The last two years have been tumultuous for businesses across all sectors – from Covid to the rising skills and supply shortages, says Danica Konestski, Consumer Industry Principal at Treasure Data. With an all but confirmed global recession on the horizon, the business landscape is now uncharted territory – a difficult space for CPG brands of all shapes and sizes to navigate.
The latest Consumer Price Index released in July worryingly exceeded forecasts and rose to a forty-year high, as soaring prices continue to constrict household spending. With the cost of living now expected to peak above 15% early next year, business leaders at CPG brands are under even more pressure to make sound decisions in a high cost, high risk environment which impacts not only their business operations, but the consumers loyal to their products too.
So what can be done? Do brands commit to offsetting their own inflation costs and risk alienating pinched customers in an economy on the brink of a recession? How do they best judge how long the current predicament will last, and whether or not to pivot their operations as a result?
With a bleak mood surrounding consumers and their spending power said to exceed even the lows of the 2008 financial crisis, obtaining a full picture of consumer behaviour in this current climate and all its complexities has never been more vital. Profits, consumer loyalty and in some cases, business viability all hang in the balance.
These are the issues keeping CPG executives up at night – and the solutions can be reached with one ultimate tool – data. Brands must make sound data-based decisions that will help them survive this immediate crunch, not to mention thrive in the future.
With this in mind, here are three considerations for CPG leaders to weather this ongoing crisis.
Connect the dots on pricing using all data available
Every CPG brand sits on a veritable treasure trove of insights in the form of first-party data on their customers, and this should be the natural first starting point for gauging what price consumers are likely to deem as reasonable during this time. Raise prices too high, brands risk customers jumping ship and taking their money – and their loyalty – to the next cheapest brand.
This is why it’s so important that brands build a unified profile of their customer that factors in all possible data sources – online or offline and first party, third or zero party. Think of it this way – you wouldn’t make the decision to buy a house without accounting for the insights from a surveyor, the observations of the estate agent and the view of legal counsel to build a full 360° view.
Building a connected, holistic customer view is critical to ensuring brands have all the information needed so that any decision made on price is agreeable and keeps customers faithful, whilst not denting their bottom line.
Use actionable insights to think outside the box
Data can be used for more than just price discussions and broad consumer trends and many businesses waste valuable opportunities by failing to get creative with what they have at their disposal. When implemented properly as part of a comprehensive data strategy, data insights can be turned into actionable ways for brands to keep consumers happy during this difficult period.
For example, the negative implications of any price changes can be offset by creative solutions like discerning which offers or incentives consumers might be most palatable for individual consumers in the event that brands have no choice but to raise prices. This could be a discount on their favourite product or money off their next spend.
Invest in the right tools and tech
Lastly, CPG brands need to ensure that they have invested in the proper infrastructure to gain such insights – after all, what is a handyman without his toolbox? This doesn’t just mean purchasing expensive software that does all the work, but also ensuring there are dedicated team members who have the skills to make any information meaningful.
By utilising the correct tools and technology as part of a wider bespoke data management strategy, the insights gleaned can be as granular as dictating precisely which promotions to show to which type of customer, or which regions would benefit from certain offers.
Consumer loyalty or even more crucially – advocacy – is hard to maintain at the best of times, but even more so in this unpredictable environment, and any decision brands make brings an inherent amount of risk with it. As consumers inevitably become more drawn to brands that are socially responsible and act collaboratively during this economic climate, it’s crucial for CPG brands to utilise their biggest asset – data – to devise effective solutions based on data-driven decisions to maintain their longevity in this era of change.
Comments are closed.