Consumer Data is Driving the Next Realm of Consumer Packaged Goods
Consumer packaged goods (CPG) brands may soon be relying on connected packaging data to secure and retain customer loyalty. Using collected consumer data, companies are indicating an ability to close the gap between the brand and consumer. With the digital transformation of CPG, this end-user/product relationship is evolving to a personally tailored experience that represents a new realm of possibility through interaction.
As Humphrey Bogart declared in the movie “Casablanca”: I think this is the beginning of a beautiful friendship.
Picture it: a future in which connected packaging is enlisted throughout the CPG sector to read and report point-of-use data. Tags and codes link packages for tracking or “unlock” educational components for ongoing engagement. Collected data is interpreted to improve the overall consumer experience. The actionable insight this provides could result in never-before-seen levels of brand loyalty.
The varied ways companies can position to keep their products on the consumer shelf for the long haul are novel, exciting and vital. Through connected packaging solutions, subsequent data collection and quick fulfillment, CPG brands may learn specific consumer needs and patterns that can be utilized proactively. With this knowledge, CPG companies will have unprecedented insight into their target market. In examining the opportunities provided by analyzing and leveraging data gathered from connected packaging, we catch a glimpse of an exciting future. But it is important to note that privacy should be at the core of every product built in this space.
“Sense”-ible Marketing: When Software and Product Merge
Nestled inside of a durable dispensing device, the omniscient “eyes” of a sensor can detect consumer reactions to product in real-time. This creates an invaluable data stream for CPGs that can be used throughout the entire product lifecycle, from product development to ongoing customer service and engagement. Sensors provide a non-intrusive window into household trends which can be addressed accordingly through more relevant marketing, auto-replenishment or both.
In the R&D phase, prototype validation can merge product and software sensor capabilities for a personalized experience. Testing customer reactions to manual or automatic reorders, for example, shows user activity and their fulfillment preferences. Once product use is identified, experience sampling can be deployed — and with it, even more feedback requested.
The spend to incorporate this technology into packaging varies. Connected packaging's cost-effectiveness and ability to streamline while continously collecting and communicating data demands a close look at the different types of wireless technologies.
Let’s examine a few different types of sensors and how the data they provide can both enhance the consumer experience and provide companies with targeted marketing opportunities.
- Simple Switches – The old model of “twist cap, dispense medication and proceed” is made smarter by this switch. Hold a bottle or push down to dispense product, and a simple metal dome switch records the interaction. This data can then be shared through a Bluetooth connection to a smartphone. This could be seen as a simple convenience – or it could save lives. Imagine the implications of this technology to an end-user suffering from early Alzheimer’s disease. Thanks to the data provided by the simple switch, the question Did I take my medication yet? is eliminated. The tracking of dosage adherence also allows for reminders to be sent to a patient to ensure proper dosage. Caregivers and medical professionals can access the data as well and react accordingly.
- Level Sensing – Ever been at the store and wondered how much of a product you had left at home? Consumers no longer need to guess when a container leverages this type of sensor. Quantity and consumption measurement can be achieved using an electromagnetic field or infrared sensor, which detects levels of liquids (and some solids). When levels dip to a certain threshold, a notification or an auto-replenishment fulfilment order can be triggered. Thanks to level technology, staples such as infant formula, dog food or coffee can stay in steady supply. The consumer likely has little need to try another brand when the next shipment is already on its way to the doorstep. This strategy can also lead to more wallet share for consumer packaged goods companies, as the consumer will not feel the need to ration a product that is always readily available.
- Movement – This class of sensor detects how the product is being used. Speed, direction and orientation are all revealed through an accelerometer and gyroscope that accurately detect usage. For the heavy tooth-brusher, such a sensor could trigger educational material regarding enamel loss associated with aggressive brush use, for example. An accelerometer not only reveals if a consumer opens a product but when, which allows for usage tracking.
- Tags and Codes – A passive QR code or tag can turn an inanimate object into one that can be tracked and engaged with; it also serves as a consumer gateway to further content about a product or service. The overall idea? Link a package with a customer smartphone, enabling access to cloud, collection of data and even payment options. Quick Response (QR) codes and Near-Field Communication (NFC) tags need only a smartphone; Radio-Frequency Identification (RFID) tags must employ a special reader and are commonly used for theft prevention or digital ticketing.
