“For any brand and for any company, understand that this is a journey, and just because you have one success does not mean that you’re done.” These are the words of Bea Perez, SVP and Chief Communications, Sustainability & Strategic Partnerships Officer at Coca-Cola. They describe the Consumer Packaged Goods (CPG) and Fast-Moving Consumer Goods (FMCG) industries perfectly. With most of their products available on store shelves, these brands constantly need to find ways to stand out — both literally and figuratively. In their fight to establish brand love, CPG loyalty programs are just one part of the equation; but an important one that can help businesses stay resilient in the face of the cost-of-living crisis and the rise of private labels.
When the topic is to build a successful rewards program, I often think about the analogy of choosing a birthday gift for your best friend. The better you know them, the higher the likelihood is of getting it right. The same applies to a CPG/FMCG rewards strategy: the key to success is to make it simple, meaningful, and personalised. If possible, conducting a survey to see what customers want in a loyalty program is a good start. It is also fundamental to measure the program’s success and understand what needs to be improved in order to implement the right strategies to increase customer loyalty and engagement.
Still new to the world of loyalty programs… or already have one, but wish to re-imagine its foundations? Use our loyalty program concept guide and downloadable worksheet to help you brainstorm.
With that in mind, let’s dive into the world of loyalty for FMCG and CPG brands.
Key Takeaways — TL; DR
- This vertical has the highest purchase frequency, but also the fiercest competition
- Challenges include a lack of data and the rise of private labels
- CPG & FMCG brands can innovate how they connect with customers when selling through third parties
- Best loyalty features include gamification, unique coupon campaigns and strategic partnerships
- We gathered five loyalty program examples for inspiration
Table of Contents
What Are CPG Loyalty Programs?
CPG loyalty programs (and, by extension, FMCG loyalty programs) are specialized customer retention solutions geared toward building loyalty within these verticals. Unlike one-size-fits-all reward systems, they are built from a collection of features, rewards and technologies that work especially well in these verticals.
Selling Through Retailers
One unique characteristic of CPG loyalty programs is that they must help bridge the gap between brand and customer. Since CPG and FCMG brands usually sell through brick-and-mortar retailers, they need some sort of mechanism to validate every loyalty member program’s purchase. This can be through receipt upload, QR code, or by asking customers to enter a code found on the inside of product packaging.
The primary challenge for CPG and FMCG brands is the customer data gap, stemming from products being sold through retailers. This issue, however, presents a significant opportunity, as a well-crafted loyalty program can incentivize customers to share their data directly with the brand. By unlocking valuable consumer insights, a loyalty program can drive customer growth, transforming this obstacle into a powerful growth catalyst for businesses in these sectors.
A primary goal for a CPG loyalty program is to make these added interactions worthwhile for consumers. Alternatively, the incentives can be used to educate customers and motivate them to adopt technologies they may be unfamiliar with. Traditionally, this meant offering bonus points or a small discount, but in this day and age, businesses have to be more creative and use more attractive rewards and more advanced loyalty program strategies.
A Market Where Brand Recognition Is Everything
Besides nurturing consumer behavior, CPG loyalty programs also play an important role in making people fall in love with the brand. Though this process usually starts with monetary benefits (vouchers, bonus points, free gifts), once they hold a member’s attention, next-gen loyalty programs need to establish emotional loyalty.
As such, a modern CPG loyalty program’s reward portfolio must focus on brand recognition. For example, brands can hold community events, invite high-tier members to factory or HQ tours, and use gamification and app-based engagement to their advantage.
I think differentiation is always the key challenge for any brand or product, regardless of vertical. There are so few businesses that operate in a “blue ocean” model and, as such, the need for a brand, product, or service to stand out and create excitement is key. For us, loyalty programs become a huge part of that differentiation. It’s a true relationship with your customers and also allows marketers a model to move customers further along the “devotion funnel
Biggest Challenges to Customer Retention in the CPG/FMCG Industries
The reason why customer retention and brand love are so important in the CPG industry is that its market size is projected to reach $2.45 trillion by 2028. However, we are talking about a highly competitive market, known for high purchase frequency — probably the highest, if we look specifically at FMCG brands. As such, CPG companies that fail to make their audience stay will see their share of the market shrink rapidly.
There are many strong CPG/FMCG brands out there, and they have an enormous potential to create engagement and get first-party customer data. To succeed with long-term customer engagement and increase loyalty, companies/brands need clear overall loyalty and customer strategy. Recruitment and early engagement are not enough. There are essentially two key components we believe are a must: First, creative content, combined with the use of gamification and other loyalty mechanisms. Second, the use of customer data in all marketing channels – owned and paid.
Challenges Unique to CPG/FMCG Brands
Besides fierce competition and the need for consumer loyalty in general, businesses in this vertical face some other unique challenges:
- Lack of user data – Due to the fact that CPG companies sell through third parties and brick-and-mortar retailers, they lack the means to harness user data. Though they can learn people’s purchasing habits and brand preferences indirectly through surveys or analyzing the uploaded receipts, people aren’t keen on sharing their data directly, especially if they have to jump through extra hoops to do so. Therefore, these data-collection methods need to be heavily incentivized.
