Beyond the Aisle: Where Consumer Packaged Goods Brands Meet Technology to Drive Business Results potx

Beyond the Aisle: Where Consumer Packaged Goods Brands Meet Technology to Drive Business Results
Tim Ross
Published by SolutionSet at Smashwords
Copyright © 2012 Tim Ross
Smashwords Edition, License Notes
Thank you for downloading this free ebook. Although this is a free book, it remains the copyrighted property of the author,
and may not be reproduced, copied and distributed for commercial or non-commercial purposes. If you enjoyed this book,
please encourage your friends to download their own copy at Smashwords.com, where they can also discover other
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Beyond the Aisle:
Where Consumer Packaged Goods Brands Meet Technology to Drive Business Results
Dedication
To Gloria, Maddie, and Allie who make everything in my life better
Acknowledgements
I would like to thank a number of people without whom this book would not be possible.

HMI’ers Zain Raj, Paul Kramer, and Peter Cloutier taught me about the CPG business and the
marketing problems web, mobile and social technologies could solve.

SolutionSet’ers Alex Kaplinsky, Frank Anan, Robert Balmaseda, Dave Kilimnik, Adam Trissel, and
Dessy Stanley who are great partners and even better people.

Chapter co-authors Joe Robinson, Stacey Rubin, Peter Cloutier, and Paul Kramer, who gave key
insights and applications across strategic domains.

Amy Westervelt, who for years has made me appear far smarter and more productive than I truly am.

My friends and family from whom I steal many of my best ideas.
Table of Contents
Preface
Chapter 1: Market Shifts

Chapter 2: Understanding the Digital Consumer
Chapter 3: Understanding Digital Marketing
Chapter 4: The Benefits of Building Active Customer Communities
Chapter 5: Mobile Tech and Capturing the Always-On Shopper
Chapter 6: Building Customer Loyalty Through Gamification, Interactive
Marketing and Rewards Programs
Chapter 7: Turning Video into Value
Chapter 8: Leveraging Video Analytics to Improve Everything from Customer
Service to Visual Merchandising
Chapter 9: Using Web CMS to Manage Not Just Content, but Brands
Chapter 10: Digital May Be Different, but Content Is Still King
Preface
In 2012, SolutionSet, the second largest independent marketing service agency in North America and
D.L. Ryan Companies, the nation’s largest independent digital, shopper, and promotional marketing
agency, merged to form Hyper Marketing Incorporated (HMI). That merger didn’t just create one giant
integrated marketing services company, it also brought together some key pieces of the digital
marketing puzzle for consumer packaged goods (CPG) companies. With DL Ryan’s long history of
working with CPG brands and SolutionSet’s experience using technology to change brands, we
quickly realized we could help transform the way CPG companies leverage technology.
Over the course of several months we brought our best thinkers together to look at all the different
aspects of digital for CPG companies—from how they might use web systems and mobile
technologies to how such strategies as gamification could help CPG companies build their brands
and solidify their relationships with consumers.
Those conversations led to a series of tips and articles and ultimately to this ebook, which we
envision as a quick and easy primer on digital marketing for CPG companies. Enjoy!
Chapter 1: Market Shifts
Ten years ago, consumer packaged goods (CPG) companies had very little direct interaction with
their customers. They dealt with distributors and retailers, and they had a corporate marketing team in
place to tend to the company’s brand more generally, but the day-to-day relationship with consumers
was left largely to retailers. And that relationship was mostly managed in person. Shoppers would

head to the grocery store, coupons in hand, and browse for what they wanted. While there, they
might happen across an end-cap display showcasing a two-for-one deal or someone handing out
samples of some kind.
Those days are largely gone. Digital technology—particularly mobile and social technology—has
transformed the consumer experience in every industry. For CPG companies that means not only
learning how to sell to consumers online, but also playing a bit of catch-up when it comes to digital
marketing. It also means a wealth of new opportunities to reach and sell to customers. Online CPG
sales were projected to reach $16 billion by 2012, according to Nielsen, up from $12 billion in 2010.
Though that’s still just a fraction of the $475 billion total predicted value of the CPG market, it’s
nonetheless a growing segment worth courting.
The key to tapping into those consumers, and to the potential of digital more generally, lies in
understanding how consumers have changed over the past several years and how marketing needs
to evolve to deal with that change.
First there was the initial shift to digital when people realized that it was easier to order things like
giant bags of dog food online and have them delivered, rather than lugging them home from a store.
Today, it goes far beyond that. Consumers can use their smart phones to find out where each piece
of produce in the grocery store came from or search for particular coupons while they shop.
According to Nielsen, the web is the fastest-growing CPG sales channel, with more than 10% of
some categories’ sales occurring online. Although CPG companies have mostly caught up with the e-
commerce side of things, many still lag behind when it comes to understanding how to market to
digital consumers.
Chapter 2: Understanding the Digital Consumer
It’s not just the distribution channel that has changed. Customers and their whole approach to
consumption have changed. Over the past decade, the way customers move through the purchasing
process for any type of product or service has fundamentally shifted. Consumers have become
increasingly suspicious of “push” marketing techniques—placing information in front of people in
order to influence purchasing decisions—opting instead to “pull” in their own information. Today’s
consumers turn more often to friends and family for advice on what to buy than a company’s website
or ad campaign.
In its 2010 study, “The Consumer Decision Journey,” consulting firm McKinsey posited that the

