Product or Consumer Data: Is There a Clear Winner?
After three conversations, two of which with split points, no clear winner is emerging in terms of Consumer Goods (CG) companies prioritizing investment in product or consumer data. In my conversation with Koen Van Bockstaele, Global Lead Sales and Marketing Transformation for CPG at Accenture, instead of diving into a discussion about which set of data was most important, we started at the beginning: What are CG companies currently striving to achieve?
Koen sees CG companies looking to do three main things to grow and excel in the marketplace:
- Drive global brands
- Focus on local execution
- Take cost out of the system to invest in points 1 & 2
The blend of global brands and local execution is driven by the increasing awareness that consumers and customers around the world are not alike. Koen sees that CG companies are increasingly aiming to transform to a B2ME business model. B2ME, or Business to ME, is a natural progression of how consumers use technologies to engage, evaluate, purchase and use products. It represents a convergence of Sales (including distribution), Marketing and Services functions to drive differentiating experiences and propositions to consumer, customer, and other channel partners. A key characteristic of B2ME is to treat each consumer as an individual across all interaction points, including the ability to interact with consumers to collect data. The data collected can then be used to improve both products and personalization. As my first blog in this series pointed out, insight into consumers should enable CG companies to highlight product attributes attractive to specific individuals.
For those brands that are associated with an experience or represent a lifestyle, Direct to Consumer (DTC) is a growing business model. More commodity-type brands, which will still primarily go through retailers, may need to rely more on closer collaborations with these retailers or other channel partners as discussed in my previous blogs (two and three in this series). The big challenge Koen sees within his customer base is how to achieve a B2ME model in an affordable way. “They must leverage digital and technology innovations” says Koen. Data should be leveraged to get insights. Insights in turn drive automated decisions. CG companies will then be faster to respond to consumers and customers, etc. needs and expectations, or to propose actions/products whilst freeing up people’s time. To this end Koen sees a lot of investment in the areas of engagement, or consumer touch-points. Additionally there is an investment in systems of intelligence, to drive the insights. The net result is that regardless of the touch-point a consumer leverages (IoT, mobile, retailer), the data about that consumer and their interaction, and therefore the understanding of their preferences, are the same.
So where does this leave investment in consumer and product data on the priority list? The investment stems from the need to grow these initiatives in an affordable way. Currently the innovation around consumer and customer experience is highly localized, with one of Koen’s customers commenting “we have created a patchwork quilt of capabilities”. A good start. But it is not sustainable if you have 400+ systems of siloed (and potentially duplicated) capabilities. CG companies are beginning to move from this patchwork quilt to a “single system of engagement with consumer and customer” in order to harmonize and leverage capabilities. This concerned me a little. It reminds me of the ERP implementation stages. At first CG companies put in a large number of individual ERP instances. During the 2000’s a cost-saving phase of ERP consolidation took place, consuming a lot of resources, but not supporting innovation. It is clear to Koen that CG companies are emerging from a 10+ year focus on ERP and shared services and are switching to focus on profitable growth. As such, he assured me, this time consolidation will be different.
The current desire is to create a single record for consumer or customer, but not a monolithic block. Koen sees that this record will be built independently of device or application. In addition, the notion of a corporate app store is taking place. Each CG will have a suite of apps that local markets can select to enhance offers, services or collaborations.
But what of product data? “Product data is critical” says Koen. It is one of the key topics consumers, especially millennials, want to engage with and about. Data about specific products ranging from health, environmental to societal impact are increasingly driving consumer choice. Without this data, consumers may hesitate to choose a specific product or brand. Koen’s vision of a single view of the consumer and customer must be linked to products, via the interactions with products or brands: Who browsed which product online? Bought a product? Posted a YouTube video? Cashed in a coupon?
I see this as a ‘data bus’ much like a factory floor has a communication bus. Factories have a central bus and common communication protocol that all machines are plugged in to. Adding and subtracting components in factories is getting increasingly easier as makers of machines, sensors and other components are aware of the communication protocol and have automated adapters. The future apps in a CG (and other) companies will likewise be aware of customer and product (and supply chain) data held on a ‘data bus’ which runs throughout the enterprise. Enabling an app should be as simple as plugging it in and configuring it to the correct subset of data.
This data bus is not only a great ideal to aim for, but is crucial in delivering timely and relevant consumer experiences at scale. These are the type of experiences that consumers are looking for. The CG company that understands this best, and can adapt to the context & connections of individual experiences most effectively is the company that can best place their product within those experiences. “If you cannot do that, you are just pushing a product,” says Koen. An ominous thought in a world where your competitors understand exactly why consumers buy their products, and can respond appropriately and immediately.
Whilst consumer and consumer data is at the heart of the B2ME concept, product data is a necessary component to meaningfully engage with the consumer and for the CPG company to monetize the relationship. No clear winner between consumer and product data emerged in my conversation with Koen. Since Koen justified both sets of data equally well in my mind, I am going to split the points here too. (I awarded points in whole numbers for this one – it doesn’t change the score differential).
Final Score: Which data capabilities should CG companies prioritize?
Product Data: 2⅔
Consumer Data: 2⅓
After four conversations, there is only ⅓ of a point separating the two sets of data. Given 4 is almost certainly not statistically significant, at this point it seems too close to call. The results aren’t surprising to me personally. Interestingly, they are not aligned to the balance of engagements I have been involved in with CG companies. I have a couple of theories on that – which I will share in my next blog.