Everyone Needs an Alice (Part I)

aliceWill consumers habitually buy and replenish non-perishable food, household cleaning and HBA items online, en masse?  That’s the question the founders of Alice.com asked themselves when thinking through their business model.  I think the answer is definitely maybe.

It all comes down to assortment, convenience and price.  Fulfill these three wishes and a segment of the population will happily work with Alice.com as their go-to source for non-perishables.  I honestly can’t see my parents (mid to late 60s) using this service, nor my sister (married w/ 2 kids, but traditional bricks retail shopper) logging onto Alice to reorder some Tide laundry detergent.

But my household (and hundreds of thousands of households like mine) could be all over this.  For example, just last weekend we ran out of diapers for our 6 month old.  Late on Saturday night we placed an order for Pampers diapers and Pampers Sensitive wipes on Diapers.com.  What a pleasant suprise to see the Diapers.com delivery box sitting on our doorstep first thing Monday morning as I left for work.  Talk about convenience.  And it’s tough to beat the price of diapers on Diapers.com.   The assortment of products is good too.  The service works well, is cost-effective and allows us to try new items when we want to.

But how can Alice.com support free shipping for relatively low ticket items?  That’s where the CPG marketer value proposition comes into play.  Reality is that CPGs like P&G aren’t banking on channels like Alice.com to drive big volume today.  The real near-term power of this channel is to establish direct connections with consumers and, more importantly, drive a deeper level of shopper insight.  Behind the scenes of Alice.com, I’d suspect, is a pretty sophisticated set of shopper behavior engines that mine deep, detailed consumer insights and reports.  At scale, these insights could be pretty valuable to big CPG brands to better understand shopper behavior and propensity to buy through a new channel of distribution.  For this insight, consumer products manufacturers may happily subsidize the “free shipping” offer that is so attractive on Alice.com

Should be interesting to see how this service does – both in terms of consumer adoption and CPG advertiser support!

Jim Stengel Act II

I’ve always admired Jim Stengel, former Global Marketing Officer from Procter & Gamble.  His focus on connecting with consumers is central to just about every message he shares with CPG marketers and agencies.  It’s a consistent and powerful statement for sure.

Jim recently gave a great interview with Brandweek and not surprisingly he remains busy consulting, keeping healthy, and working on a new book titled “Packaged Good”.  This should be a great read when it hits the press next year.

Social media app for bathrooms…courtesy of Charmin

offers_sitorsquat_featureThis is a clever little application that I can actually see providing value to busy families on the go.  A recent writeup references an iPhone app and BlackBerry app are also available for added convenience.  This quote from the Charmin brand manager pretty much sums up the strategy for sitorsquat.com:

“Our goal is to connect Charmin with innovative conversations and solutions as a brand that understands the importance of bringing the best bathroom experience to consumers, even when they’re away from home,” says Jacques Hagopian, brand manager for Charmin.


Making Points-Based Rewards Programs Really Work

pitcrewI’ll come right out and say that I am an avid supporter of points-based rewards programs for CPG brands.  If planned and executed properly, rewards program can reach your most valuable consumers and measurably drive incremental volume.  At SoftCoin, we designed and implemented a number of highly successful rewards programs for Welch’s, NASCAR, Nestle, DPSG, P&G and others.  These programs were engaging, reached a mass market audience, and were rich with data and insights.

But for any CPG marketer pondering a points program, there are three things you’ll want to make sure you really get right: optimizing purchase validation, assembling a solid rewards catalog and mining the database.

The most scalable method to validate purchase is via secure, on-pack alphanumeric codes.  Sure, there is an up-front capital investment in equipment to apply the codes (~$25k to $100k) and there will likely be a short-term disruption to the production line, but this is really the way to do it.  The MyCokeRewards program has been using secure on-pack codes for 3+ years now, so the business case exists.  Other methods include tracking purchases through a store club card (doesn’t scale beyond that one retailer) or via credit card data (bad if you are strong in C-store distribution given the bias toward cash transactions).  And whatever you do, don’t digress with mail-in UPC code redemption.

The rewards catalog must be relevant and compelling to get your best consumers excited about participating.  There should be a mix of digital asset rewards (music, special content) and some cool aspirational prizes.  There should also be enough redemption opportunities to keep consumers engaged, without breaking the bank so to speak.  NASCAR offered a highly coveted “pit crew captain for a day” reward that money simply can’t buy along with a number of other lower level digital assets.  Talk about resonating with a core audience and really driving consumption.