- An appetite for better CPG marketing strategies – Businesses in this industry are always on the lookout for new solutions to boost brand awareness. As a result, this vertical is quite tech-savvy and eager to adopt new technologies. However, the sale of products depends on how the marketing tech is used. This puts a lot of pressure on marketing and CRM teams to come up with engaging strategies for their existing tech, including their loyalty programs.
- Exploring D2C & subscription models – Following the recent eCommerce hyperjump, more and more CPG brands are exploring opportunities to sell directly to consumers, preferably through a subscription. On the other hand, getting customers to order a large batch of supplies or to pay a recurring fee for the subscription needs customers to think outside of the box with their marketing. For instance, they have to explore more sophisticated reward program models that are more effective for incentivizing subscriptions.
- The rise of private labels – The inflation and cost of living crises have caused the most pressing challenges for CPG companies. Consumers are more price-conscious than ever, and they are willing to sacrifice quality for a better deal. As a result, the private labels that are produced by large store chains have become an appealing alternative. This means more than just another competitor to worry about, because price-wise it’s hard to compete with a budget private label. Instead, CPG businesses have to find a way to cost-effectively add more value — something loyalty programs can help with.
Best Loyalty Program Features for CPG/FMCG Brands
An effective CPG loyalty program has many legs to stand on. Businesses have many aspects to consider while building the concept, from selecting a program type, which determines the overall journey for members, to the rewards, which impact the experience. Here are the most important loyalty program features that help CPG and FMCG companies solve industry-specific challenges.
CPG companies operate in a very competitive environment. Reward programmes offer them the opportunity to get zero-party data and understand their customers’ shopping behaviour, building lasting, personalised relationships without having to rely on retailers’ data. However, the main challenge is to create an enticing program that can distinguish itself and encourage customers to participate. To be successful, CPG companies need to build compelling propositions that align with their brand values, provide value for money and convenience, and drive engagement beyond the transaction. Additionally, they must ensure a seamless experience throughout the programme.
1. Defining the Loyalty Program Strategy
Unique loyalty program types
Next-gen loyalty programs can be so much more than simple point-collection schemes. For example, if a business wants to run a subscription-type service, they can transform it into a paid loyalty program where the subscription is part of the deal, or add perks to the mix, granting instant access to the benefits to subscribers. CPG loyalty programs can also be geared towards community building, fostering a sense of belonging and brand identity.
Rewarding brand engagement
Just because recording transactional activity requires extra steps doesn’t mean that CPG loyalty programs don’t have other strategies for keeping customers aligned with the brand. For example, CPG brands can organize social media contests in which customers who submit the best picture using a product, or the best comment, win a prize. Additionally, members can be rewarded for referring their friends or leaving product reviews.
2. Connecting With CPG Customers
Loyalty programs can be an excellent source of both zero- and first-party data. The latter comes naturally through the program, as you can use data like tier level and claimed rewards to better segment your customers. Meanwhile, zero-party data—like product preferences, lifestyle, shopping habits, etc.— can be collected through surveys. Customers rarely engage with quizzes and surveys without a reward, however, so if you have a point system in place, using points as incentives is a more cost-effective alternative to discounts.
Mass coupon code campaigns
Printing a code on product packaging, which customers need to submit in the app or website is probably the easiest way for CPG brands to connect with their customers. The most standard use case is to grant customers points for doing so. However, there are other ways to use coupon codes, such as distributing pamphlets at community events or special birthday celebrations, which can be used to acquire limited-edition merch or other benefits.
3. Gamifying the Membership Journey
Badges and challenges
The easiest way for a CPG loyalty program to shape the behavior of its customers is through badges and challenges. These are set milestones and tasks members have to complete in order to get rewarded. For instance, customers can earn a badge titled “Survey Master” (and some bonus points or coupons) when they complete five different surveys. The goal here is to engage the customer’s “collector spirit” and entice them to adopt a certain behavior.
Another gamification strategy for CPG loyalty programs is to randomize the rewards earned. For instance, after submitting a coupon code, instead of earning a flat amount of points, customers can spin a wheel in hopes of doubling or tripling it. Though the chance of earning a point multiplier should be slim, the thrill of the experience is enticing enough to keep customers coming back.
4. Building the Rewards Experience
Rewards, benefits and incentives are the cornerstones of any loyalty program. Nonetheless, CPG loyalty programs have to go beyond transactional benefits and implement rewards that foster true brand love. Early access is a great example: if a brand offers subscriptions, those who subscribe get a sample of a soon-to-be-released product. Birthday rewards, invitations to influencer parties, and VIP customer service are other privilege-driven loyalty program benefits.
Customers love tangible benefits in a loyalty program, whether it is a free product that they can redeem for points, branded merch reserved for those who reach the diamond tier, or a bundle of free product samples customers receive on their birthdays. However, CPG loyalty programs can expand their gift catalog even further, by incorporating gifts, offers and services from partnering companies.
