Beyond the Aisle: Where Consumer Packaged Goods Brands Meet Technology to Drive Business Results potx

Table of ContentsPreface Chapter 1: Market Shifts Chapter 2: Understanding the Digital Consumer Chapter 3: Understanding Digital Marketing Chapter 4: The Benefits of Building Active Cust

Beyond the Aisle: Where Consumer Packaged Goods Brands Meet Technology to Drive Business Results

Tim Ross

Published by SolutionSet at Smashwords

Copyright © 2012 Tim Ross

Smashwords Edition, License Notes

Thank you for downloading this free ebook Although this is a free book, it remains the copyrighted property of the author, and may not be reproduced, copied and distributed for commercial or non-commercial purposes If you enjoyed this book, please encourage your friends to download their own copy at Smashwords.com, where they can also discover other works by this author Thank you for your support.

Beyond the Aisle:

Where Consumer Packaged Goods Brands Meet Technology to Drive Business Results

Dedication

To Gloria, Maddie, and Allie who make everything in my life better

I would like to thank a number of people without whom this book would not be possible

HMI’ers Zain Raj, Paul Kramer, and Peter Cloutier taught me about the CPG business and the marketing problems web, mobile and social technologies could solve

SolutionSet’ers Alex Kaplinsky, Frank Anan, Robert Balmaseda, Dave Kilimnik, Adam Trissel, and Dessy Stanley who are great partners and even better people

Chapter co-authors Joe Robinson, Stacey Rubin, Peter Cloutier, and Paul Kramer, who gave key insights and applications across strategic domains

Amy Westervelt, who for years has made me appear far smarter and more productive than I truly am

My friends and family from whom I steal many of my best ideas

Table of Contents

Preface

Chapter 1: Market Shifts

Chapter 2: Understanding the Digital Consumer

Chapter 3: Understanding Digital Marketing

Chapter 4: The Benefits of Building Active Customer Communities

Chapter 5: Mobile Tech and Capturing the Always-On Shopper

Chapter 6: Building Customer Loyalty Through Gamification, Interactive

Marketing and Rewards Programs

Chapter 7: Turning Video into Value

Chapter 8: Leveraging Video Analytics to Improve Everything from Customer Service to Visual Merchandising

Chapter 9: Using Web CMS to Manage Not Just Content, but Brands

Chapter 10: Digital May Be Different, but Content Is Still King

In 2012, SolutionSet, the second largest independent marketing service agency in North America and D.L Ryan Companies, the nation’s largest independent digital, shopper, and promotional marketing agency, merged to form Hyper Marketing Incorporated (HMI) That merger didn’t just create one giant integrated marketing services company, it also brought together some key pieces of the digital marketing puzzle for consumer packaged goods (CPG) companies With DL Ryan’s long history of working with CPG brands and SolutionSet’s experience using technology to change brands, we quickly realized we could help transform the way CPG companies leverage technology

Over the course of several months we brought our best thinkers together to look at all the different aspects of digital for CPG companies—from how they might use web systems and mobile technologies to how such strategies as gamification could help CPG companies build their brands and solidify their relationships with consumers

Those conversations led to a series of tips and articles and ultimately to this ebook, which we envision as a quick and easy primer on digital marketing for CPG companies Enjoy!

Chapter 1: Market Shifts

Ten years ago, consumer packaged goods (CPG) companies had very little direct interaction with their customers They dealt with distributors and retailers, and they had a corporate marketing team in place to tend to the company’s brand more generally, but the day-to-day relationship with consumers was left largely to retailers And that relationship was mostly managed in person Shoppers would head to the grocery store, coupons in hand, and browse for what they wanted While there, they might happen across an end-cap display showcasing a two-for-one deal or someone handing out samples of some kind

Those days are largely gone Digital technology—particularly mobile and social technology—has transformed the consumer experience in every industry For CPG companies that means not only learning how to sell to consumers online, but also playing a bit of catch-up when it comes to digital marketing It also means a wealth of new opportunities to reach and sell to customers Online CPG sales were projected to reach $16 billion by 2012, according to Nielsen, up from $12 billion in 2010 Though that’s still just a fraction of the $475 billion total predicted value of the CPG market, it’s

nonetheless a growing segment worth courting.

