Most leaders feel overwhelmed by uncertainty right now. The questions CPG brands are asking are big ones, and they have consequences for companies with limited resources who are trying to grow and scale. What from the last year was an aberration? What can and should I count on going forward?
Here are six trends we have identified that CPG brands can and should plan to take action on:
- COVID-19 made “buy online, pick up in store” a mainstream option for shoppers, meaning even more purchase decisions are being made on our devices, not at the physical shelf.
- At the height of the pandemic, consumers would put up with inconvenience to support small businesses by buying direct. Now their patience is waning.
- The rise of remote work means that where consumers are spending their time has changed drastically.
- Amazon is becoming even more flooded with both brands and third party sellers, increasing competition.
- Consumers are becoming harder to reach, which means the ability to speak directly to your current and prospective customers is more valuable than ever.
- Consumers are expecting more from social media content than most brands are delivering, meaning there is opportunity for those that create truly relevant and engaging content.
Read on to learn more about each of these trends and get tips you and your team should use to address them.
- “Buy online, pick up in store” orders placed online increased 202% in just three months from March to May 2020 (Rakuten Intelligence).
- It’s not just for the upper-middle class. 29 percent of dollars, orders, and items are coming from consumers earning $25,000-$50,000 annually.
- New order-for-pick-up activity spans all generations. In fact, Gen Z buyers and seniors are the two groups accounting for the most first-time orders, with each group accounting for 22 percent of the new growth respectively.
WHAT TO DO
- Since CPG brands previously depended on a strong shelf presence in-store, you now need to translate the same experience to digital environments. Here are some ways to make up for that lost tactile experience:
- Invest in high-resolution, naturally lit photography that will allow shoppers to zoom in on details.
- Set a style for primary product images (image quality, lighting, distance from camera, background, size, styling, etc.), and then maintain it consistently across all of your brand’s products.
- Leverage 360-degree product videos to mimic the in-person, three-dimensional shopping experience.
- Mix in-use and lifestyle images and video with your product images, too. Don’t rely solely on product descriptions to convey your product’s features and benefits. Help your customer imagine how the product will fit into their life.
- Take image loading speed into consideration. Your product photography can be “saved for web” after photoshopping to limit file size, without significant effect on image quality.
- Tailor product descriptions to your primary target customer, ensuring you anticipate what questions they will have, and consider their top priorities when making purchasing decisions in your category. Emphasize keywords most important to that primary target, and build your product information hierarchy in a way that’s consistent with their shopping priorities.
Trend #2: Customers did put up with inconvenience to buy direct from CPG brands before the pandemic. Now they expect more of you.
In addition to more widespread consumer adoption of online shopping methods, more retailers have arrived (albeit a bit late) to the ecommerce party, too. This perfect storm will result in higher expectations for CPG brands in direct sales as well-polished, seamless ecommerce experiences become a shopping norm.
- 19 percent of small businesses began selling products online or shipping to customers for the first time in 2020. (Chase Ink)
- Large retailers are making it more difficult for brands to be competitive with their direct sales. Digital Commerce 360 notes that the top 100 retailers, minus Amazon, accounted for 74 percent of the new, non-Amazon ecommerce growth in 2020.
- More competition means increased investment required to move your target customer from awareness to sale. The top spending increases for small businesses in 2020 were shipping, social media and search advertising, and ecommerce platforms.
WHAT TO DO
- Understand how building direct-to-consumer sales fits into your brand strategy and business plan. If you’ve punted on selling direct-to-consumer through your own website and are unsure if the model makes logistical sense for your brand — now’s the time to decide.
- Our Solve for Y Ecommerce Gap Analysis can provide guidance on what it will take your brand to compete in ecommerce. We will dive into everything from shipping costs, to logistics, to SEO, to how (and how much) your competition is advertising.
- Then, invest accordingly. If CPG brands intend to rely on direct sales as a significant revenue stream, you must invest in tech (platform), creative that aids the sale (web design, product photography, video), and advertising that drives traffic (SEO and search advertising, social media advertising, etc.)
- Winning a first-time sale is only half of the equation. With ecommerce acquisition now more costly than ever, be sure to have a retention strategy in place to keep customers engaged, happy, and purchasing regularly.
Changes to where and how consumers spend their time means your advertising focus should shift. It also means you could quickly become out of touch with your target customer’s new lifestyle if you aren’t proactive.
Lifestyle changes, new hobbies, new financial priorities — this is a transitional time for everyone. Your target customer has gone through an evolution that will have lasting effects.
- Job status and finances are volatile. We’ve still lost 10 million jobs in our country overall. Millions have transitioned jobs, and/or have transitioned to working remotely.
- The number of people continuing to work remotely could increase three to four times compared to pre-pandemic levels of remote work.(McKinsey & Company).
- An estimated 9 million Americans relocated between March and October 2020 (National Association of Realtors).
WHAT TO DO
- Go straight to the source. Interview and survey your existing customers, and plan to do so more frequently than you have in the past.
- Use email surveys to engage past customers who haven’t made recent purchases.
- Capture in-the-moment feedback from your site’s visitors with an intercept survey.
- Mix optional survey questions into the checkout process.
- Follow-up with a survey post-purchase as an opportunity to re-engage the customer in your brand.
