Digital technologies have provided society with unprecedented access to publicly review, rate and scrutinize consumer goods companies, placing increased power in the hands of individuals to act independently and on their own terms. The fact that consumers use of online reviews and recommendations from their friends (and others) are so successful is reflective of the paradigm shift where a new world of trust is emerging; transferring trust from the power of the institution to the hands of the individual. Whilst this level of unregulated exposure can be daunting for consumer goods companies, this type of sharing and trust generation also has the potential to generate significant revenue benefits for the industry.
The digital age has brought a new class of engaged and informed consumers. These connected consumers have better visibility into supply chains and can rapidly share evidence of both malpractice and good practice through social media. Today, consumers are demanding more visibility around products and want to understand the product journey. They are demanding more transparency from companies. Consumers globally are more interested in, and informed about, the safety, ethics and sustainability of the products they purchase. Concern about visibility on origin and ethics has increased from 6% to 14%, according to the UN, a significant growth trajectory.
CMOs have the opportunity to address this challenge by being a driving force in developing a robust traceability and transparency strategy to deliver business value. Key to a successful strategy is for CMOs to collaborate with category leads, sourcing and procurement, supply chain, through to quality and innovation functions as early as possible. Working together they must align on the understanding of the end to end value chain, as well as the opportunity and risk. A robust strategy will need to leverage both digital technologies and collaborative partnerships across the value chain and industry – driving resilience, innovation and long-term value. Business leaders understand that without credibility and trust, they will not be able to grow.
To support this, CMOs can employ three key mechanisms; value, visibility, and engagement.
1. Understand the impact of consumer trust on core business metrics
Businesses need to understand the risks and opportunities that they have across all facets of consumer trust. By doing so, they can help turn a potential liability into an asset for growth and differentiation. The more trust you build, the more consumers are prepared to share with you, and the more you can do with it. Consumer goods companies are now more effective than ever at creating targeted advertising and using the data to build complex profiles of consumer preferences and buying patterns. Across the board, this strategy has driven up sales, increased consumer awareness and engagement.
2. Embrace visibility across the value chain
To build trust, and avoid the implications of consumer boycotts, social media backlash, or product recall, consumer goods companies need to get visibility and identify opportunities for traceability and transparency by embracing the possibilities of connectivity, mobile, IoT, cloud and big data in order to continue to capture the consumer interest in ingredient origin, journey and other credentials. Successful brands are already maximizing digital solutions not just to track batches across the value chain, but also to actively inform the consumer on the traceability of their product.
3. Empower and engage consumers to build long-term trust
To maintain growth in this industry, companies need to collaborate with their value chain partners, with their customers, and they need to increasingly engage their consumers to understand what makes them tick, what makes a “good” product and what will keep them loyal and vocal in a positive way.