With Google announcing their plan to phase out third-party cookies by 2022 completely, first-party data will be the go-to for brands henceforth. Also, the recent evidence in the decline of data management platforms (DMPs) is another sign that brands are shifting their focus to first-party data.
CPG brands cannot put together a strategic marketing plan without collecting significant purchase data. Most CPG brands rely on third-party purchase data, either supplied by retailers at their discretion or research firms in aggregate, neither of which allows CPG brands to build a direct relationship with customers.
Think Dollar Shave Club and Nestle.
Nestle employed better audience strategies with better sharing of data by combining their first-party data with Google’s audience data to find prospective customers to deliver Nestle Waters and San Pellegrino through its D2C model.
Antonio Scuito, Nestle North America’s Executive VP, and CMO said, “Each customer has to live a more relevant experience, one that is helpful rather than interruptive,” thus creating their D2C channel, ReadyRefresh, to have a direct relationship with their customers at every step of their journey.
To adjust to rapidly changing consumer needs, CPG brands need to pivot their strategies accordingly.
How can CPG brands build first-party data using QR Codes and NFC?
1. First-party data for CPG brands fuels modern marketing campaigns
One of the most significant advantages of the modern genre of online category leaders (Glossier, Benefit Cosmetics, and alike) is product differentiation as a result of having complete consumer data.
Senior Director of eCommerce, Chris Perry, estimated that 44% of CPG companies either launched or were planning to launch D2C models.
The main driving force? Test-and-learn capability. Long-term growth. And most importantly, first-party data ownership.
“Getting more first-party data has become a CEO initiative with major brands,” said Matt Kilmartin, formerly Chief Revenue Officer of DMP Krux.
The growing emphasis on first-party data directly results from privacy concerns and consumer behavior that seems to suggest an increased interest in personalization and one-on-one connections with brands.
Retailers and even data management platforms (DMPs) do not typically provide this personalization, but instead offer actionable target-audience data exported from third-party cookies.
This is where CPG brands can use QR Codes and NFC tags to have a more direct relationship with customers – engaging with them (online and offline) – and focusing on first-party data.
Let’s say a brand uses QR Codes on its chip packets. When a consumer scans it after purchasing it from their eCommerce store, the brand can ask for their email address to send personalized coupons, offers, and other relevant information to segment their audience.
“There’s going to be a renewed emphasis with marketers on first-party segmentation,” said Anne Hunter, a media and data executive. “Marketers will build the segments themselves and look for activation cues that aren’t cookie-based.”
By acquiring first-party data from customers, CPG brands can track, analyze, and compartmentalize their audience to send out personalized, relevant marketing campaigns and in turn, achieve a higher ROI.
Want to know about QR Codes for smart packaging? Read this blog post.
2. Build an enhanced customer persona and identify the best performing campaigns
For popular CPG brands such as Coca Cola and Lays, sticking to exclusive D2C models is not entirely beneficial, since most of their sales come from retailers and eCommerce stores.
Acquiring first-party data for such niche brands becomes increasingly tricky –
- They do not have an up and running D2C model, and
- Accumulating first-party data is challenging.
Since CPG brands seldom deal directly with their customers, they typically rely on second and third-party data to drive their marketing efforts. This inexorably leads to some degree of disconnect between marketing efforts and the consumer, caused by an absence of knowledge about the consumers’ interests and needs.
A CPG brand’s conventional marketing strategy draws inferences from second and third-party data to steer important decisions instead of building out strong first-party data sources, which can be used to fuel more relevant brand experiences.
Embed an NFC tag or a QR Code on the product packaging and implement it on a myriad of marketing campaigns. Analyze and track the number of scans/taps to measure the success of the marketing campaign. Based on customers’ output, run the marketing campaign with the most number of scans/taps.
As Forbes points out, location data gained through consumer opt-ins is a form of first-party data that CPG brands can leverage to target their core audience safely.
How can CPG brands establish a D2C eCommerce channel?
3. Amplify user experience for CPG brands selling out of retailers and eCommerce stores
Experts predict that by 2025, 10% of global fast-moving consumer goods (FMCG) sales will be via digital platforms, with US online grocery sales reaching 20%.
So much so that even large, traditional CPG brands from PepsiCo to P&G are revising their business models to stay ahead of the marketplace’s ever-changing user preferences.
While CPG brands are increasingly adopting the eCommerce route, their reliance on third-parties such as Amazon or other retailers like Walmart – leaves a significant gap in the first-party transactional data that brands can acquire.
For such CPG brands, relying solely on retailers to receive third-party data to enhance user experience is not sufficient.