- Compare pre-pandemic website analytics (2019) to present day analytics.
- Are you noticing major shifts in visitor location? It’s possible that your customers are moving away from major cities, into suburban and rural areas where you may be able advertise more cost-effectively.
- Go through the exercise of mapping the customer journey again.
- For most, the daily commute has instead been replaced with more screen time, frequenting social media and other digital channels during breaks in the day. How you influence the first stage of the customer journey — brand awareness — will need to shift further towards digital spaces.
- Think about all of the decision-making advantages your customer has in-store. If your packaging tells your brand story in a way that immediately resonates with customers, that experience needs to be brought into the ecommerce shopping experience. If consultation from a store associate is an important part of the decision-making process for your product, look to mimic this experience in ecommerce. Cover frequently asked questions through multimedia when possible, limiting reading time for the customer.
Amazon’s 2020 growth (38 percent net growth in North American sales) means sellers will be spending more to jockey for the attention of Amazon shoppers.
- Amazon currently boasts 2.4 million active sellers, with as many as 1.5 million more expected in 2021. 258,000 have joined in Q1 2021. (Marketplace Pulse)
- 96 percent of Amazon sellers plan to expand their business in 2021. (Jungle Scout)
- Amazon advertising dollars increased 47 percent year-over-year, with bidding on popular searches commonly costing $7 or more per click.
WHAT TO DO
- If you’re selling on Amazon, a “set-it-and-forget-it” approach to your product listings won’t get you the results you need anymore. Invest in optimizing copy, images, and videos for your product listings. Build an Amazon Brand Store, making it easier for fans of your products to shop your full product lines.
- Tap into video ads, which don’t yet suffer from the same level of cut-throat competition.
- Understand which Amazon fulfillment model best fits your goals. All have their drawbacks and positives. If you don’t know the difference between them or haven’t recently reviewed them, you need to. If you don’t know where to start, contact us and we can recommend an expert that can help you.
While Amazon’s Fulfillment-by-Amazon (FBA) model makes it easy for brands to sell more without logistical challenges, it’s still critical to keep a direct throughline to your target audience.
- Tech giants are preparing to roll out new advertising targeting policies that will inhibit brands’ collective ability to target potential customers.
- FBA is an easy sales model logistically, but as more CPG brands lean on it as a primary ecommerce channel, they’re missing out on useful customer-identifying information Amazon doesn’t share.
- As consumers uproot and move across the country, your customer data is likely to quickly become out-of-date.
WHAT TO DO
- Maintaining a direct-to-consumer ecommerce strategy, even if not a primary sales driver, can help you build and segment CRM lists.
- Email marketing keeps your brand top-of-mind and reengages existing customers.
- Communicating regularly with existing customers helps to increase their lifetime value to you, and provides access to cheaper revenue vs. costly one-time advertising and acquisition programs.
- Build “data collection” into your social media content strategy.
- Focus on building a community of engaged fans.
- Poll customers where they’d like to be able to find more of your products.
- Run contests and giveaways, building a direct connection with winners you can survey or interview in the future.
- Engage influencers.
- Influencers have a built-in, trusting audience. If you can find influencers that appeal to your target audience, you can shortcut the process of getting in front of them. Find influencers that align with your brand, and begin building partnerships.
- Start with a $10,000 budget while you’re still learning what influencer partnerships will work best for your brand. In general, influencer activity shouldn’t dominate your marketing budget — and it doesn’t need to dominate it to add value.
- Understand that costly “big names” aren’t the only partners who will get a return on investment. In fact, content posted by “nano influencers” (1,000-10,000 followers) and “micro influencers” (10,000-100,000 followers) gets more engagement.
Virtually all consumer brands have social media presences, and consumers are spending more time perusing social media than ever before. Still, consumers have indicated that the majority of brands are still missing the mark with their content.
- 68% of people don’t think brands or companies share interesting content.
As noted in HootSuite’s Social Trends 2021 report, brands are now counteracting this by paying closer attention to what their customers want.
WHAT TO DO
- Begin social listening, the practice of tracking conversations and mentions related to topics relevant to your brand. Brand mentions, relevant hashtags, competitor mentions, industry trends, and keywords will provide you with complementary insights you can’t get from customer surveys and interviews.
- Use the insights you glean to make adjustments to your content strategy.
- Between social listening and trial-and-error of new content, answer the following questions:
- How does your brand fit into customers’ lives on social media, and how does that influence your posting frequency?
- How can you find creative ways to fit into the conversations customers are having, instead of leading them?
- What will “break the wall of indifference” customers have to brand social media?
- Are you “reading the room” to get timing right before launching campaigns?
- Treat social listening as ongoing practice and critical must-have to optimizing your social media results going forward.
CPG Brands: Count on the six trends outlined in this article to continue into the long-term future. Nimbleness is an advantage for second-stage brands over slower-moving, enterprise-level competitors. Lean into that advantage! Adjust now, and capitalize on change as opportunity. If you wait until beyond 2021 to address new consumer preferences, expect to fall behind your savvy competitors.
Answer the questions keeping you up at night.
If the pandemic has brought into question your purpose, your target customer, or your brand strategy altogether, find out if Solve for Y is the right solution for your team.