It’s no secret that many CPG brands are still struggling with customer loyalty, and it's mostly because of supply chain issues.
During the summer of 2021, for example, a whopping 80% of consumers bought a different brand than usual, citing out-of-stock products and price hikes as their primary reasons for switching.
So to hang on to customers during these tumultuous times, many CPG brands are turning to loyalty programs — and getting creative in the process.
Let’s take a look at what some of the top brands are doing when it comes to loyalty right now.
Latest trends in CPG customer loyalty
1. High-tech gamification
Image credit: Kraft
This first trend is simply a technology-based extension of what’s been happening on CPG packaging for decades. Take cereal boxes, for example. They’ve had games on them forever, often with prizes inside, driving loyalty because kids like the games and prizes almost as much as the cereal itself.
And as it turns out, adults like games and prizes too; over 80% of millennials report an interest in getting rewards not just for purchases but also for engaging with brands. And nearly one-third of all participants and 40% of millennials say there should be games with loyalty programs too.
The thing is, though, adults are busy and distracted. So, the games need to be easy and they need to be frictionless. As we mentioned, consumers aren’t going to jump through any extra hoops these days to engage with your brand.
Case in point: Kraft Foods
A great example of high-tech gamification comes from Kraft Foods and their “Find The Golden Single” campaign in 2019. For this campaign, Kraft used mobile-activated packaging for their popular Kraft Singles product sold at Walmart.
The packaging utilized near-field communications (NFC) based technology that allowed shoppers to tap the package with their smartphone to unlock a scratcher style game — giving shoppers a chance to win a $50 Walmart gift card.
2. App-based loyalty programs
Image credit: General Mills
What’s this trend all about?
The reasoning behind the move towards app-based loyalty programs is twofold. First, it makes participation easier for the consumer. They don’t have to keep track of points online or remember to bring paper coupons to the store. All they need is their phone.
Second, app-based programs provide brands with a wealth of data — which in turn allows brands to send customers personalized communication and targeted offers.
Case in point: General Mills’ Box Tops for Education
The General Mills Box Tops for Education loyalty program is unique in that rewards are donated to schools rather than given directly to the customer. It’s been wildly popular, however, with customers choosing Box Top products over the competition just to earn money for their school.
That said, the cumbersome process of cutting out the tops and physically sending them into schools was losing steam as a new, digitally savvy generation of parents took over. So in 2019, General Mills announced that after 23 years of clipping Box Tops, people across America could ditch the scissors for their smartphones, earning cash for schools with the simple push of a button.
This move was made possible by the launch of a new mobile app that allows customers to digitally scan receipts, earning ten cents per participating product and automatically adding the funds to the customer’s selected school.
The app-based program also provides General Mills with loads of valuable customer data and purchase information that they didn’t have access to before.
3. DTC channel + subscriptions
Image credit: Clif Bar
What’s this trend all about?
Before the pandemic, only a handful of traditional CPG brands were available in the direct-to-consumer (DTC) channel. But all that changed during COVID.
The shift to online grocery shopping combined with supply chain issues expedited the DTC movement, with major players like Pepsi, Heinz, Clif Bar, Oreo, and M&Ms jumping on board.
And as it turns out, the DTC channel is a golden goose when it comes to customer loyalty — especially if you include a subscription service allowing customers to order your products on an auto-renewal basis.
Case in point: Clif Bar
With a best-in-class DTC site, Clif Bar offers an excellent example of a loyalty inspiring subscription program. Customers can simply set it and forget it, as their website explains.
“It’s never been easier to get more of everything you love from Clif. With Clif Subscribe, you’ll enjoy your favorite CLIF, CLIF Kid, and LUNA products delivered on your schedule, with the flexibility to swap or add products as often as you’d like — plus email reminders before every order ships.”
To entice customers to enroll in the subscription program, Clif Bar offers incentives like saving 10% on every order, free shipping on orders over $40, and free samples as available.
4. Flexible rewards
Image credit: Pampers
What’s this trend all about?
Flexible rewards basically means giving customers choices as to what they redeem their points for. So, for example, customers could choose to get a gift card, cash, or free gift instead of just coupons to use in-store.
The trend towards more flexible rewards is a direct result of customers having the upper hand. Customers simply won’t bother with unattainable or useless rewards anymore. They’ll switch to another brand that’s easier to work with or offers better rewards.
And if you’re worried about tanking profits by making rewards too easy to get, recent data from McKinsey shows that lowering the price of redemptions can actually boost sales.
So you're better off offering a flexible rewards system or even offering a points plus cash option. McKinsey mirrors this same idea — that allowing members to pay with a combination of their points and cash makes it easier to redeem rewards. This can motivate inactive customers and increase redemptions by up to 25%.
Case in point: Pampers
Pampers revamped their loyalty program in 2018 to include flexible rewards using an app-based system. All shoppers need to do is scan a code on the package using the app on their phone and then use the points to redeem a variety of rewards. These include things like:
- Pampers cash that can be used to buy more Pampers products.
- Coupons and discount codes for baby products from other brands. For example, customers can currently get $30 off an Ergobaby product just by downloading the app.
- Personalized items and prints from Shutterfly.
- Donations to various children’s charities.
- Toys and gift items for the whole family.
“Pampers understands that parents have a lot going on — and we’re always looking for ways to make their lives a little easier,” said Andrea Zahumensky North America Baby Care, P&G.
“That’s why we’re offering parents a new, simplified Pampers Rewards program. It’s a way for them to get more out of every shopping trip — truly the perfect hack for any parent with little ones in diapers!”
5. Partnering with retailers like c-stores
Image credit: Yesway
What’s this trend all about?
The trend towards retailer partnerships acknowledges the reality that consumers are only willing to join so many loyalty programs. And these partnerships allow brands to piggyback on programs that already have strong following like many c-store retailers do.
In fact, loyalty engagement in the c-store channel is up 20% largely due to strategic moves by major chains to modernize their loyalty programs over the last few years.
Loyalty also just makes sense in the c-store channel where high-frequency, habitual shopping trips are the norm. Many shoppers, for example, will stop at the same c-store every morning to grab the same CPG products for the day.
Case in point: Red Bull and Coca Cola + Yesway
If you’re unfamiliar, Yesway is a convenience store chain with 402 stores scattered across the South and Midwest. And the retailer’s popular loyalty program, Yesway rewards, relies heavily on partnerships with major CPG brands.
For example, Red Bull and Coca-Cola both work with Yesway to create and fund promotional offers within the retailer’s loyalty program. Yesway’s CPG partners are embedded in both the offer and the reward. Examples include:
- Purchase any six 20-ounce Coke products and get a seventh for free.
- Buy two Red Bull drinks to get 3 cents off per gallon.
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