traditional way of thinking about how customers make purchasing decisions—typically represented by
a funnel, with consumers narrowing their decisions down over time as they are influenced by various
factors—no longer bears any resemblance to the way customers make decisions. The firm’s analysts
found that consumers no longer move neatly and linearly toward a purchase. At any given point, most
people are only aware of a handful of brands in a given product space. However, once they decide to
purchase a particular type of product—a TV, say, or a smart phone—they set about researching that
category, asking friends and relatives, reading consumer and media reviews online, and (less
frequently) paying attention to ads in the space.
CPG companies that understand this new customer—and meet them where they’re at—stand to gain
substantial market share. Those that don’t will spend the next several years looking over their
shoulders at Amazon. Not only is the e-tailer setting up regional distribution centers all over the
country, but it also bought Diapers.com and Soap.com in 2011, and it has been hinting at taking a
bite out of the grocery industry.
Customers “pull” more information these days because there’s plenty of it available and more than
half the planet now has access to it. There is no end to sources of relatively unbiased information,
from the running commentaries of friends on social media sites to crowd-sourced product reviews to
plain old word-of-mouth suggestions. Not only have consumers become quite good at finding the
information they’re looking for, but they can do so anywhere and any time. According to recent Pew
research, nearly half of all Americans are smart phone users. And according to the latest comScore
report, four out of five of those 85.9 million people use their smart phones to research and make retail
purchases.
Thanks to the proliferation of DVRs and streaming video sites, it’s becoming easier for consumers to
avoid “push” messages. Consumers have always been able to avoid being influenced by web ads. As
mobile ads increasingly geo-target consumers and serve up more relevant content, they are proving
more effective than standard web ads. However, their peers still influence consumers more than any
campaign, no matter how personalized.
Then there’s the public’s widespread mistrust of advertising in general. A Forrester Research survey
found that between 2002 and 2004 alone, there was a 40% drop in the number of respondents who
agreed that ads were a good way to learn about new products. There was also a 59% drop in the
number of respondents who had bought products because of ads, and a 49% drop in the number of

respondents who said they found ads entertaining.
The thing about social networks—both digital and physical—is that they constantly influence
consumers. Unlike the traditional advertising paradigm, wherein the natural campaign “end” is a
purchase, in today’s digital world, companies need to ensure customer satisfaction long after the
purchase date or face the dip in sales that could come if customer complaints start cropping up on
Twitter and Facebook. No company wants a hashtag that marries its name with the word “sucks” to
start trending on Twitter.
So there’s the availability of information, consumers’ ability to avoid advertising, their general mistrust
of advertising, and the communal nature of the web, which lends itself to constant social influence.
When you throw technological innovation into that mix—in the form of apps that tie products,
information, and your Facebook page together, for example—it doesn’t take long for the masses to
take it and run with it.
In the past, CPG brands focused the bulk of their marketing efforts on in-store promotions and
coupons. When they began to use digital channels to reach customers, CPG companies tended to
cling to similar strategies, simply making them slightly more digital—coupons on a brand’s website or
a push alert to consumers’ phones about a two-for-one offer. CPG brands must start looking beyond
the in-store experience and begin thinking about how to interact with their customers everywhere—at
home, online, in-store, on devices, and on review and social media sites where customers might
share their product experiences with others. It’s no longer enough to release the occasional coupon
on a brand’s Facebook page. Although such activities are worth pursuing, they’re the low-hanging
fruit of digital marketing for CPG brands. Consumers expect at least that much, but to truly
differentiate themselves, CPG brands need to do more. They need to connect with consumers on
multiple levels by providing content and tools that are applicable to their daily lives.
Gluten Freely, a site recently launched by General Mills, is a great example. The site is content-rich
with plenty of info and tips on gluten-free diets, not just product information. By providing an easy
portal for gluten-free consumers, General Mills has not only connected with a new market segment,
but it has also created a great way to keep tabs on what sorts of products this segment is looking for
—both by tracking what customers search for on the site and by providing easy ways to post
questions and comments.
ConAgra’s “Give Every Night New Flavor” program, launched in conjunction with several retailers, is