Finally, solid analytics and segmentation are essential to getting the most out of these programs and driving the right behaviors.   Big CPG points programs can easily attract 2 million+ unique / authenticated consumers, so expect to see a broad array of behaviors.  A core set of heavy users (as measured by code entries and/or self-reported survey response), will sit alongside a  long tail of single code entry consumers.  Developing the right analytical framework to reward heavy consumers for their loyalty and encourage casual consumers to buy more is essential.  Brandweek recently highlighted that loyalty program participants are 70% more likely to actively recommend a product, so segmenting and supporting the brand champions is key.

Web-based loyalty programs are excellent vehicles for CPG brands to drive, measure and reward consumer behavior.  If designed properly, these programs can deliver profitable results.  Just pay attention to these three key areas before moving too far down the path of execution.

TPMA Virtual Forum Hosted on Second Life

virtual_cokeOn Feb 3, I will appear on a virtual panel hosted on Second Life titled “Positioning Your Trade Promotion Program for Economic Challenges” .  The event and panel is organized by TPMA (Trade Promotion Management Associates) and will feature many of my industry peers from Oracle, SAP, Booz & Company, Information Resources and more.

This should be interesting and fun on many levels.  TPMA is touting this as the first virtual event of its kind in the industry, so it’s a bit unclear right now how many folks will take the time to register and attend.   But with corporate belt tightening and travel restrictions in full force, events like this make it easy for industry professionals to stay connected without ever leaving the office.

On a related note, Second Life and related virtual worlds have started to attract marketing investment from big brand advertisers including Coca Cola and Procter & Gamble.  Use cases range from product concept testing, virtual focus groups and more.   I’ll explore this marketing vehicle in a separate blog post as I learn more.

Cracking the code on word-of-mouth marketing

At an industry conference last year I saw a fantastic live keynote presentation on buzz marketing from Steve Knox, CEO of P&G’s Tremor division.  Steve’s keynote highlighted the emergence (and critical importance) of word-of-mouth marketing in the CPG sector, and how brand franchises are benefiting from a groundswell of loyal consumers who behave as self-appointed ambassadors.

These “connectors”, as Steve calls them, form the fabric of word-of-mouth and social media in general.  These are the folks that tend to be early adopters (but not always), have distributed groups of friends and acquaintances, and just generally like to be heard.  The key message that Tremor has for brand marketers is to identify these connectors and nurture real relationships with them.   From there, good things will happen. Sounds easy to do, but there is clearly a lot more to it than that.

But once you do identify the right group of connectors, how do you forge meaningful relationships?  Bring them into the product development process.  Let them have a real say on which line extensions, flavors, colors, varieties and form-factors are on the roadmap.  Let them be the first on their blocks (and in their social networks) to try a product pre-launch.  Allow them to critique advertising.  Communicate with these folks often and early, and they will pay you back many times over.

One of the key take aways that Steve shared with the audience has stuck with me.  It was something to the effect of: “Don’t confuse word-of-mouth marketing with the internet.  The internet can be an enabler to this discipline, but is not a requirement.”  Great advice from someone who is clearly deep in the trenches.

On an interesting side note, it’s important to recognize that Tremor serves not just P&G’s portfolio brands, but also brands from non-competitive CPG organizations.  The Tremor business website highlights customers from Hershey’s, Del Monte, Ford, Kellogg’s and more.  Good news travels fast.

Keeping brands on course in a down economy

2008cornLike all good marketers ought to do, I wrote the obligatory contributed story on what this challenging economy means for CPG brand health.  Specifically, my call to action was to apply more rigor and science to the trade promotion planning process.  Doing so is both good brand hygiene and also a likely long-term competitive hedge against private label.  You can find the published story on the Journal of Trading Partner Practices website.

On a side note, as this story went to press commodity food ingredient costs started to tumble back to reality after unprecedented gains in the first half of 2008.  But the same rationale for a better planning process still applies, even in a highly volatile cost environment.  The price hikes that P&G, ConAgra and Kraft were all forced to make in the first half of the year have yielded price decrease decisions that require the same analytical rigor.