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Putting On The Dog

June 18, 2007 | by ELAINE APPLETON GRANT
Large Business, Loyalty
 

Once upon a time, consumer packaged goods marketers dismissed rewards programs as impractical. These days, though, CPG companies such as pet food mainstay Purina are making sure that loyalty pays.

All right. I admit it. Being over the top about my two cats and my dog, I joined a pet food company’s “snack lover’s club.” On the company’s micro-site, I can, gee, read my pets’ horoscopes (really) or send in a darn cute story about how Peanut won’t go to bed until I’ve given her a tuna fish treat. Yumm. Plus, the company will e-mail me coupons for Grover’s favorite biscuits. But do I really want more e-mail – even one that tells me that with Aquarius rising, today might be the day when Grover will get a whole new outlook on life, and here’s 50 cents off some doggy beef jerky to help?

So I’m skeptical about what an online pet food club will do for my life. What I’m not doubtful about is the enthusiasm with which consumer packaged goods (CPG) companies like this one are experimenting with loyalty marketing programs.

CPG companies have been among the last companies to adopt rewards techniques, in large part because the obstacles, until now, were seemingly insurmountable. While plenty of top-flight CPG marketers certainly do know their customers, many of their industry comrades remain in the dark and, because of low margins, can’t afford to build one-on-one relationships with consumers. But as relationship technology improves and gets cheaper, it’s allowing even those CPG vendors who may be behind the times to try to make formerly invisible customers visible.

As most marketers know, point-of-sale systems are now sophisticated enough to allow retailers to track customer purchases, which allows them to build comprehensive profiles of customer behavior and even to do predictive modeling. Using this information, CPG marketers can build social networking sites that target market segments, send personalized direct mail and e-mail and offer individualized incentives to slices of their markets. Thus, it’s now possible for virtually all companies to join the loyalty party.

As a result, CPG rewards programs are springing up daily. Purina, for instance, has built a rich program for pet breeders called Purina Pro Club. Huggies has an interactive, educational online community called the Huggies Baby Network for moms who are expecting their first baby or those who are in the midst of raising children. With various companies, consumers can sign up for soda rewards, design a new beverage can online, join a society of whiskey aficionados or exacerbate their coffee nerdness with a coffee lovers’ club.

Certain CPG loyalty efforts have a better chance of succeeding than others, suggests Kelly Hlavinka, senior director of Colloquy, which consults on loyalty marketing efforts. She separates CPG products into two categories – higher-ticket, higher-involvement products, like diapers and dog food, and lower-margin, lower-involvement products, like soda and butter. Other than price, the primary difference between the two categories is that companies marketing higher-involvement products can identify specific market segments that care deeply about their products, are likely to stay with the brand and may want to interact not just with the company but with other customers.

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Large Business, Loyalty
 
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