another good model. The company created a microsite, which offered recipes and all the products
needed to prepare them, built in-store displays that showcased the recipes, provided digital coupons,
and advertised both online and in print. The program delivered double-digit growth in units, dollars,
and profit over the prior year.
Both programs highlight the importance of every part of the customer journey for CPG marketers,
beyond the initial interaction or the point of sale. CPG marketing needs to happen all the time now,
not just in the aisles. It also needs to provide real value to consumers, not just more ads to ignore.
Marketers can no longer post the occasional digital coupon on their brand’s Facebook page, create a
viral video, and call it a digital marketing strategy. Although the idea of completely rethinking how
marketing is done may seem daunting at first, we’ve boiled it down to two fundamental changes: CPG
marketers need to re-think how customer value is calculated, and they need to start thinking more like
product managers.
Chapter 3: Understanding Digital Marketing
The traditional Lifetime Value Formula (LTV)—used for the past several decades to figure out
marketing budgets—is being upended by the shift in how companies and customers interact. The
Lifetime Value formula predicts the net profit attributable to a company’s entire relationship with a
customer. The math is complicated; it takes into account churn rates and retention rates, retention
costs, contribution margins, and time period. Traditionally, if the cost of acquiring customers is lower
than the LTV of those customers, marketers got the go-ahead to spend more on campaigns aimed at
finding new customers.
Today, that’s not always a good strategy. Ideas about Customer Lifetime Value and Customer
Acquisition Costs need to change because the markets they describe and predict are changing.
Customers don’t want to be bought, they want to be wooed. They still seek immediate gratification to
a certain extent, but they’re much more concerned about identifying with a brand and its values than
they were in the past.
Beyond that, consumers don’t want to hear about a product or service from the company that sells it.
They want recommendations from their trusted friends and family. Study after study has shown that
word-of-mouth marketing—while slower to pay off—delivers nearly twice as much long-term customer
value to companies as advertising does.
Word-of-mouth marketing is particularly crucial in new markets. A 2010 study by McKinsey found that

although advertising and previous product usage continued to be the primary drivers of consideration
in mature product markets, word-of-mouth was the most important factor at every stage of
consideration in new markets.
The thinking around word-of-mouth needs an update, too. Traditionally viewed as low-cost advertising
with a high return, it could perhaps be better described as high-cost brand building with a high, long-
term return. Companies could spend quite a bit of money creating apps, tools, and customer service
programs that their audience view as cool enough to share with their friends and family or to tweet
about. But because all of those investments have a long shelf life, unlike a month-long ad campaign,
they will continue to generate returns for years. They are also likely to deliver ongoing word-of-mouth
returns, which traditional marketing formulas don’t account for.
There’s an additional shift underway, not just away from marketing’s obsession with new customers
and toward building long-term brand loyalty, but also toward baking that eventual loyalty into a
company’s acquisition strategy from the beginning. Companies that are able to turn marketing efforts
into content or tools that are of real value to their customers will typically build a customer base that is
loyal for life rather than acquiring the one-off customers drawn by catchy ad campaigns.
Even the idea of a viral video, once considered the Holy Grail of marketing, has gone the way of the
dodo. Sure, that Old Spice video got millions of views on YouTube, and maybe Old Spice increased
sales for a period of time. Maybe it even nabbed some younger customers this year. But a clever
video doesn’t provide real value or guarantee long-term loyalty.
Focusing on the customer experience isn’t just about building a brand or finding and engaging
customers, it’s a way to ensure that the customers you acquire will be more valuable (better)
customers over the long haul, and that they will be customers who continue to help spread the word
to other potential customers.
Product-Oriented Thinking
If marketing is fundamentally changing, then marketers need to evolve to keep up or risk becoming
irrelevant. In a 2011 survey of 600 global CEOs conducted by London-based Fournaise Marketing
Group, 73% of them said that CMOs lack business credibility and the ability to generate sufficient
business growth, 72% are tired of being asked for money without an explanation of how it will
generate increased business, and 77% have had it with all the talk about brand equity that can’t be
linked to actual firm equity or any other recognized financial metric.

Part of the problem is that many marketers have lost touch with what customers really want.
Consumers want companies to show them the value of a product, not a cool concept vaguely related
to the product. To the extent that marketers can make marketing about adding value to a product,
they will capture the attention of consumers.
Marketers must identify gaps to fill in parts of the experience chain that their competitors are missing.
To be effective in today’s market, they need to develop digital tools and experiences that extend and
enhance their brands. In other words, they need to be product managers as well.
Part of being a good product manager and a great marketer is building a cross-functional team. It
used to be that a marketing VP could go to an ad agency, commission a creative campaign, and
worry about tacking it on to the website later. Today, marketers who want to incorporate digital tools
into their strategies are going to have to get a lot more comfortable with technology. Adding
technologists to the team is a great place to start, but creating good digital marketing tools requires
thinking about technology all along the way, even in the initial brainstorming sessions. At SolutionSet,
we put technology and creative on the same team from the beginning. We developed a process that
allowed both to thrive and eliminated wasteful spending on concepts that wouldn’t work technically as
well as technical bells and whistles that didn’t deliver customer value.
SolutionSet’s Creative Tech Process
For marketers to embrace a product management-style process, they need to shift their thinking in
three key areas:
Bring Technology and Creative Together
The right team for a digital marketing product includes top-level technologists who are involved in the
process from the beginning. Make sure you have your tech folks at the table vetting technology
solutions early on, and ensuring that your concept will either work with things you’ve done before or
with tools that they have experience using. Too often people wait until the visual and conceptual
designs of a marketing product are finished before testing its feasibility from a technology
perspective. Not only can starting with the technology question help you avoid problems down the
road, it can actually help to inform creative as well. Many of the apps out there already incorporate
good thinking—playing around with them as a team early on can help lead to great new ideas.
Adopt a Phased Approach
Plan for iterations. In the digital world, the launch date is no longer the end-date of a marketing plan.