The key to tapping into those consumers, and to the potential of digital more generally, lies in understanding how consumers have changed over the past several years and how marketing needs

to evolve to deal with that change

First there was the initial shift to digital when people realized that it was easier to order things like giant bags of dog food online and have them delivered, rather than lugging them home from a store Today, it goes far beyond that Consumers can use their smart phones to find out where each piece

of produce in the grocery store came from or search for particular coupons while they shop According to Nielsen, the web is the fastest-growing CPG sales channel, with more than 10% of some categories’ sales occurring online Although CPG companies have mostly caught up with the e-commerce side of things, many still lag behind when it comes to understanding how to market to digital consumers

Chapter 2: Understanding the Digital Consumer

It’s not just the distribution channel that has changed Customers and their whole approach to consumption have changed Over the past decade, the way customers move through the purchasing process for any type of product or service has fundamentally shifted Consumers have become increasingly suspicious of “push” marketing techniques—placing information in front of people in order to influence purchasing decisions—opting instead to “pull” in their own information Today’s consumers turn more often to friends and family for advice on what to buy than a company’s website

CPG companies that understand this new customer—and meet them where they’re at—stand to gain substantial market share Those that don’t will spend the next several years looking over their shoulders at Amazon Not only is the e-tailer setting up regional distribution centers all over the country, but it also bought Diapers.com and Soap.com in 2011, and it has been hinting at taking a bite out of the grocery industry

Customers “pull” more information these days because there’s plenty of it available and more than half the planet now has access to it There is no end to sources of relatively unbiased information, from the running commentaries of friends on social media sites to crowd-sourced product reviews to plain old word-of-mouth suggestions Not only have consumers become quite good at finding the information they’re looking for, but they can do so anywhere and any time According to recent Pew research, nearly half of all Americans are smart phone users And according to the latest comScore report, four out of five of those 85.9 million people use their smart phones to research and make retail purchases

Thanks to the proliferation of DVRs and streaming video sites, it’s becoming easier for consumers to avoid “push” messages Consumers have always been able to avoid being influenced by web ads As mobile ads increasingly geo-target consumers and serve up more relevant content, they are proving more effective than standard web ads However, their peers still influence consumers more than any campaign, no matter how personalized.

Then there’s the public’s widespread mistrust of advertising in general A Forrester Research survey found that between 2002 and 2004 alone, there was a 40% drop in the number of respondents who agreed that ads were a good way to learn about new products There was also a 59% drop in the number of respondents who had bought products because of ads, and a 49% drop in the number of respondents who said they found ads entertaining

The thing about social networks—both digital and physical—is that they constantly influence consumers Unlike the traditional advertising paradigm, wherein the natural campaign “end” is a purchase, in today’s digital world, companies need to ensure customer satisfaction long after the purchase date or face the dip in sales that could come if customer complaints start cropping up on Twitter and Facebook No company wants a hashtag that marries its name with the word “sucks” to start trending on Twitter

So there’s the availability of information, consumers’ ability to avoid advertising, their general mistrust

of advertising, and the communal nature of the web, which lends itself to constant social influence When you throw technological innovation into that mix—in the form of apps that tie products, information, and your Facebook page together, for example—it doesn’t take long for the masses to take it and run with it

In the past, CPG brands focused the bulk of their marketing efforts on in-store promotions and coupons When they began to use digital channels to reach customers, CPG companies tended to cling to similar strategies, simply making them slightly more digital—coupons on a brand’s website or

a push alert to consumers’ phones about a two-for-one offer CPG brands must start looking beyond the in-store experience and begin thinking about how to interact with their customers everywhere—at home, online, in-store, on devices, and on review and social media sites where customers might share their product experiences with others It’s no longer enough to release the occasional coupon

on a brand’s Facebook page Although such activities are worth pursuing, they’re the low-hanging fruit of digital marketing for CPG brands Consumers expect at least that much, but to truly differentiate themselves, CPG brands need to do more They need to connect with consumers on multiple levels by providing content and tools that are applicable to their daily lives

Gluten Freely, a site recently launched by General Mills, is a great example The site is content-rich with plenty of info and tips on gluten-free diets, not just product information By providing an easy portal for gluten-free consumers, General Mills has not only connected with a new market segment, but it has also created a great way to keep tabs on what sorts of products this segment is looking for

—both by tracking what customers search for on the site and by providing easy ways to post questions and comments

ConAgra’s “Give Every Night New Flavor” program, launched in conjunction with several retailers, is another good model The company created a microsite, which offered recipes and all the products needed to prepare them, built in-store displays that showcased the recipes, provided digital coupons, and advertised both online and in print The program delivered double-digit growth in units, dollars, and profit over the prior year

Both programs highlight the importance of every part of the customer journey for CPG marketers, beyond the initial interaction or the point of sale CPG marketing needs to happen all the time now, not just in the aisles It also needs to provide real value to consumers, not just more ads to ignore Marketers can no longer post the occasional digital coupon on their brand’s Facebook page, create a viral video, and call it a digital marketing strategy Although the idea of completely rethinking how marketing is done may seem daunting at first, we’ve boiled it down to two fundamental changes: CPG marketers need to re-think how customer value is calculated, and they need to start thinking more like product managers