Make use of QR Codes and/or NFC tags on product packaging, not to redirect the consumers to the brands D2C channel, but to enhance their user experience by introducing interactive content such as a game or an AR experience, or even an invite to an exclusive event of the brand.
Although CPG brands can flourish with eCommerce and retailers, having interactive technologies such as QR Codes and NFC tags can provide brands with new opportunities to understand, identify and reach out to their customers with the advantage of direct transactional data, or first-party data.
Learn how top 10 CPG brands nailed their QR Code campaigns
4. Scale user personalization and engagement
A 2020 Innvoid survey found that 43% of consumers want personalized ad experiences. The third most receptive business category for ad personalization is consumer packaged goods.
Once the first-party data strategy is set in place, CPG brands can begin to incorporate it in every facet of their marketing plan.
This also includes the brands personalization strategy for its shoppers and their customer engagement model.
The pandemic has tectonically shifted online shopping behavior. The pandemic pushed several popular brands including Nestle and Puma to shift their base from retailers to an exclusive D2C model.
The key to winning with a personalized marketing strategy is to account for the prospects and customers unique interests, behaviors, and interactions – and in real time.
For instance, emailing current customers and prospective customers hyper-personalized recommendations about a product or service they might be interested in based on their most recent site activity can go a long way in proving that the brand cares about customer experience.
QR Codes and NFC can help establish that effortlessly.
When a customer scans/or taps the product, the CPG brand can analyze the campaign based on the interaction received to connect with the customer via one-on-one methods to meet their needs and further scale up personalization.
A stellar user experience can help a CPG brand to humanize their service, build a long-term relationship with the customer, and differentiate their business from competitors.
Read how CPG brands have reformed post-COVID
5. Learn from D2C models
Amazon is not the only eCommerce store disrupting the traditional retail landscape.
D2C models have claimed a foothold in the market by ensuing the familiar format of traditional CPG marketing strategy –
- Cutting out the middleman
- Selling directly to their audience
- Using first-party data to strengthen consumer relationships over time
For instance, P&G took the D2C route. Late in 2019, it acquired Walker & Company, a brand that owns a number of DTC brands, according to Market Dive.
For P&G, beyond diversifying its own holdings, the move also helped thin out existing D2C competition while acquiring assets in the market. But more importantly, it establishes a direct line of access to first-party data of a valued consumer group, enabling P&G to help strengthen branded experiences.
Similarly. CPG brands can make use of QR Codes and NFC to establish first-party data from their consumers by learning from their counterpart D2C models.
Technologies such as QR Codes and NFC are famously known for their ability to understand, target, and analyze customer data both passively and non-passively. This might put CPG brands at a larger advantage in helping understand their consumers and providing them with just the right offerings.
Instead of shifting focus on expensive marketing efforts and starting everything from scratch, CPG brands must focus on finding opportunities to embrace a modern marketing approach and ways to create touchpoints, which can become the source of valued first-party data.
How to address consumer privacy concerns as a factor with the rise of first-party data?
iOS and Android have both evaluated and reformed their location and privacy settings in their latest operating systems.
Today’s customers have no inhibitions about sharing their data as long as it is not misused and used correctly to receive the best offerings from their brands.
Besides, users have the option of authorizing permission to the brand to access their data by either choosing or declining to accept cookies for retargeting. This way, users can empower their data sharing permissions.
Lay out the rules to consumers about what information the brand is using, where it is being used, and why it is being used to be completely transparent.
Coupled with an increased interest from younger consumers for more honest, authentic connections with brands, it is no surprise that CPG brands prefer first-party data collection and hands-on segmentation.
Why is first-party data beneficial for CPG brands?
CPG brands with D2C models have some major advantages over legacy brands –
- They can often get to market faster,
- They can experiment more freely with partnerships and distribution models, and
- They are rarely seen as commodities.
Most importantly, they know their customers intimately. This is because they possess their data, getting it directly from the source, which gives them the clearest picture of what, when, where and why their customers buy.
A latest survey of 200 senior brand marketers reinforces the value of first-party data. The top reasons these decision makers cited for using first-party data included –
- Improved campaign performance/ROI
- Accuracy/data quality
- Lends to more precise targeting
- Improved measurement and attribution
A handful of McKinsey partners recently noted the growing importance of a strong online presence for CPG companies — one that helps them steadily grow DTC sales and simultaneously provides a high-quality customer experience to their shoppers.
“With customer decision journeys encompassing more digital touchpoints and increasing in complexity, shoppers will expect CPG companies to have a consistent presence online and offline.”
Whether its propensity marketing or traditional marketing effort to exchange between the brand and the consumer, brands can get closer to their audiences by scaling first-party data strategies with the help of QR Codes and NFC.
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