Marketers need to think about things in terms of phases and creating sustained impact.
Plan for Technology Costs
Many of the big agencies tend to maximize the creative budget and minimize the technology budget.
This type of cost planning no longer works. Concepts need to come quickly, and creative is one piece
of that. But generally when you’re building marketing apps or products, the biggest expense is the
technology. Companies and agencies need to start planning accordingly. There’s a cultural bias in
agencies to always underestimate technology and never understand why you can’t do it cheaply.
They’ll say this tech shop says it costs $400,000 to build this thing, but from what I understand this
app and that app can do those things, so why don’t we just use those? The problem with that sort of
thinking is that you end up with high-end creative on low-end, poorly functioning technology, which
ultimately amounts to a failed marketing initiative.
But it’s not just the process that has changed. And it’s not simply a question of marketers needing to
get familiar with new platforms. That would be easy. It’s about a fundamental change in how
consumers operate, which necessitates a new approach to marketing. It’s no longer about telling a
story or communicating some particular brand attribute to the customer. It’s about figuring out what
would make the customer’s experience of your brand or product better and creating a digital tool that
does that.
Clark Kokich, chairman of digital agency Razorfish has talked about this a fair amount as well, noting
that the education and experience of most high-level marketers has little to do with the way markets
function today. “I have friends who have told me they’re just trying to hang on before people realize
they don’t know what they’re doing,” he said in a recent Forbes interview. “But I don’t think you can
fake it another five years. You’re just not relevant if you’re fighting the reality of what’s happening.”
Four Key Digital Marketing Strategies for CPG Companies
We’re not the only ones who noticed the trend toward digital products in marketing. Kokich describes
the current shift as being a move away from campaigns and toward relationship building. “It’s less
about advertising and more about creating an experience that transforms what it means to be a
customer of a brand,” he says. “And that change has really caused a lot of consternation in marketing
because none of us were trained to do that.”
Method’s Kevin Farnham says he started to see it about a decade ago as well, and his firm made a
concerted effort to shape the work they do toward digital products and services rather than standard

campaigns. “We used to collaborate with ad agencies on the digital side back when they weren’t very
good at it—now they’re better,” he says. “But at one point we had to make a hard stop and say we
don’t want to do this any more, even though we have the skills and can make money doing it. It was a
hard decision to make as a services agency, but we had decided that one of the core philosophies of
our company was that we wanted to shape products and services rather than the messaging around
them.”
Whether marketers are prepared or not, the companies they work for are embracing this shift as well,
earmarking more of the marketing budget for digital products than ever before. According to a recent
Gartner study, by 2017 chief marketing officers (CMOs) will be responsible for more technology
spending than chief information officers (CIOs). And a report by the Path to Purchase Institute notes
that about 71% of marketing executives at CPG firms expect to see an increase in their budget for
digital promotions and 35.6% see the most potential in mobile coupons.
Fortunately, this transformation is not all doom and gloom for marketers, nor is it about learning how
to cook up and execute digital products simply because everyone else is doing it. Customer
Experience Apps are a useful tool for marketers as well. They tend to deliver far more information
about a company’s customers than a one-off campaign, they’re ongoing and can be continuously
improved, and, when done right, they deliver meaningful long-term benefits.
1. High-value Relationships
According to Nielsen, digitally engaged shoppers are more valuable to brands and retailers. Not only
does online engagement lead to a more positive association with that brand, but we’re now seeing a
connection between activity on a brand’s website and purchasing in brick-and-mortar stores. In fact,
according to research from CatapultRPM, visitors to CPG brand websites buy 37% more in retail
stores than those who don’t visit these websites.
Digital tools and content that are seen as useful and valuable to consumers also help companies
build direct relationships with high-value customers. We’re not just talking about people who spend
more money, but so-called “social connectors,” influential consumers who deliver long-term value by
bringing other consumers along with them.
Technology has broadened the reach of those connectors. Whereas a social connector may have
once had influence over 50-odd friends, their influence is now exponentially greater. If just a handful
of these people decide a company’s app is cool, the brand suddenly becomes more visible to