Chapter 3: Understanding Digital Marketing

The traditional Lifetime Value Formula (LTV)—used for the past several decades to figure out marketing budgets—is being upended by the shift in how companies and customers interact The Lifetime Value formula predicts the net profit attributable to a company’s entire relationship with a customer The math is complicated; it takes into account churn rates and retention rates, retention costs, contribution margins, and time period Traditionally, if the cost of acquiring customers is lower than the LTV of those customers, marketers got the go-ahead to spend more on campaigns aimed at finding new customers

Today, that’s not always a good strategy Ideas about Customer Lifetime Value and Customer Acquisition Costs need to change because the markets they describe and predict are changing Customers don’t want to be bought, they want to be wooed They still seek immediate gratification to

a certain extent, but they’re much more concerned about identifying with a brand and its values than they were in the past

Beyond that, consumers don’t want to hear about a product or service from the company that sells it They want recommendations from their trusted friends and family Study after study has shown that word-of-mouth marketing—while slower to pay off—delivers nearly twice as much long-term customer value to companies as advertising does

Word-of-mouth marketing is particularly crucial in new markets A 2010 study by McKinsey found that although advertising and previous product usage continued to be the primary drivers of consideration

in mature product markets, word-of-mouth was the most important factor at every stage of consideration in new markets

The thinking around word-of-mouth needs an update, too Traditionally viewed as low-cost advertising with a high return, it could perhaps be better described as high-cost brand building with a high, long-term return Companies could spend quite a bit of money creating apps, tools, and customer service programs that their audience view as cool enough to share with their friends and family or to tweet about But because all of those investments have a long shelf life, unlike a month-long ad campaign, they will continue to generate returns for years They are also likely to deliver ongoing word-of-mouth returns, which traditional marketing formulas don’t account for

There’s an additional shift underway, not just away from marketing’s obsession with new customers and toward building long-term brand loyalty, but also toward baking that eventual loyalty into a

company’s acquisition strategy from the beginning Companies that are able to turn marketing efforts into content or tools that are of real value to their customers will typically build a customer base that is loyal for life rather than acquiring the one-off customers drawn by catchy ad campaigns

Even the idea of a viral video, once considered the Holy Grail of marketing, has gone the way of the dodo Sure, that Old Spice video got millions of views on YouTube, and maybe Old Spice increased sales for a period of time Maybe it even nabbed some younger customers this year But a clever video doesn’t provide real value or guarantee long-term loyalty

Focusing on the customer experience isn’t just about building a brand or finding and engaging customers, it’s a way to ensure that the customers you acquire will be more valuable (better) customers over the long haul, and that they will be customers who continue to help spread the word

to other potential customers

Product-Oriented Thinking

If marketing is fundamentally changing, then marketers need to evolve to keep up or risk becoming irrelevant In a 2011 survey of 600 global CEOs conducted by London-based Fournaise Marketing Group, 73% of them said that CMOs lack business credibility and the ability to generate sufficient business growth, 72% are tired of being asked for money without an explanation of how it will generate increased business, and 77% have had it with all the talk about brand equity that can’t be linked to actual firm equity or any other recognized financial metric

Part of the problem is that many marketers have lost touch with what customers really want Consumers want companies to show them the value of a product, not a cool concept vaguely related

to the product To the extent that marketers can make marketing about adding value to a product, they will capture the attention of consumers

Marketers must identify gaps to fill in parts of the experience chain that their competitors are missing

To be effective in today’s market, they need to develop digital tools and experiences that extend and enhance their brands In other words, they need to be product managers as well

Part of being a good product manager and a great marketer is building a cross-functional team It used to be that a marketing VP could go to an ad agency, commission a creative campaign, and worry about tacking it on to the website later Today, marketers who want to incorporate digital tools into their strategies are going to have to get a lot more comfortable with technology Adding technologists to the team is a great place to start, but creating good digital marketing tools requires thinking about technology all along the way, even in the initial brainstorming sessions At SolutionSet,

we put technology and creative on the same team from the beginning We developed a process that allowed both to thrive and eliminated wasteful spending on concepts that wouldn’t work technically as well as technical bells and whistles that didn’t deliver customer value

SolutionSet’s Creative Tech Process

For marketers to embrace a product management-style process, they need to shift their thinking in three key areas:

