Building Customer Loyalty Through Habit-Forming Packaging

Tue May 16 00:00:00 EDT 2017

Customer-centric brand marketing holds the key to creating and sustaining long-lasting product value. When companies know how to solve customers' problems, they earn greater brand loyalty and broader market share. That's why every maker of consumer products across every conceivable industry segment focuses on optimizing customer experiences, where they can showcase true differentiation. Product packaging plays a significant role in that.  

In a traditional retail setting, the consumer buying journey involves four steps: 

  • Learning 
  • Selecting 
  • Transporting 
  • Using  

Until recently, much of the product learning and selection process took place in a brick & mortar store, from a retail shelf. Consumer Packaged Goods (CPG) companies have historically made major R&D investments to win store-buying customers. Considering 34 percent of impulse buys can be attributed to packaging, according to the Contract Packaging Association, it's no wonder. But, all that's in the midst of changing. 

In fact, e-Commerce has turned the world of packaging upside down. Today, buying decisions tend to be motivated more by convenience and value than by which product has a more compelling look and feel, or boasts more bells and whistles.  

The Psychology Behind "Customer Loyalty"  

In a recent e-commerce packaging trends survey sponsored by Jabil, 75 percent of respondents agreed that convenience is the key driver behind purchasing decisions.   

And, whether consumers buy in-store or online, and the convenience actually translates into habit-forming behavior. Previous research on the brain suggests that "the mind loves automaticity more than just about anything else—certainly more than engaging in conscious consideration. Given a choice, it would like to do the same things over and over again," according to the Harvard Business Review (HBR).  

For the same reasons that we take the same route to work every day, consistently purchase our favorite latte or keep the same friends over the years, we habitually are likely to purchase the same products over and over. As long as the action or intended product consistently fulfills the customer's expectations, buying the same thing is the easier thing to do. It helps the decision-maker avoid having to make another choice. "Every time you buy another unit of the brand in question, you make it easier to do—for which the mind applauds you," according to the same HBR article.  

Knowing the psychology behind "customer loyalty" (or simply, purchasing habits), how can brands simplify the process for the consumer so they don't have to make another choice? 

Building Habits Through Smart Packaging 

"Habit is how we build the connection," says Jørgen Vig Knudstorp, co-chairman of the LEGO Brand Group. Through e-commerce and smart packaging, brands have the perfect opportunity to build those habits.  

With recent advancements in technology, major brands in the food and beverage, consumer packaged goods, consumer health and other sectors are exploring opportunities to develop more meaningful relationships with their consumers. By gathering data and analyzing the behaviors of users, a streamlined consumer journey can be built, in which case following the initial purchase of a product or brand, the first two steps of the customer journey we highlighted earlier could be eliminated. For that to happen, a brand needs to excel in two areas: 1) the value proposition to first attract the customer and, 2) a system where the built habit can be repeated with even more convenience than before. 

When it comes to a customer's choices, any company can benefit by making the "routine choices easier, faster, and more convenient," writes Rita Gunther McGrath, Professor of Management at the Columbia Business School. This is why subscription models succeed in many industries.  

Brands have an opportunity to utilize auto-replenishment to drive this point home. Low-cost sensors and printed electronics can be used to implement a replenishment use case. When embedded in packaging, these digital enablers can track the use of household goods and other essential household items. For example, these technologies can measure liquid levels in a package to determine when replenishment is in order. The consumer benefits directly from this, because they never have to "remember" if they still have enough laundry detergent or body wash for the next load of laundry or shower. Ordering processes can be automated or be presented to the consumer to make the final click to purchase.  

Even if a purchase originates in a brick-and-mortar environment, as people get busier, e-commerce becomes easier and brands get smarter, auto-replenishment models provide the opportunity to convert the physical sale to future e-commerce purchases. And that's the sweet smell of recurring revenue.  


 

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