thousands of other potential customers without any additional expenditure or promotional activity on
the company’s part.
2. Consumer Insights
Digital products also provide unprecedented access to consumers’ thoughts, opinions, and behaviors.
Not only are people more willing than ever to share all sorts of information about themselves online,
but any app or microsite will include a database. Companies can splice that data in multiple ways to
understand exactly how to deliver what their customers want.
Pepsi’s new online dashboard, Pepsi Pulse, is a great example. Pulse uses a FlipBoard-style grid to
display the most interesting pop culture news (as ranked by SocialFlow), celebrity Twitter feeds, and
original content.
“Everyone’s hyper-connected at this point, and we want to be at the different touch points that our
consumers are at,” said George Smith, senior manager, social strategy and execution for Pepsi
Beverages.
Smith added that the longer someone interacts with Pepsi online, the more opportunities the
company has to change opinions, glean valuable insights, and strengthen brand loyalty, not to
mention gather valuable statistics about the age, gender, interests, and reactions of consumers. “With
digital, you end up with a lot of extra data, and you end up with a lot more understanding of who your
consumer is,” he said.
That data helps companies market their products better, and it could also help them develop better
digital products. After all, a branded app is only valuable to a company if it’s truly valuable to
consumers. Consumers download an average of 65 apps on their smartphones, but only use a
handful on a daily basis. Marketers have quickly discovered that getting customers to download an
app doesn’t matter much if they never end up using it.
Armed with great information about what their customers want, companies have a much better
chance of creating a valuable app. Walgreens offers an app that is consistently cited as a favorite by
consumers because the drugstore included a digital scanner that makes it extremely easy to submit
prescription refill requests.
3. Customers for Life
While a particular campaign might win over a customer for a short while, an app, tool, or microsite
aimed at improving consumer experience helps companies build solid, ongoing relationships with

customers. It gives them a reason to keep coming back to a company’s site, it keeps the company’s
brand in their view, and it integrates the company into the customer’s life. It also gives customers a
reason to keep talking about the company with their friends. Just think of all those Nike+ running
updates you see on your friends’ Facebook walls.
Companies can further encourage brand loyalty by incorporating ideas such as gamification and
crowdsourcing into online and mobile apps, tools, and content. Interactive marketing through gaming
has become a compelling way to entice customers to continue engaging with brands and products
beyond the purchase point. This concept, gamification, is exactly what it sounds like—using game
principles in a non-game setting, awarding points or rewards based on consumer activity, brand
loyalty, and check-ins. Contests, sweepstakes, and trivia can also be a type of gamification if linked
with a specific brand or product.
From a technology perspective, many companies are “getting in the game.” For example, Foursquare
and other location-based social networks pioneered the check-in badge and programs like Klout
Perks and MyPoints offer a range of rewards based on online traffic, purchasing habits, and brand
interaction on social media. Today, a combination of the two can be used to track consumer habits
and offer applicable rewards.
Platform vendors such as Badgeville and Bunchball provide cloud-based portable gaming across
digital touch points including mobile apps, online communities, and CRM systems. These vendors
have partnered with the likes of General Mills, Danone, and Samsung. Other similar vendors,
including SCVNGR, BigDoor, and CrowdTwist, reward real-world activity paired with online or mobile
activity in the form of points, badges, leaderboards, and currency and goods in the virtual economy,
or even tangible rewards.
To get a sense of how gamification has caught on with consumers, consider that if you lined up all the
FarmVille users side-by-side, the line would reach from New York to San Francisco three and a half
times. Or the fact that the total amount of time the World of Warcraft has been played is 5.93 million
years. A recent Gartner study predicts that by 2014, gamified services for consumer goods marketing
and retention will become as important as Facebook, eBay, or Amazon.
Crowdsourcing is another way to bring customers closer to a company’s brand. When consumers feel
like they have a say in how a company behaves or what types of products it produces, they tend to
become fiercely loyal. In most cases, companies that have built successful apps and tools also build