Bring Technology and Creative Together

The right team for a digital marketing product includes top-level technologists who are involved in the process from the beginning Make sure you have your tech folks at the table vetting technology solutions early on, and ensuring that your concept will either work with things you’ve done before or with tools that they have experience using Too often people wait until the visual and conceptual designs of a marketing product are finished before testing its feasibility from a technology perspective Not only can starting with the technology question help you avoid problems down the road, it can actually help to inform creative as well Many of the apps out there already incorporate good thinking—playing around with them as a team early on can help lead to great new ideas

Adopt a Phased Approach

Plan for iterations In the digital world, the launch date is no longer the end-date of a marketing plan Marketers need to think about things in terms of phases and creating sustained impact

Plan for Technology Costs

Many of the big agencies tend to maximize the creative budget and minimize the technology budget This type of cost planning no longer works Concepts need to come quickly, and creative is one piece

of that But generally when you’re building marketing apps or products, the biggest expense is the technology Companies and agencies need to start planning accordingly There’s a cultural bias in agencies to always underestimate technology and never understand why you can’t do it cheaply They’ll say this tech shop says it costs $400,000 to build this thing, but from what I understand this app and that app can do those things, so why don’t we just use those? The problem with that sort of thinking is that you end up with high-end creative on low-end, poorly functioning technology, which ultimately amounts to a failed marketing initiative

But it’s not just the process that has changed And it’s not simply a question of marketers needing to get familiar with new platforms That would be easy It’s about a fundamental change in how

consumers operate, which necessitates a new approach to marketing It’s no longer about telling a story or communicating some particular brand attribute to the customer It’s about figuring out what would make the customer’s experience of your brand or product better and creating a digital tool that does that.

Clark Kokich, chairman of digital agency Razorfish has talked about this a fair amount as well, noting that the education and experience of most high-level marketers has little to do with the way markets function today “I have friends who have told me they’re just trying to hang on before people realize

they don’t know what they’re doing,” he said in a recent Forbes interview “But I don’t think you can

fake it another five years You’re just not relevant if you’re fighting the reality of what’s happening.”

Four Key Digital Marketing Strategies for CPG Companies

We’re not the only ones who noticed the trend toward digital products in marketing Kokich describes the current shift as being a move away from campaigns and toward relationship building “It’s less about advertising and more about creating an experience that transforms what it means to be a customer of a brand,” he says “And that change has really caused a lot of consternation in marketing because none of us were trained to do that.”

Method’s Kevin Farnham says he started to see it about a decade ago as well, and his firm made a concerted effort to shape the work they do toward digital products and services rather than standard campaigns “We used to collaborate with ad agencies on the digital side back when they weren’t very good at it—now they’re better,” he says “But at one point we had to make a hard stop and say we don’t want to do this any more, even though we have the skills and can make money doing it It was a hard decision to make as a services agency, but we had decided that one of the core philosophies of our company was that we wanted to shape products and services rather than the messaging around them.”

Whether marketers are prepared or not, the companies they work for are embracing this shift as well, earmarking more of the marketing budget for digital products than ever before According to a recent Gartner study, by 2017 chief marketing officers (CMOs) will be responsible for more technology spending than chief information officers (CIOs) And a report by the Path to Purchase Institute notes that about 71% of marketing executives at CPG firms expect to see an increase in their budget for digital promotions and 35.6% see the most potential in mobile coupons

Fortunately, this transformation is not all doom and gloom for marketers, nor is it about learning how

to cook up and execute digital products simply because everyone else is doing it Customer Experience Apps are a useful tool for marketers as well They tend to deliver far more information about a company’s customers than a one-off campaign, they’re ongoing and can be continuously improved, and, when done right, they deliver meaningful long-term benefits.

1 High-value Relationships

According to Nielsen, digitally engaged shoppers are more valuable to brands and retailers Not only does online engagement lead to a more positive association with that brand, but we’re now seeing a connection between activity on a brand’s website and purchasing in brick-and-mortar stores In fact, according to research from CatapultRPM, visitors to CPG brand websites buy 37% more in retail stores than those who don’t visit these websites

Digital tools and content that are seen as useful and valuable to consumers also help companies build direct relationships with high-value customers We’re not just talking about people who spend more money, but so-called “social connectors,” influential consumers who deliver long-term value by bringing other consumers along with them

Technology has broadened the reach of those connectors Whereas a social connector may have once had influence over 50-odd friends, their influence is now exponentially greater If just a handful

of these people decide a company’s app is cool, the brand suddenly becomes more visible to thousands of other potential customers without any additional expenditure or promotional activity on the company’s part