- Display – While not a sensor itself, this is a sensor’s way to communicate with the user. Thanks to user interface protocols that communicate dynamic information, that scalding cup of coffee need no longer be a surprise. Indicator LEDs have the capability to display basic information such as heat ratings. Reactive pigments can also be used to display temperature or chemical exposure in a non-digital manner, and e-paper and OLED screens reveal text or graphics. The smartphone is an ideal high-resolution display and most consumers have one at the ready.
Now we’re able to access real-time consumption data from these devices and take that to really give a good view of product use.
How Consumers Benefit From CPG Point-of-Use Data
According to a Jabil Connected Packaging Survey of more than 1,000 consumers, 74% agree that it is very convenient when the products they need are automatically sent to them. However, nearly half (48%) revealed that they dread the setup of anything that must connect to the Internet. Download the full survey report.
Once you get a device, typically as a consumer, the odds of you changing to a different device are very slim. Connected packaging that triggers auto-replenishment must therefore work seamlessly for consumers to adopt it. If that is achieved, CPG brands can unlock the possibilities for differentiated consumer benefits.
Auto-replenishment means that with a never-ending supply of the fast-moving consumer good, there is no need to stockpile product. This overstock mistake happens often: 47% of respondents say that each month they purchase things they already own. Furthermore, connected packaging data empowers consumers to manage their home inventory on-the-go. On a planned or impromptu store visit, they can easily check the home balance of their products like dishwashing liquid or detergent before deciding to purchase more.
How frequently do you buy something you already have because you forgot that you had it or didn't know someone else in your household had bought it?
Additionally, a company that uses this data to truly understand customer behavior can then engage in relevant, hyper-targeted communication. When a consumer trusts that a brand really understands and meets their needs at the right time, brand loyalty increases. This is a win-win for both the consumer and the brand. Staying loyal means less time researching alternative brands on the consumer side, and therefore, less decision-making. On the CPG company side, it translates to brand loyalty and ongoing sales.
How CPG Brands Benefit From First-party Data
Connected packaging reveals descriptive information that CPG brands have never had access to before — including total active users, number of replenishments over a period or even the seasonality of the product. These descriptive analytics allow for better decision-making on production levels, product design and identification of populations that may need an extra “nudge” to stay loyal to their brands.
Since demographic information is critical to the consumer packaged goods industry, connected packaging data can also provide a deeper understanding of how different demographical traits impact consumer behavior. This allows more powerful segmenting across predefined groups for even closer examination and reveals opportunities for cross selling.
Marketing teams that look to truly understand the data from smart devices could provide the customer with value-added collateral such as discounts, coupons and more. Consider the value of such focused marketing to someone consuming oatmeal. Typically marketed as a breakfast item, with connected packaging, usage activity during the day or at night could indicate the user is baking. Based on this knowledge, the brand may provide appropriate educational materials.
Constant Diligence: New Opportunities Unveil New Threats
The opportunities that come with CPG consumer data are manifold, but companies must proceed with eyes wide open and with total transparency regarding privacy concerns. If consumers know that collected data will be used to better their daily life, they are open to the practice. According to the Jabil survey report, 90% of consumers understand that user data helps to create better products. When data collection demonstrates benefit, most do not mind the practice.
Maintaining consumer confidence is vital to the success of any brand. A mantra of constant diligence is necessary as CPG companies strive to collect data and keep it safe. Cyberattacks target even the most “secure” connections, leaving consumer data vulnerable and companies potentially liable for any subsequent breach. To fortify against potential hacks in the CPG space, companies must take a proactive approach.
By keeping customer data safe and using it to make everyday life easier for customers, CPG companies stand ready to create strong, long-term connections with consumers inside the home. Data in CPG has the potential to transform the customer experience and to be a truly beautiful friendship for brands and consumers alike.
Download the 2021 Connected Packaging Survey Report
Insights from over 1,000 U.S. consumers on their perceptions and attitudes on connected packaging, subscription services, auto-replenishment, data privacy and more.