large and vibrant digital communities in the process. Those communities can be supremely valuable
to marketers in a myriad of ways—from offering product ideas to providing a window into potential
issues to shaping future branding and marketing efforts.
Mountain Dew’s DEWmocracy campaign/community is a prime example. The company asked its
customer community to vote on a potential new flavor. Out of seven initial options, the company
selected the three most popular to further test in the community, asking for applications for taste
testers. The fifty chosen applicants were divided into three groups, depending on which flavor they
preferred. The so-called “Flavor Nations” were charged with naming their flavor, designing the
packaging, and promoting the product. The members of each “Nation” went out their communities to
drum up support for their flavor, earning Mountain Dew thousands of new customers.
The winning flavor (White Out) was billed as “the first soft drink designed by consumers,” which was
interesting enough to gain the brand even more customers. And in the meantime, the campaign also
created 4,000 die-hard Mountain Dew advocates.
Not every piece of customer insight comes via a targeted poll, campaign, or question, of course.
Sometimes it’s just a matter of listening to what your community is talking about.
Once a company has built a relationship between the customer community and the brand, customers
can become truly valuable additions to the product development process. This can be particularly
valuable for small to medium-size businesses that don’t have giant product development
organizations.
Nature’s Path Organic, for example, uses its community to test new ideas and is constantly working
to embed customer feedback into the product development process. “A company our size can
execute on five to ten new ideas a year at best,” Tom Newitt, the company’s director of brand
management and research, has said. “There isn’t a lot of room for error, and it’s vitally important that
we let the consumer chime in on our ideas. We were finding it very hard to get that input consistently
and cost effectively. “
Crowd-sourcing and community building are also key ingredients to making video valuable. When
companies create videos that can be downloaded and remixed by fans and consumers, the
possibilities for viral video exposure grow exponentially. When Cadbury’s 2009 “eyebrow dance”
video came out, a number of spoofs popped up almost immediately. Sometimes, video ideas
originate with the consumer—Tide’s Super Bowl video, featuring a “miracle stain” of Joe Montana,

was actually inspired by a funny fan video
Linking digital products to social media wherever it makes sense helps extend the reach of consumer
experience apps as well. However, the “where it makes sense” bit is really key with social, and it is
another area where many marketers have failed to smoothly transition to digital. Consumers have
already lost patience with unnecessary social media tie-ins. Companies that don’t understand the
subtleties of social media risk alienating more consumers than they attract.
“There’s a place and time where social makes sense and sometimes it just doesn’t,” Method’s Kevin
Farnham says. “Companies are jamming it in everywhere right now because they think social is the
new thing and they need to integrate it into everything—I mean, even car navigation systems have
social tie-ins now—but hopefully some of the more egregious uses of social will go away.”
“Social’s fifteen minutes are over,” he adds. “It’s sort of like when being able to do transactions online
was a big deal and so everyone jumped on it. Social is another core underlying functionality and
companies need to figure out where it makes sense and where it doesn’t because people’s
engagement with social that has no value will go away really quickly.”
4. Charging for Marketing
In some cases, companies have hit upon consumer experience gaps that are so perfectly filled by a
digital solution that consumers are willing to pay for what is essentially marketing. Again, Nike+ is a
good example of this. While the app is free, the gear required to make it work is not and in many
cases consumers are buying the gear because the app is cool. Obviously, this isn’t going to happen
for every company. That said, when marketers get into the digital products game, they would be wise
to think in terms of apps people would be willing to pay for.
London-based digital agency Nonsense even posits that to think of branded apps as giveaways is to
misunderstand the nature of apps and how people use them. In general, brands like to make their
apps free. Part of the problem is that the success of an app is generally judged by how often it’s
downloaded, probably because that metric closely mimics page views or Facebook likes, both things
marketers have become comfortable with in recent years. Nonsense argues that downloads are not a
good way to measure success. “It ignores what apps are actually for. Their purpose is not one single
interaction like an ad. The purpose of apps is to provide utility, i.e. be useful in some way in the users’
lives. So, repeated interactions (a.k.a. loyalty) or depth of engagement are better benchmarks of
success for mobile apps. And these can normally be measured.”

If you create an app that has real value for people, charging for it is not only okay, it may actually
underscore the value of the app and further engender customer loyalty. “By adopting a paid-for-utility
mindset when developing apps, brands can ensure their apps are genuinely worthwhile for people,”
Nonsense suggests (and we agree).
By listening to what customers are saying and asking throughout the development process whether
this app or tool is something that is genuinely helping them, brands stand a great chance of producing
not only an app that delivers valuable brand benefits, but also one that consumers would happily pay
for.
Of course, reaching this pinnacle of digital product marketing isn’t easy, but there are some
companies that have managed to do it. In the following chapters, we’ll explore what they’ve done and
provide tips for producing effective consumer experience apps. We’ll also look at some of the
fundamental basics of digital marketing for CPG companies—from how to use web-based content
management systems (CMS) to how to capitalize on mobile opportunities to how to use video, online
communities, and gamification to strengthen relationships with consumers.
Chapter 4: The Benefits of Building Active Customer Communities
Every brand knows it needs some sort of social media strategy, but it’s not enough these days just to
have a Facebook page, Twitter account, and YouTube channel. The CPG companies that are most
successful in linking what they’re doing in social media to tangible results—namely, increased sales—
are often those that have created vibrant online communities. These social sites live within the
company’s larger website. In these brand-specific communities, members talk to each other and to
the company, and the company disseminates various types of content, including how-to videos and
coupons.
Leveraging Customer Communities to Drive Sales
Companies have far greater control over their brands on these proprietary sites and, unlike on third-
party sites, can link these social sites to their ecommerce efforts and existing web sign-on
infrastructure. Building and integrating these communities takes some investment and technical
know-how, but the effort can really pay off. The following are three key ways that CPG companies
can leverage online communities to drive sales:
1. Turn Customers into Salespeople
The best advertisement for your products doesn’t come from you, but from your customers. In some

