CPGers Need to Link Digitally With Stores First, Then Consumers
Sales executives may hold the true keys to multichannel success on a mass scale, says a new Forrester study.
Before consumer packaged goods (CPG) companies can succeed in multichannel engagements with shoppers, they must first develop the capability to collaborate digitally with retailers and distributors. Marketing executives need to consult their colleagues in sales, who better realize that a failure to do so will derail efforts to deliver on consumer expectations.
This is the principal finding of a Forrester Research survey of 56 CPG heads of sales and 75 account-level sales executives worldwide. The study, which was commissioned by Accenture, learned that a high logistical cost must be paid to reap the benefits of multichannel marketing at scale.
Future gains in sales and market share will largely be fueled by emerging markets reached via digital means, sales chief said. But more than half of them said that the costs of establishing distribution, developing new products, and fulfilling orders posed major impediments to that growth.
Furthermore, top sales executives are high on the prospects of direct-selling to shoppers via digital channels. Again, a majority of them said such sales would yield a 6-10% savings in both production costs and trade funds. Yet only 16% said their companies used online channels to maintain relationships with consumers in-store and out-of-store, and just 30% said digital means drove order and delivery operations with retail customers.
“What we believe is that some of the best practices in the store have to be transferred to the digital arena and vice versa,” says Koen Van Bockstaele, a managing director in Accenture's consumer goods practice.“Take what you do to increase sales in a physical world and apply those best practices in a multichannel way.”
One of those best practices is quick delivery of goods. Out-of-stocks kill in-store promotions, and the same goes for digital appeals. Three-quarters of sales execs said that facilitating a purchase in just one or two clicks is essential to converting sales and securing market share.“Say you're in a restaurant and you want to buy a bottle of the wine you're drinking. If you can't get on your phone and find it and make a purchase in a few clicks—either direct from the maker, from a store, or from a third party—you've lost the sale,” says Van Bockstaele. “You have to have the fulfillment to make the digital engagement successful.”
It turns out that CPG sales honchos, most of whose business lives have been measured out in cases delivered to retail warehouses, are bullish on the prospects of digital channels. Nearly nine out of 10 chief sales executives surveyed agreed that selling via digital means increases the likelihood of getting consumers to trade up, and almost eight out of 10 thought direct-to-consumer digital engagement would raise average order sizes in stores.
It might be wise for large CPG companies the likes of Procter & Gamble, Unilever, and Kraft to take promotion strategies that have been successful in-store and extend them digitally. “People still want to hunt for the bargain. They want the promotion,” he says. “We're seeing more and more examples of CPGs engaging digitally with shoppers when they're in the buying process in stores.”
A favorite recent example of Van Bockstaele's is one in which a European company employed a common percentage-off promotion to coax shoppers into its mall stores. When a user of its app was located inside the mall via GPS, she was served a timed offer that started at 100% and ticked down as she rushed to the store to redeem the offer.