The Packaged Goods Dilemma

And how collaboration is always better

I’ve worked in retail my entire career.    I’ve watched the rules of retail marketing get tested over and over again and while digital has expanded our universe it hasn’t really upped everything altogether.

David Edleman’s article a few years ago created angst among retailers with a vision of the customer decision journey that looked like something the Jetsons might have designed. Yet, in the end, and once the dust had settled, we all figured out that few of us had an active customer file big enough to execute touch point optimization and the illusion of web to retail behavioral tracking was just that, an illusion for the majority and barely possible for those without several million plus in their active files.

What worked in the past continued to work and the integration of social and digital media extended and expanded reach and 3rd party endorsement to the overall benefit of the business.

Customer vs. Packaged Goods marketing

The vision of a customer marketer is multi touch.  Analytics drives touch point optimization, offer structures are paneled and segmentation is geared to customer lifecycle all managed within the iron grip of the retail calendar.

I hadn’t realized how little packaged goods marketing disciplines had changed.

I understand the aggregated view of customer data they are restricted to.  I also understand their proxy for customer data is the A&U study and focus groups which more often than not deliver a view of the customer filtered by the vision of the product manager and the limitations of the panel.

The customer marketer recruits from the customer database and extrapolates the results.  The active file underpins every action we take and drive the KPIs that measure success.

The Olympian struggle

The Olympian struggle is when packaged goods meets retail marketing.  Most often it’s a confrontation of distant planetary orbs rather than a meeting of minds.  The challenge is that the minds don’t meet because the languages of their respective marketing disciplines are so completely at odds with each other.

While the customer marketer has learned the value of a strong brand in lifting response the brand managers struggles with our vision of targeted and versioned brand messaging. More often the customer marketer flexs to the brand marketer’s point of view.

The customer marketer’s weapons of choice – segmentation, offer tests, versioning, pulse promotion, clienteling – are sometimes discounted or not even considered as requirements within the packaged goods view of the marketing mix.

Where the struggle is most simply illustrated is by the brands versus the customer marketer’s KPIs.  The brand sees the business metrics as their key indicators while the customer marketer starts with the customer and works up.

A customer marketer’s metrics are a by day, week, year view of changes in customer behavior versus year ago within a test and learn rigor driving change.

When packaged goods leads retail marketing without an effective collaboration it’s simply bad for business.

The language of Customer Marketing

New customers, returning, net daily, weekly, monthly and annual customer, customers retained, customers lost, top of file change, file migration patterns upwards and downwards, propensity, recency, frequency, monetary, and so on are the bread and butter of customer marketing’s pattern of success.

Get the machine running on this basis and we make a consistent +10% net.

This is at the heart of the risk scenario of packaged goods strategy driving retail marketing. This is not a question of lack of expertise but a question of inappropriate expertise. And, please don’t misunderstand and believe I don’t see a place for brand marketing.  Of course I do.

A strong brand makes for strong CRM but there is a very big BUT in this statement

Here’s the difference —   the brand might say “cut the monthly mailer” and not consider the impact on returning customers.  The customer marketer would say “test a matched group” to understand the impact, and test into the rollout.  They are fundamentally different points of view.

Testing into change.

The challenge in the overlay of packaged goods strategy on retail marketing is losing sight of the customer.  Knowing customer behavior is predictive of future business. Knowing how many new customers entered the business in March will tell you how the business will perform in May much more accurately than a focus group, a quant or AC Nielsen.

I haven’t forgotten that packaged goods companies have no customer access to data.  That’s not my point.  My point is a strategic one – that packaged goods strategies need to flex to the disciplines of retail customer marketing.

The result when both sides collaborate is a successful retail business.  The other option we just don’t want to consider.

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