of the most effective online communities, members actually become salespeople of sorts, selling
other members on the virtues of various products.
A prime example is Sephora’s Beauty Talk community, in which users and Sephora-managed
“experts” share advice on beauty products. Sephora has found that the average Beauty Talk user
stays on the site 2.5 times longer than non-Beauty Talk consumers, and avid community users stay
on 10 times longer than average. By using a single sign-on for both the community and the brand’s
ecommerce site (which is also pegged to an in-store member account), Sephora can easily track the
shopping behaviors of Beauty Talk members. This enables Sephora to target its messaging more
precisely and track various trends within its online community.
Recently the company expanded its community content to include Sephora TV. These online videos
give users detailed how-to guides for various beauty trends, complete with product recommendations
from professional makeup artists. Sephora’s strategy could easily be adopted by any company selling
personal care items
2. Become a Valuable Resource
You can’t just create an online community, link to it from your website and your Facebook page, and
hope customers show up. To create a customer community that will drive sales, you need to provide
content that will attract customers, whether it’s exclusive deals, useful tips, relevant research and
stories, or some combination of all three.
The Pampers Village website is of the latter variety. Launched in 2008, this community forum for
expectant mothers provides a wealth of information about children ranging in age from newborns to
preschoolers. The downloadable app, “Hello Baby,” gives detailed images of a typical baby’s weekly
growth as well as a complete pregnancy calendar. And charitable campaigns, such as the Little
Miracle Mission—which has supplied more than 30,000 care packages to families with babies in
neonatal intensive care units—keep new moms engaged and feeling good about the brand. The site
has a strong commercial aspect as well, with ever-present discounts, rewards, and “buy now” links. It
also suggests relevant products depending on the topic visitors are reading and pushes related
coupons to them.
3. Use Content to Turn Customers into Marketers
Kraft has developed a similarly social site with Recipes.com. Kraft knows moms need quick, easy
recipes, and it has built a community to encourage consumers to use, share, and rate their recipes

and experience with Kraft products. Most moms find the ratings and reviews section to be a real acid
test of both the ingredients and recipes. Was the recipe easy? Did everyone like it? Was there a fun
way to add a new twist? For an example of this audience interaction, check out the site’s Fiesta
Casserole recipe. It has nearly 700 comments, many from consumers suggesting substitutions,
changes, and tips on cooking the recipe.
Kraft isn’t afraid to let consumers run the show. The site welcomes feedback and input, and it hosts a
recipe exchange board, which is actively managed with comments and tips. After Kraft opened up the
site to its audience, consumers started distributing the content on Facebook, Pinterest, and other
social networks. This expands Kraft’s social connectivity, drives SEO, and improves overall brand
credibility, without Kraft having to devote resources to these improvements. Just as importantly for
Kraft, they use the community to learn about consumer needs and cooking trends and develop new
product ideas.
Social communities help you leverage the power of your current users and their shared interest in
your brand. Let them amplify your messages to their friends. Let them suggest answers to typical
user questions. Let them find it easy to “buy now.” Let them add value to your brand experience—you
just need to provide the opportunities and tools.

Turning Your Customer Community into a Valuable Asset
We all know that building customer communities is about more than just racking up “likes” on
Facebook. What do you do with that community once it’s built? How do you continue to engage and
provide value to them? And of course—the Holy Grail—how do you get them to take any action once
they’ve joined the community?
Proprietary communities make the answers to all of these questions slightly easier. After all, they’re
designed with a particular brand or company’s goals in mind, so they are equipped to deliver next-
level community engagement and insight. Still, what do you do with that community once it exists,
other than continuously sell to it, which may immediately alienate some members?
One option is to tap into customer communities for market research and product ideas. Brands can
create “ideation” communities, turning devoted consumers into active focus groups. By engaging
consumers in the development of everything from product design to tag lines, companies create a
virtuous circle that gives consumers a vested interest in the brand and provides product development

