with a large partner, but smaller-sized partnerships may prove to be more agile and therefore more effective,” she said. “Smaller size doesn’t necessary mean smaller levels of expertise.”
Looking into the future, she sees regional chains as paving the way for collaboration simply for the fact that there is less red tape involved in the process.
“With smaller, regional players, you don’t need 20 approvals to act,” she said. “I would recommend manufacturers to embrace that idea – that collaborative learning could be much more beneficial and will come much quicker with a smaller, regional partnership.”
And let’s not forget the customer.
“It is through collaboration that you can understand what the consumer’s needs are with respect to the brand and what the customer-specific needs are a retail level,” said the consultant.
“This will ensure that the right product is on the shelf, with the
right offer and the right message, all which is relevant to that particular consumer.”
In summing up collaboration, Zambo used the analogy of a game of darts to get her point across. She said that having only small insights into your customer base will only lead to retailers and manufacturers “throwing darts at the wall.”
The retailer has only so many insights; ditto for the manufacturer. But the more you put the two together, said the consultant, the more you’ll uncover what the customer really wants.
“Collaboration gets you closer to the bull’s eye.”
Market Watch
Popular CPG Websites Help
To Build Brand Loyalty
By Lynne Cooke
Online customer satisfaction plays a critical role for CPG companies using their website to engender loyalty and encourage purchase behavior online or offline, according to ForeSee Results, a company that measures online consumer satisfaction. Using its CPG benchmark system, the ForeSee tabulated the satisfaction scores for online browsers on more than 25 websites for major brands like ConAgra, Kellogg’s and Snapple, among others.
“The high performance of the CPG industry in our benchmark is an indication that they’ve made serious progress getting and engaging customers online,” said Larry Freed, president and CEO of ForeSee Results. “However, it’s also a sign of how high customer expectations of these websites will become, and it will be crucial for CPG websites to understand how they perform relative to close competitors as well as which specific aspects of their website can be improved for the greatest return on investment during a time when resources may be tighter.
According to the researcher, when compared to less satisfied visitors, highly satisfied visitors to a CPG website are: 81% more likely to return; 109% more likely to recommend it; 59% more likely to recommend the product; 73% more likely to purchase online and 41% more likely to purchase offline. The aggregate customer satisfaction benchmark score for CPG websites in October of 2008 was 76 on ForeSee Results’ 100-point scale, well above the ForeSee Results cross-industry aggregate satisfaction score (71).
“Some CPG companies still struggle with proving that their websites contribute tangibly to company-wide objectives, especially when there are little or no sales associated with the online channel,” added Freed. “When you look at the proven link between satisfaction and both purchase and brand loyalty, it’s clear that the web plays a critical and quantifiable role in the overall success of an organization.”
Catalina’s New Media Network
The Pointer Media Network, launched recently by Catalina Marketing, is a large and sophisticated addressable media network. The platform enables advertisers, media buyers, brand managers and marketers to leverage the network’s sophisticated database of 250 million weekly shopping transactions, which accounts for 80% of American households.
According to St. Petersburg, Fla.-based Catalina, the network speaks directly to consumers based on knowledge of their individual preferences, purchasing habits and behaviors – knowledge that has been largely out of reach until now. With an infrastructure of more than 23,000 retail outlets and an average 80% readership rate among target audiences, Catalina maintains that the network gives clients unmatched consumer insight, precision and media reach.
Cellfire Aligns with Kroger
Cellfire, the only nationwide mobile coupon and discount offer service, is making grocery coupons from a half-dozen leading CPG companies available through Kroger, the nation’s largest traditional grocer. The new capability is presently available to Kroger consumers in Georgia, South Carolina, Eastern Tennessee and Alabama, and includes savings on dozens of brands from
Clorox, ConAgra, Del Monte, General Mills, Kimberly-Clark
and Unilever.
To use this service, customers register an account with Cellfire and link it to their Kroger Plus loyalty card. Consumers view coupons within a Cellfire interface on their phone, and the coupons they select to use are automatically loaded to their loyalty card. Discounts are applied at the point of sale. Once the coupon is used or it expires, it is automatically deleted from the consumer’s phone and loyalty card.