5 Inspiring FMCG / CPG Loyalty Programs
Here’s a list of real-world FMCG or CPG loyalty programs for inspiration.
1. Kellogg’s: Family Rewards
Cereal giant Kellogg’s runs a colorful and fun loyalty program called Family Rewards, which was revamped in 2022. Family Rewards offers a great example of rewarding customers when products are sold through retailers, so Kellogg’s can get to know their consumers better.
- Customers upload receipts in exchange for tokens and an entry for the monthly sweepstake.
- Tokens can be used toward rewards (some of which are partner rewards) like gift cards, branded merch, limited-edition snacks, magazine subscriptions, etc.
- Rewards change each month and customers need to earn five tokens to redeem a reward.
Why it works:
- Kellogg’s smartly incentivizes new members to try a receipt upload by granting bonus tokens for the first upload
- Tangible gifts and partner rewards are a great match, and they are a powerful reward that can capture the attention of multiple generations
- Sweepstakes are a great gamification feature. For customers, it’s a chance to win big. For brands, they can excite a large audience each month while only giving away a handful of rewards
2. P&G: Good Everyday
American consumer product company Procter & Gamble (P&G) has launched its loyalty program, Good Everyday, with a special mission in mind: to build loyalty and make the world a better place. Therefore, charities are a core component of the experience.
- Members earn 50 points for uploading a receipt.
- Points can be redeemed for product P&G product samples or an eGiftcard from one of 200 partners.
- The points can also be used on sweepstake entries or be donated to a charity.
Why it works:
- Having a huge collection of partner rewards, even if they only involve gift cards, is a huge selling point for any loyalty program
- P&G cleverly incentivizes receipt uploads by supporting charities with each upload
- Having a rotating list of charities ensures that ESG-conscious customers will always find a new cause to donate to
3. Yeo Valley Organic: Yeokens
Started in Somerset by the Mead family farm in 1961, Yeo Valley has grown to become the UK’s no. 1 organic dairy brand. The company’s loyalty program, Yeokens, emphasizes community building and an exciting reward experience.
- Customers can earn Yeoken tokens by entering special codes on products.
- Tokens can be spent on a variety of benefits, from discounts on products and community events to free annual visits to the company’s organic gardens.
- Yeo Valley Organic regularly hosts raffles that members can enter using their Yeoken tokens. Tokens can also be donated to charitable causes endorsed by the company.
Why it works:
- Entering coupon codes into a web browser is a smoother process than uploading receipts
- If you do prize wheel, do it like Yeo Valley: the Dairy-go-round is fun, visually engaging, and uses freebies as rewards
- Yeokens uses the perfect blend of community-driven rewards to build emotional loyalty with customers who care about dairy farms
4. Lillydoo: LillyDoo Club
Headquartered in Germany, Lillydoo is a monthly subscription-based baby care company. The company wanted a loyalty program that encouraged recurring subscriptions to the brand’s products and increased touchpoints with its customers.
- Lillydoo Club is based on two distinct loyalty mechanisms: earn & burn and subscriptions. When customers subscribe to Lillydoo, they are automatically enrolled in the loyalty program.
- Members can automatically earn points with their subscriptions and redeem them for exclusive and practical gifts, such as an exclusive Lillydoo wooden box and organic almond oil.
- Customers who have an active subscription can invite up to 10 friends, and Lillydoo awards them with a €15 discount.
Why it works:
- When the program membership and the product subscription are tied together, members have more reasons to remain active and maintain their subscription
- Although customers can earn points with single purchases, being a subscriber grants them the most value for their money, which is another reason to subscribe
- Friend referrals are a powerful tool for loyalty programs because they leverage the trust and influence of existing customers to bring in new subscribers
5. AspenClean: Treehouse
Known for their organic and green cleaning products, AspenClean operates a loyalty program, Treehouse, that’s all about bonding with their customers. Members of the program are rewarded for interacting with the brand in multiple ways.
- The loyalty program combines tiers with points. The higher a member’s tier, the more points they receive for each $1 spent.
- Points can be used on exclusive discounts, valued between $5-$20.
- Members can earn bonus points on their birthdays, and for following the brand on social media.
Why it works:
- If tier levels directly influence the point earning ratio and recurring benefits, members will be more motivated to rank up
- Rewarding non-transactional activities keep members more engaged with the program and, therefore, with the brand
- Encouraging social media involvement and user-generated content boosts a company’s credibility and popularity among other shoppers
Get Ready to Become a Trailblazer in Your Industry
Standing out in the CPG / FMCG industry is no easy task, even with a loyalty program. If you wish to strengthen your brand image while also building customer loyalty, you are going to need a revolutionary loyalty program concept—and a technology that makes it a reality.
Interested in what Antavo’s Enterprise Loyalty Cloud has to offer? Our loyalty experts would be more than happy to showcase our technology in action. Click here to book a demo with them, or if you have more precise requirements, then send us an RFP.
In the meantime, make sure to download our concept building worksheet—it will prove to be a valuable tool when it comes to brainstorming your loyalty program’s concept.