2 Consumer Insights

Digital products also provide unprecedented access to consumers’ thoughts, opinions, and behaviors Not only are people more willing than ever to share all sorts of information about themselves online, but any app or microsite will include a database Companies can splice that data in multiple ways to understand exactly how to deliver what their customers want

Pepsi’s new online dashboard, Pepsi Pulse, is a great example Pulse uses a FlipBoard-style grid to display the most interesting pop culture news (as ranked by SocialFlow), celebrity Twitter feeds, and original content

“Everyone’s hyper-connected at this point, and we want to be at the different touch points that our consumers are at,” said George Smith, senior manager, social strategy and execution for Pepsi

Smith added that the longer someone interacts with Pepsi online, the more opportunities the company has to change opinions, glean valuable insights, and strengthen brand loyalty, not to mention gather valuable statistics about the age, gender, interests, and reactions of consumers “With digital, you end up with a lot of extra data, and you end up with a lot more understanding of who your consumer is,” he said

That data helps companies market their products better, and it could also help them develop better digital products After all, a branded app is only valuable to a company if it’s truly valuable to consumers Consumers download an average of 65 apps on their smartphones, but only use a handful on a daily basis Marketers have quickly discovered that getting customers to download an app doesn’t matter much if they never end up using it

Armed with great information about what their customers want, companies have a much better chance of creating a valuable app Walgreens offers an app that is consistently cited as a favorite by consumers because the drugstore included a digital scanner that makes it extremely easy to submit prescription refill requests

3 Customers for Life

While a particular campaign might win over a customer for a short while, an app, tool, or microsite aimed at improving consumer experience helps companies build solid, ongoing relationships with customers It gives them a reason to keep coming back to a company’s site, it keeps the company’s brand in their view, and it integrates the company into the customer’s life It also gives customers a reason to keep talking about the company with their friends Just think of all those Nike+ running updates you see on your friends’ Facebook walls

Companies can further encourage brand loyalty by incorporating ideas such as gamification and crowdsourcing into online and mobile apps, tools, and content Interactive marketing through gaming has become a compelling way to entice customers to continue engaging with brands and products beyond the purchase point This concept, gamification, is exactly what it sounds like—using game principles in a non-game setting, awarding points or rewards based on consumer activity, brand loyalty, and check-ins Contests, sweepstakes, and trivia can also be a type of gamification if linked with a specific brand or product

From a technology perspective, many companies are “getting in the game.” For example, Foursquare and other location-based social networks pioneered the check-in badge and programs like Klout

Perks and MyPoints offer a range of rewards based on online traffic, purchasing habits, and brand interaction on social media Today, a combination of the two can be used to track consumer habits and offer applicable rewards

Platform vendors such as Badgeville and Bunchball provide cloud-based portable gaming across digital touch points including mobile apps, online communities, and CRM systems These vendors have partnered with the likes of General Mills, Danone, and Samsung Other similar vendors, including SCVNGR, BigDoor, and CrowdTwist, reward real-world activity paired with online or mobile activity in the form of points, badges, leaderboards, and currency and goods in the virtual economy,

or even tangible rewards

To get a sense of how gamification has caught on with consumers, consider that if you lined up all the FarmVille users side-by-side, the line would reach from New York to San Francisco three and a half times Or the fact that the total amount of time the World of Warcraft has been played is 5.93 million years A recent Gartner study predicts that by 2014, gamified services for consumer goods marketing and retention will become as important as Facebook, eBay, or Amazon

Crowdsourcing is another way to bring customers closer to a company’s brand When consumers feel like they have a say in how a company behaves or what types of products it produces, they tend to become fiercely loyal In most cases, companies that have built successful apps and tools also build large and vibrant digital communities in the process Those communities can be supremely valuable

to marketers in a myriad of ways—from offering product ideas to providing a window into potential issues to shaping future branding and marketing efforts

Mountain Dew’s DEWmocracy campaign/community is a prime example The company asked its customer community to vote on a potential new flavor Out of seven initial options, the company selected the three most popular to further test in the community, asking for applications for taste testers The fifty chosen applicants were divided into three groups, depending on which flavor they preferred The so-called “Flavor Nations” were charged with naming their flavor, designing the packaging, and promoting the product The members of each “Nation” went out their communities to drum up support for their flavor, earning Mountain Dew thousands of new customers

The winning flavor (White Out) was billed as “the first soft drink designed by consumers,” which was interesting enough to gain the brand even more customers And in the meantime, the campaign also created 4,000 die-hard Mountain Dew advocates

Not every piece of customer insight comes via a targeted poll, campaign, or question, of course Sometimes it’s just a matter of listening to what your community is talking about

Once a company has built a relationship between the customer community and the brand, customers can become truly valuable additions to the product development process This can be particularly valuable for small to medium-size businesses that don’t have giant product development organizations.

