April 11, 2013

Can CPG Crack the CRM Code? CPG brands have had an off-and-on relationship with 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 compliment 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.
3 Convenient Illusions If you watch Mad Men regularly and filter out all the illegal and non-PC stuff, it becomes pretty clear that not much has changed in Adland in sixty years. Agencies are run pretty much the way they are depicted on TV. Evidently the great management and technology revolutions sidestepped Madison Avenue. If you doubt me ask how many Six Sigma black belts work in your agency or describe which consultants re-engineered your studio or production departments. And while there has been significant increases in financial controls and cutbacks, ad agencies are notorious for lack of predictable and consistent business processes, spotty project management and the inability to forecast and deliver profit and productivity gains reliably. Never ones to miss a fad, agency executives have embraced a number of new concepts in an attempt to demonstrate to prospective clients and employees how forward thinking and innovative they really are. These “innovations” are comfortable and convenient illusions that help agency managers sleep at night. But they’ve had little or no impact on either the chronically broken agency business model or the productivity, creativity or profitability of agencies. The dream makers need their own illusions, too. Consider these 3 concepts that have gained widespread conversation and adoption if not, business traction among ad agencies. Creative Technologists. Like unicorns, these mythic hard-to-find creatures are part creative, part techie and part wizard. Having one suggests that an agency is able to generate breakthrough tech savvy ideas that become global memes, give traditional campaigns smart digital executions or enable agencies to make applets, apps, widgets and viral or video memes that are as cool and shareable as those created by Google or Intel. What isn’t clear is how these new hybrid players are accepted (or not) by traditionally run and managed agencies who barely understand the need for interaction and engagement much less complex, two-way digital, mobile or social technologies. Frequently embedded in creative departments with the idea that they will form a triad with copywriters and art directors, most practitioners are frustrated by the lack of baseline technical knowledge, among their peers and co-workers, the reluctance to give a pure digital guy a seat at the ideation table or the inability to prioritize digital thinking and organically connect digital assets to core creative concepts. In the last few years, agencies have acquired people with these titles to keep up with first movers and to demonstrate their technology prowess in credentials meetings. The breakout creative executions that have resulted across the industry are concentrated in a handful of agencies and can be counted on one hand. Project Management. For decades account guys managed client relationships and projects. As the digital era dawned and technical production became more complicated, agencies added project managers charged with managing timelines, budgets and project QA. Unfortunately while many agencies embraced the position in the hope to better control timelines and budgets, results have been mixed. There is no consensus on the job description, the tool set, the degree of authority or responsibility granted or the technical competences required. People were recruited fresh out of school, from traffic departments, and among failed account guys. Some nag and pester creatives. Others hide behind endless revisions of Excel spreadsheets, hot lists or MS Project Gantt charts. Still others send out the invitations for and attend every meeting but contribute only carbon monoxide. To a great extent, agencies faked themselves out. PMs add a layer of expense and friction, lengthen the production process and gain very little either in terms of quality assurance or staff productivity. Now everybody can claim to have project management as a core agency discipline. But very few agencies can quantify their impact on process improvements, staff efficiency or in added margins. Digital Integration. Fifteen years ago when digital agencies emerged from primordial bits and bytes, technology was new and alien. It had to be carefully scrutinized and considered before being bolted onto agencies. As the Web grew many people in shops of many sizes and configurations mastered web technologies. Agencies allied with and acquired digital capabilities to reduce competitive pressure, defend brand stewardship, while grabbing a bigger slice of client retainers and provide through the line media neutral communications in service to client commercial goals. This momentum has continually built up year after year. As consumer behavior shifts toward a digitally centric lifestyle no agency wants to be left out or appear to be a dinosaur. To compensate many traditional agencies hired marquee Chief Digital Officers away from digital-only shops...

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

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