How Can Customer Engagement Deliver Growth for the CPG Industry in 2024?

In recent years, the consumer packaged goods (CPG) industry has experienced many rapid changes. From rising costs of operating to supply chain issues, brands in the CPG industry are facing challenges at every turn. This makes maintaining market share difficult, especially as price increases cause consumers to rethink their purchases.

Yet the CPG industry does have a key asset to regain its momentum: Their brands remain some of the strongest and most recognizable in the world. However, with only 48% of companies in the space growing due to these challenging conditions, how can CPG brands lean into the craft of customer engagement to recapture the growth agenda for the rest of 2024?

The simple answer is that brands in the CPG industry need to build more meaningful relationships with their consumers to differentiate their value and drive purchases in the current tough environment. To help CPG brands succeed, let’s first take a look at three of the most common challenges and how you can address them.

Three challenges brands in the CPG industry are facing

1. Challenge: Going direct to consumers to know them better

Traditionally, it’s been the retailers that have owned the customer relationships and orchestrated data to drive up spend. However, against an increasingly digital backdrop, CPG brands are building their own relationships that help them to stay top of mind for consumers and keep their market share across an increasingly complex set of journeys. As online grocery spend and D2C channels are set to grow, and consumers are telling us they plan to shop online for products they used to buy in-store, in more categories, the importance of online channels for purchase journeys isn’t going away.

In this landscape, being able to create the relationship and gather the resulting first-party data to better understand and influence your individual customers' buying habits and preferences, even if they end in-store, is a key capability for CPG brands.

2. Challenge: Meeting rising consumer expectations of personalized and cross-channel purchase journeys

CPG brands are prioritizing the task of meeting consumers' demand for personalized and coherent shopping experiences. As consumers are increasingly shopping across more channels, their expectations for seamless experiences as they move from digital to physical channels and back again are rising. This is putting pressure on CPG brands to truly tailor their messaging in order to tackle the challenges currently blocking these joined-up journeys: First, by bringing together offline and online data to create a true profile, as described above, and then by acting on this data to add relevance and delivering the messaging across a wider array of touchpoints.

However, the industry is lagging when it comes to integrating data sources for campaign planning and reliance on single-channel solutions, something that raises the risk that they end up delivering irrelevant experiences, something that can alienate customers. Meeting consumer’s personalization expectations requires the right data, orchestration, and channel capabilities to successfully bridge the online/offline divide.

3. Challenge: Building brand storytelling that’s worth paying for

As CPG prices have risen across categories, consumers have started rethinking their choices and opted for generic versions instead of branded goods, with 41% having switched already. This has left many CPG brands asking how they can reestablish consumer willingness to pay a premium for their brands. After all, the ways that consumers perceive the value of CPG brands are key, especially as consumers are becoming more price-sensitive.

Additionally, many consumers choose brands that align with their values, whether that's focused on ethics, inclusion, or sustainability. Getting this right can be tricky and brands must live up to their values or risk alienating customers who are quick to see through fluff.

Taken together, this makes clear that CPG brands need to deliver messaging that showcases both their value and values with consumers—in an authentic way—to drive purchases. This requires CPG brands to be able to get their message in front of consumers on the channel of their choosing but also, crucially, at the right moment. That, in turn, means responding to customer behavior when it matters and delivering messaging that is memorable enough to drive actions for their purchase decision.

How customer engagement can solve these challenges across the purchase journey.

1. Acquisition: Building the base across paid and owned channels with the first-party imperative

As set out above, direct relationships have not been a priority for CPG brands historically; instead, they focused on building impactful brands that won on the physical shelf. This has changed. CPG brands are realizing the benefits of owning their own first- and zero-party data. One of the big benefits is putting this data to work to boost media and acquisition efforts.

CPG brands invest heavily in media—with spending on acquisition, as a percentage of their marketing budget, that’s 3% higher than any other industry—and are constantly looking to optimize their ad spend. One smart way to do that? Leveraging Braze Audience Sync, which can improve the targeting of ads to individuals who resemble a given brand’s most valuable customers, as well as suppress ads the moment a customer converts or goes back to owned channels.

This is not the only role customer engagement can play in building a foundation for direct consumer relationships. Many CPG brands do get web traffic; however, they aren’t leading with a messaging experience that captures the attention of these anonymous users, which can make up to 86% of a brand’s active users. We’ve seen from our own research that just messaging these users can have positive outcomes—it helps convert anonymous user traffic into known consumers or drives them towards meaningful actions like marketing opt-ins and purchases.

2. Engagement: Coherent cross-channel brand storytelling that is as unique as your customers

In order to get consumers to choose them more and more often, brands in the CPG industry must deliver great experiences that showcase their brand value. This should be the core capability of customer engagement, allowing brands to land the messages they want their consumers to hear.

Where to start? The first rule is knowing your customers—it’s hard to be relevant if you do not know who your customers are or what they want. Modern CPG retail often needs cross-channel reach that extends beyond the core of email and lets marketers speak to consumers on the channels that matter to them. This is a key differentiator, as consumers today get a high volume of brand messaging. Being able to cut through and grow engagement will help with growth.

Marketing budgets are routinely scrutinized leaving CPG marketers being asked to do more with less. A customer engagement platform that enables teams to create personalized, real-time engagement to land brand messaging and drive purchases with ease is a must. Adding AI into marketing activities is another industry priority and another focus area for customer engagement: Sage AI by Braze™ can further boost marketing efforts with built-in intelligence like customer-specific product recommendations.

Being more responsive to their customer needs can deliver business results, with CPG brands seeing a 10X increase in conversion rate when using action-based triggers.

Example:

3. Loyalty: Drive loyalty to win repeat purchasers

In the current economic climate, consumers are often more value-conscious and can change their choices based on value. This makes loyalty and repeat purchases harder to achieve.

Customer engagement can be a key channel to add utility and show your customer that you know them. Being able to easily integrate loyalty program data into your customer engagement platform unlocks more personalized messaging. This includes timely product replenishment messages and tailored product recommendations. Loyalty efforts are also amplified by customer engagement aiding in program adoption and personalized promotions.

For those without a formal loyalty program, driving continued purchases is about optimizing what works. Learning what messaging, whether that’s creative elements, timing, or channels, helps drive repeat purchasing and retention is a way to increase the engagement of existing customers.

CPG brands that have leaned into using customer engagement with Braze to help keep their customer base engaged for longer have seen significant benefits, including a 72% increase in purchases per buyer and a 9% increase in six-month retention.

Example:

Key Takeaway: Brands in the CPG industry can get results with customer engagement strategies that build relationships

Here at Braze, we’ve seen our CPG customers use customer engagement to deliver strong results across the user lifecycle in order to stay competitive online and on the shelf. So, if you’re a CPG brand and your goal is to acquire more customers, build your brand awareness, increase purchases, or keep your customers around for longer, get in touch to have a conversation about why customer engagement could be the answer to help your brand grow.