• by Matthew Leach , Columnist, November 16, 2017

Change in the consumer packaged goods industry today comes in the form of four key challenges that are impacting every brand in every market:

• Blurring Lines Between CPG Firms and Retailers 

• Personalization and Customization of Products 

• Desire for Experiences over Products 

• Need on Authenticity and Connection to Brands

The tie that binds each of these market trends is customer-centricity. As CPG firms strive to remake themselves in the face of these challenges, they will (or have already) start down the path of digital transformation to reinvent their existing business models to take advantage of new solutions and technology enabled opportunities. This journey must be led by insights into the customer experience or else CPGs risk not realizing the desired outcomes. 

The winners of the digital economy will be the companies who can leverage a detailed understanding of customer experience and use that information to drive transformation from the customer’s perspective. By quantifying customer experience, CPG companies would be able to implement exact measures to enhance strengths and improve weaknesses, positioning them to conquer the four challenges facing their industry with customer-centric business solutions. 

In a recent study, “Friction Challenges for the Consumer Packaged Goods Industry,” researchers analyzed 15 top-tier CPG firms, including Nestle S.A., ConAgra Foods, and Coca-Cola. 

The findings examined brand performance across the five categories of process, technology, knowledge, engagement and ecosystem friction. In this case, friction was defined as any instance where contact with a customer depreciates their experience, such as wait time, incorrect product information or websites not responsively designed for mobile devices. Research found the process, technology and knowledge categories had high friction for the evaluated companies. 

Process Friction

Process friction occurs when customers are asked to complete more tasks, such as inserting information or choosing preferences, than necessary to accomplish their goal. The CPG firms with the highest process scores averaged 55% more steps for customers to complete their goals, when compared to their peers. Process friction represented 32% of overall customer experience scores among the 15 companies. 

Putting barriers such as extra process steps or decisions will drive customers who put a premium on experience away from their current channels of engagement to competitors. When companies can lessen online distractions and unnecessary customer actions through comprehensive assessments of their processes and associated technical solutions friction, business will be able to reduce the demands placed on the customer and in turn increase conversion rates. 

Technology Friction

The assessment found 21% of friction occurs from technical architecture errors and customer complaints, such as, lagging sites with confusing navigation, unhelpful search results or frequently occurring page refreshes. 

To resolve technology friction, companies need use an evaluation of the customer journey to influence user experience improve technical architecture by focusing on how and why the customer chooses to engage via an online or any other channel. By focusing on core goals and transactions, the technology process can remove additional noise from the customer journey regardless of whether that customer comes to a brick-and-mortar location or through Alexa. 

Knowledge Friction

Marketers are no strangers to the need to employ clear, concise messages to help customers positively connect with a brand. When these messages are unclear, friction will occur. The recent study of the CPG industry found that 16% of friction for CPG companies is derived from knowledge friction. 

Marketers are no strangers to the need to employ clear, concise messages to help customers positively connect with a brand. When these messages are unclear, friction will occur. The recent study of the CPG industry found that 16% of friction for CPG companies is derived from knowledge friction. 

Personalization of products and experience is the holy grail of customer knowledge. To lessen knowledge friction and better meet the demands of their customers, marketers should look to provide meaningful engagement with customizations driven by knowledge of a customer and their preferences. In doing so, the brand’s intent will become clearer, enabling customers to feel more familiar and do more with the company, ultimately driving increase engagement and revenue.

Creating a Frictionless Experience

Using the CFF’s capability to identify specific points of customer friction, CPG marketers are now better equipped to partner with CIOs to tackle the challenge for customer-centric digital transformation and take responsibility for the customer’s end-to-end experience. If a company can reduce friction in customers’ journey, it will create a competitive advantage that improves business outcomes

The CPG companies studied that had the lowest amount of customer friction were better positioned to turn their capital expenses into growth, with an average 31% greater asset turnover and were more profitable with a 13% higher gross margin. With less customer friction, companies will build a better brand experience for customers that leads to loyalty and an increase in profitability.