Nature’s Path Organic, for example, uses its community to test new ideas and is constantly working

to embed customer feedback into the product development process “A company our size can execute on five to ten new ideas a year at best,” Tom Newitt, the company’s director of brand management and research, has said “There isn’t a lot of room for error, and it’s vitally important that

we let the consumer chime in on our ideas We were finding it very hard to get that input consistently and cost effectively “

Crowd-sourcing and community building are also key ingredients to making video valuable When companies create videos that can be downloaded and remixed by fans and consumers, the possibilities for viral video exposure grow exponentially When Cadbury’s 2009 “eyebrow dance” video came out, a number of spoofs popped up almost immediately Sometimes, video ideas originate with the consumer—Tide’s Super Bowl video, featuring a “miracle stain” of Joe Montana, was actually inspired by a funny fan video

Linking digital products to social media wherever it makes sense helps extend the reach of consumer experience apps as well However, the “where it makes sense” bit is really key with social, and it is another area where many marketers have failed to smoothly transition to digital Consumers have already lost patience with unnecessary social media tie-ins Companies that don’t understand the subtleties of social media risk alienating more consumers than they attract

“There’s a place and time where social makes sense and sometimes it just doesn’t,” Method’s Kevin Farnham says “Companies are jamming it in everywhere right now because they think social is the new thing and they need to integrate it into everything—I mean, even car navigation systems have social tie-ins now—but hopefully some of the more egregious uses of social will go away.”

“Social’s fifteen minutes are over,” he adds “It’s sort of like when being able to do transactions online was a big deal and so everyone jumped on it Social is another core underlying functionality and companies need to figure out where it makes sense and where it doesn’t because people’s engagement with social that has no value will go away really quickly.”

4 Charging for Marketing

In some cases, companies have hit upon consumer experience gaps that are so perfectly filled by a

digital solution that consumers are willing to pay for what is essentially marketing Again, Nike+ is a good example of this While the app is free, the gear required to make it work is not and in many cases consumers are buying the gear because the app is cool Obviously, this isn’t going to happen for every company That said, when marketers get into the digital products game, they would be wise

to think in terms of apps people would be willing to pay for

London-based digital agency Nonsense even posits that to think of branded apps as giveaways is to misunderstand the nature of apps and how people use them In general, brands like to make their apps free Part of the problem is that the success of an app is generally judged by how often it’s downloaded, probably because that metric closely mimics page views or Facebook likes, both things marketers have become comfortable with in recent years Nonsense argues that downloads are not a good way to measure success “It ignores what apps are actually for Their purpose is not one single interaction like an ad The purpose of apps is to provide utility, i.e be useful in some way in the users’ lives So, repeated interactions (a.k.a loyalty) or depth of engagement are better benchmarks of success for mobile apps And these can normally be measured.”

If you create an app that has real value for people, charging for it is not only okay, it may actually underscore the value of the app and further engender customer loyalty “By adopting a paid-for-utility mindset when developing apps, brands can ensure their apps are genuinely worthwhile for people,” Nonsense suggests (and we agree)

By listening to what customers are saying and asking throughout the development process whether this app or tool is something that is genuinely helping them, brands stand a great chance of producing not only an app that delivers valuable brand benefits, but also one that consumers would happily pay for

Of course, reaching this pinnacle of digital product marketing isn’t easy, but there are some companies that have managed to do it In the following chapters, we’ll explore what they’ve done and provide tips for producing effective consumer experience apps We’ll also look at some of the fundamental basics of digital marketing for CPG companies—from how to use web-based content management systems (CMS) to how to capitalize on mobile opportunities to how to use video, online communities, and gamification to strengthen relationships with consumers

Chapter 4: The Benefits of Building Active Customer Communities

Every brand knows it needs some sort of social media strategy, but it’s not enough these days just to have a Facebook page, Twitter account, and YouTube channel The CPG companies that are most successful in linking what they’re doing in social media to tangible results—namely, increased sales—are often those that have created vibrant online communities These social sites live within the company’s larger website In these brand-specific communities, members talk to each other and to the company, and the company disseminates various types of content, including how-to videos and coupons

Leveraging Customer Communities to Drive Sales

Companies have far greater control over their brands on these proprietary sites and, unlike on party sites, can link these social sites to their ecommerce efforts and existing web sign-on infrastructure Building and integrating these communities takes some investment and technical know-how, but the effort can really pay off The following are three key ways that CPG companies can leverage online communities to drive sales:

third-1 Turn Customers into Salespeople

The best advertisement for your products doesn’t come from you, but from your customers In some

of the most effective online communities, members actually become salespeople of sorts, selling other members on the virtues of various products