DECEMBER 2008
Collaboration Remains Key
To More Effective Programs
By Jack Grant
Loyalty marketing has great potential to build brands, keep customers shopping in a favorite store, and develop a deeper overall customer relationship. The challenge is how to balance these very different objectives through effective collaboration between CPG manufacturers and retailers.
That is the view of John Chesak, a loyalty marketing consultant based near Chicago, who believes that the relationship between trading partners still needs work. Chesak is formerly the Global Marketing Director for Nielsen Loyalty and has worked with many retailers including Albertsons, CVS, Pathmark and Price Chopper.
“When a manufacturer is able to see analysis of customer data, while also being able to add some of their own analytic and intellectual expertise about categories and customer segments, that is a very positive development,” he said in an interview with CPGmatters.
Chesak recommends quarterly meetings of the kind that Safeway has been conducting. A recipe for success is manufacturers meeting with retailers, whose category managers develop an annual plan for assortment, shelf display and promotion.
“When you are able to bring in insights from a manufacturer to help retailers benefit the category, it ultimately helps both parties,” he said. “You’re focused on customer needs and not just building store traffic or moving cases.”
All too often, however, the realities of doing business intrude on the best-laid plans.
“There can be a ‘disconnect’ inside various aspects of a retailer if the concept of consumer-centric is not completely bought into,” Chesak said. “The same disconnect can exist between the sales and marketing departments of a manufacturer.”
The cause, he explained, is that manufacturers reward their sales reps to move product – and that is often their entire focus. This approach, he added, is often at odds with what marketing is doing in terms of shopper management or shopper marketing, both of which are focused on the end consumer. Retailers reward their category managers for meeting category sales and gross margin goals. Neither approach is necessarily focused on meeting customer needs and building the long-term customer relationship.
In conjuring up successful collaboration, Chesak believes that transparency is key with a best-case scenario of openness and sharing. And if there was ever one roadblock to collaboration between retailers and manufacturers, the struggle for power would be it.
“Manufacturers, by and large, want to believe they have far more impact to move customers with their brand,” he said. “That may be why you see Procter & Gamble bypassing retailers and leading consumers to their website to purchase directly from them.”
But customer data, he stressed, levels the playing field for the retailer. What loyalty data lacks in outside marketplace perspective, it makes up for with a better view of internal processes, or as Chesak characterized it: “a very deep, rich panel of shopping activities that are going on inside that retailer.”
Chesak recommends that manufacturers carefully choose which retailers to partner with for loyalty marketing. Some are more committed to collaboration than others. A troubling issue is the commercialization of retail loyalty data to solve short-term financial challenges.
Which retailers are leaders in loyalty marketing today – either through their own initiative or through effective collaboration with manufacturers?
“Retailers and their primary analytic consultants, such as Kroger and dunnhumby or Safeway and EYC, have created real partnerships designed to change the retailer’s business,” Chesak said. “Kroger has publicly commented that dunnhumby has helped the various functional areas inside the retailer see a different path to success.”
He does not see direct marketing as the “be all, end all” approach and cites Tesco in the U.K. as a retailer that has gone well beyond such a linear approach to “permeate the entire business” with thinking about who their customers are and how they will serve them. “Customer insights derived from loyalty data can be useful for adjusting pricing, assortment, new item placement and all manners of promotions,” said Chesak.
“They are even into banking and telecom as well as a variety of other businesses that are not traditionally related to retailing,” he added. “The customer insight they gained out of their data led them to different paths. They really have become customer-centric.”
The consultant also admires smaller, lesser-known retailers.
“You actually see far more small retailers making greater strides
than the bigger guys,” he said. “And this is because when the organization is smaller, there is less complexity, and it is easier to gain a better perspective.”
Although there are some two- to five-store chains doing a good job in loyalty marketing, Chesak said some larger regional chains are stepping up, too.
“Price Chopper is a fantastic example,” he said. “It’s a well-run operation. They use a lot of customer information to drive their business, but they also understand that there is a lot more to be done in this area.”