teams with customer input.
1. Tap into Tastemakers
By encouraging your creative customers to contribute their ideas, you can improve product design
and marketing, and turn already-passionate customers into rabid, lifelong fans.
Again, Mountain Dew’s DEWmocracy campaign is a great example. Not only did fans help to develop
three potential new flavors, but also the company was able to create new brand loyalists and make its
existent fan base even more devoted to the brand.
The winning flavor (White Out) was billed as “the first soft drink designed by consumers,” which was
interesting enough to help the brand gain additional press as well.
Mountain Dew also recently provided an example of why it can be smart to restrict ideation to
branded social networks only. Its “Dub the Dew” campaign—an attempt to crowdsource a name for a
new flavor—was taken over by trolls who pushed such names as Diabeetus and Sierra Mist to the top
of the list. Note to marketers: There are no guarantees against hacking online, but you can hedge
your bets by starting with a friendly community.
2. Let Your Customers Do Your Marketing
Not every piece of customer insight comes via a targeted poll, campaign, or question. Sometimes it’s
just a matter of listening to what your community is talking about.
Walmart discovered through monitoring comments and conversations in its online community that
moms loved saving money not because it made them feel efficient, but because it made them feel
smart. Armed with this insight, it changed its tagline in 2008 from “Always Low Prices” to “Save
Money. Live Better.”
3. Encourage Customer Feedback
Once you’ve built a relationship between the customer community and the brand, customers can
become truly valuable additions to your product development process. This can be particularly
valuable for small to medium-size businesses that don’t have giant product development teams.
There are new examples of this all the time. In addition to the Mountain Dew and Nature’s Path
Organic examples, Doritos recently launched a campaign to crowd-source new chip flavors. They
ended up with three options, a popular contest, and a renewed sense of consumer excitement around
their brand.
Guest Contributor: How Customer Communities Can Improve Customer Service

by Joe Robinson, President, Catapult RPM
In discussions of how companies can use social media, the unsexy but completely crucial component
of customer service is often forgotten in favor of more exciting topics like ideation and driving sales. In
today’s social media landscape, companies ignore customer service at their peril. A recent study from
Carnegie Mellon University’s Heinz School of Business found that consumers are more likely to
complain about a company on social media than say anything else about its product. The researchers
also discovered that negative customer service feedback on social networks carries more influence
than feedback through other channels.
Rather than going directly to the company, consumers often lodge product and service complaints on
Facebook, Twitter, and lesser-known sites, including ComplaintCommunity, Cofacio, GetSatisfaction,
Amplicate, Vark, and Plebble. And yet, most companies still rely on outdated customer service
models that require consumers to come to them. Companies that don’t search for their customer
complaints on third-party sites, do so at their own peril. RightNow’s latest Customer Experience
Impact report showed that 89% of consumers began doing business with a competitor following a
poor customer experience, and 50% of consumers give a brand only one week to respond to a
question before they stop doing business with them. Despite these risks, companies ignore four out of
five consumer complaints according to the RightNow survey. Moreover, the survey found that a
whopping 86% of consumers were willing to pay more for a product or service if it came with a better
customer service experience.
The following are three ways CPG companies can use online communities to improve customer
service and make consumers feel heard:
1. Embrace Your Brand Experts
Most brands will have one or two loyalists who are not only capable of, but excited about, fielding
other customer questions. Let them! In the tech industry, Microsoft has done an excellent job of
empowering people like “Mr. Excel,” whose site routinely gets more hits than Microsoft’s own Excel
help page. Rather than ignoring or trying to silence Mr. Excel, the company has embraced him,
asking his opinion on support documents and giving him software updates to beta test.
In the CPG realm, Nestlé’s VeryBestBaking.com community is a great example of social customer
service done right. The company’s message boards feature discussions on a wide range of baking
topics, and consumers who are uncertain about how to prepare a particular on-pack cookie recipe

can tap into the wisdom of other visitors to the message board. Active board members love getting to
share their expertise, and newbies appreciate the quick response, which they associate with the
company, even though the person responding is another consumer.
2. Create Digital Tools
Digital tools like live chat can improve the customer service experience and don’t require a huge
investment of resources to implement. Live chat enables companies to respond to customer
questions directly—before, during, and after a purchase. By placing live chat links on every page,
companies make it as easy as possible for consumers to reach them, limiting the need to go outside
the branded website for help or to complain.
CoverGirl.com visitors, for example, can access CoverGirl’s Live Chat Beauty Consultants from every
page of the site and get advice about how to apply the products they have purchased. These
sessions also present an opportunity to promote additional products.
3. Encourage Questions and Feedback on Your Own Site
While every company needs something similar to Best Buy’s “Twelpforce” to field Twitter questions
and respond to complaints, it’s more effective for companies to encourage feedback through their
own social communities. For example, when top UK baby site Kiddicare integrated customer service
into its online community, it saw a 30% reduction in customer calls and a 98% increase in the number
of issues that were resolved during a customer’s first contact with the company. Kiddicare’s site is set
up so that members can easily interact with each other and promote comments and answers that
they like. It doesn’t just provide a message board for questions and complaints, it enables—and
encourages—customer feedback of all sorts.
Joe Robinson is president of one of the largest shopper marketing agencies in the world. Robinson
leads a team of individuals located across the United States and has worked with some of the
country’s largest consumer brands and manufacturers, including Kraft, General Foods, Heineken,
Pillsbury, Campbell’s, HJ Heinz, Pepperidge Farm, Labatt, ConAgra, Hormel, 3M, and Energizer.