A prime example is Sephora’s Beauty Talk community, in which users and Sephora-managed

“experts” share advice on beauty products Sephora has found that the average Beauty Talk user stays on the site 2.5 times longer than non-Beauty Talk consumers, and avid community users stay

on 10 times longer than average By using a single sign-on for both the community and the brand’s ecommerce site (which is also pegged to an in-store member account), Sephora can easily track the shopping behaviors of Beauty Talk members This enables Sephora to target its messaging more precisely and track various trends within its online community

Recently the company expanded its community content to include Sephora TV These online videos give users detailed how-to guides for various beauty trends, complete with product recommendations

from professional makeup artists Sephora’s strategy could easily be adopted by any company selling personal care items

2 Become a Valuable Resource

You can’t just create an online community, link to it from your website and your Facebook page, and hope customers show up To create a customer community that will drive sales, you need to provide content that will attract customers, whether it’s exclusive deals, useful tips, relevant research and stories, or some combination of all three

The Pampers Village website is of the latter variety Launched in 2008, this community forum for expectant mothers provides a wealth of information about children ranging in age from newborns to preschoolers The downloadable app, “Hello Baby,” gives detailed images of a typical baby’s weekly growth as well as a complete pregnancy calendar And charitable campaigns, such as the Little Miracle Mission—which has supplied more than 30,000 care packages to families with babies in neonatal intensive care units—keep new moms engaged and feeling good about the brand The site has a strong commercial aspect as well, with ever-present discounts, rewards, and “buy now” links It also suggests relevant products depending on the topic visitors are reading and pushes related coupons to them

3 Use Content to Turn Customers into Marketers

Kraft has developed a similarly social site with Recipes.com Kraft knows moms need quick, easy recipes, and it has built a community to encourage consumers to use, share, and rate their recipes and experience with Kraft products Most moms find the ratings and reviews section to be a real acid test of both the ingredients and recipes Was the recipe easy? Did everyone like it? Was there a fun way to add a new twist? For an example of this audience interaction, check out the site’s Fiesta Casserole recipe It has nearly 700 comments, many from consumers suggesting substitutions, changes, and tips on cooking the recipe

Kraft isn’t afraid to let consumers run the show The site welcomes feedback and input, and it hosts a recipe exchange board, which is actively managed with comments and tips After Kraft opened up the site to its audience, consumers started distributing the content on Facebook, Pinterest, and other social networks This expands Kraft’s social connectivity, drives SEO, and improves overall brand credibility, without Kraft having to devote resources to these improvements Just as importantly for

Kraft, they use the community to learn about consumer needs and cooking trends and develop new product ideas.

Social communities help you leverage the power of your current users and their shared interest in your brand Let them amplify your messages to their friends Let them suggest answers to typical user questions Let them find it easy to “buy now.” Let them add value to your brand experience—you just need to provide the opportunities and tools

Turning Your Customer Community into a Valuable Asset

We all know that building customer communities is about more than just racking up “likes” on Facebook What do you do with that community once it’s built? How do you continue to engage and provide value to them? And of course—the Holy Grail—how do you get them to take any action once they’ve joined the community?

Proprietary communities make the answers to all of these questions slightly easier After all, they’re designed with a particular brand or company’s goals in mind, so they are equipped to deliver next-level community engagement and insight Still, what do you do with that community once it exists, other than continuously sell to it, which may immediately alienate some members?

One option is to tap into customer communities for market research and product ideas Brands can create “ideation” communities, turning devoted consumers into active focus groups By engaging consumers in the development of everything from product design to tag lines, companies create a virtuous circle that gives consumers a vested interest in the brand and provides product development teams with customer input

1 Tap into Tastemakers

By encouraging your creative customers to contribute their ideas, you can improve product design and marketing, and turn already-passionate customers into rabid, lifelong fans

Again, Mountain Dew’s DEWmocracy campaign is a great example Not only did fans help to develop three potential new flavors, but also the company was able to create new brand loyalists and make its existent fan base even more devoted to the brand

The winning flavor (White Out) was billed as “the first soft drink designed by consumers,” which was

interesting enough to help the brand gain additional press as well

Mountain Dew also recently provided an example of why it can be smart to restrict ideation to branded social networks only Its “Dub the Dew” campaign—an attempt to crowdsource a name for a new flavor—was taken over by trolls who pushed such names as Diabeetus and Sierra Mist to the top

of the list Note to marketers: There are no guarantees against hacking online, but you can hedge your bets by starting with a friendly community

2 Let Your Customers Do Your Marketing

Not every piece of customer insight comes via a targeted poll, campaign, or question Sometimes it’s just a matter of listening to what your community is talking about

Walmart discovered through monitoring comments and conversations in its online community that moms loved saving money not because it made them feel efficient, but because it made them feel smart Armed with this insight, it changed its tagline in 2008 from “Always Low Prices” to “Save Money Live Better.”

3 Encourage Customer Feedback

Once you’ve built a relationship between the customer community and the brand, customers can become truly valuable additions to your product development process This can be particularly valuable for small to medium-size businesses that don’t have giant product development teams

There are new examples of this all the time In addition to the Mountain Dew and Nature’s Path

Organic examples, Doritos recently launched a campaign to crowd-source new chip flavors They ended up with three options, a popular contest, and a renewed sense of consumer excitement around their brand

Guest Contributor: How Customer Communities Can Improve Customer Service

by Joe Robinson, President, Catapult RPM

In discussions of how companies can use social media, the unsexy but completely crucial component

of customer service is often forgotten in favor of more exciting topics like ideation and driving sales In today’s social media landscape, companies ignore customer service at their peril A recent study from Carnegie Mellon University’s Heinz School of Business found that consumers are more likely to complain about a company on social media than say anything else about its product The researchers

also discovered that negative customer service feedback on social networks carries more influence than feedback through other channels.

Rather than going directly to the company, consumers often lodge product and service complaints on Facebook, Twitter, and lesser-known sites, including ComplaintCommunity, Cofacio, GetSatisfaction, Amplicate, Vark, and Plebble And yet, most companies still rely on outdated customer service models that require consumers to come to them Companies that don’t search for their customer complaints on third-party sites, do so at their own peril RightNow’s latest Customer Experience Impact report showed that 89% of consumers began doing business with a competitor following a poor customer experience, and 50% of consumers give a brand only one week to respond to a question before they stop doing business with them Despite these risks, companies ignore four out of five consumer complaints according to the RightNow survey Moreover, the survey found that a whopping 86% of consumers were willing to pay more for a product or service if it came with a better customer service experience

The following are three ways CPG companies can use online communities to improve customer service and make consumers feel heard:

1 Embrace Your Brand Experts

Most brands will have one or two loyalists who are not only capable of, but excited about, fielding other customer questions Let them! In the tech industry, Microsoft has done an excellent job of empowering people like “Mr Excel,” whose site routinely gets more hits than Microsoft’s own Excel help page Rather than ignoring or trying to silence Mr Excel, the company has embraced him, asking his opinion on support documents and giving him software updates to beta test

In the CPG realm, Nestlé’s VeryBestBaking.com community is a great example of social customer service done right The company’s message boards feature discussions on a wide range of baking topics, and consumers who are uncertain about how to prepare a particular on-pack cookie recipe can tap into the wisdom of other visitors to the message board Active board members love getting to share their expertise, and newbies appreciate the quick response, which they associate with the company, even though the person responding is another consumer

2 Create Digital Tools

Digital tools like live chat can improve the customer service experience and don’t require a huge investment of resources to implement Live chat enables companies to respond to customer

questions directly—before, during, and after a purchase By placing live chat links on every page, companies make it as easy as possible for consumers to reach them, limiting the need to go outside the branded website for help or to complain.

CoverGirl.com visitors, for example, can access CoverGirl’s Live Chat Beauty Consultants from every page of the site and get advice about how to apply the products they have purchased These sessions also present an opportunity to promote additional products

3 Encourage Questions and Feedback on Your Own Site

While every company needs something similar to Best Buy’s “Twelpforce” to field Twitter questions and respond to complaints, it’s more effective for companies to encourage feedback through their own social communities For example, when top UK baby site Kiddicare integrated customer service into its online community, it saw a 30% reduction in customer calls and a 98% increase in the number

of issues that were resolved during a customer’s first contact with the company Kiddicare’s site is set

up so that members can easily interact with each other and promote comments and answers that they like It doesn’t just provide a message board for questions and complaints, it enables—and encourages—customer feedback of all sorts

Joe Robinson is president of one of the largest shopper marketing agencies in the world Robinson leads a team of individuals located across the United States and has worked with some of the country’s largest consumer brands and manufacturers, including Kraft, General Foods, Heineken, Pillsbury, Campbell’s, HJ Heinz, Pepperidge Farm, Labatt, ConAgra, Hormel, 3M, and Energizer.