Breaking the Mold: What Could a Disruptor Do in CPG Customer Experience?

If you adjust, you'll be a winner. If you don't, I think you're going to get left behind.

Nigel, hello. It's great to see you again.

Good morning. It's nice to be able to chat. I'm looking forward to today's conversation.

Yeah, me too. This is a session we had recently with the CPG Experience Council. What I'd like to try and do is recap it with you to talk about what we learned from that. How do you feel about that?

Absolutely. It was one of my favorite sessions we've done over the last 12 months. So quite excited about not only the conversation but the outputs that the council came to on this.

Yeah, I think as usual we'll preserve the, the privacy and the anonymity of everyone that was in it and make this completely compliant and legal. But I'd like to come back to the thing because you, you posed the question to the, to council members, what could a disruptor do in the consumer goods market in, in the customer experience way? And I loved when you went into this, you said in many markets have been some disruptors coming out of this. And then you went in and you and you suggested three brands to get people thinking. Why don't you talk a little bit about what happened and why you chose those three brands?

Yeah. Well, if we just take a little step back for one moment. Remember the example we gave to the council members. We did Walmart and we did McDonald's.

Oh yes.

And the question was because everybody knows the those two businesses, everybody's been in a Walmart at some point in their life and most people, either under duress or through pleasure, they've been into a McDonald's. So they know what they know those two businesses. So imagine for a moment that overnight the McDonald's management team went into run the Walmart business and it was just a click of your fingers, everything changed. And the whole of the wall Walmart team was taken over by the mindset of McDonald's and we gave some examples to the council members about what did he think would happen. And when you start to think like McDonald's you can imagine. So for example, a handful of examples, they might build many more smaller stores. They might have pre done meals. So you might have a family meal for every night, you might have a Happy meal or a healthy meal that everything would be prepackaged into deals.

Yeah.

You would be able to drive through to be able to click up your groceries. You would have screens at the front of the store that be super easy to be able to use the app would be super easy to be able to use. You can imagine very quickly how it's hard to be able to take the world that you've lived in if you're a McDonald's executive and not apply some of those principles to another business.

Yeah.

So we gave them five or six different examples, and then we looked at who've been the real big disruptors over the last five years that have influenced almost any single consumer in most parts of the world.

Yeah.

And you get to Uber, that really disrupt what happens with transport. You get to Amazon, that disrupted what happens with shopping and online shopping. And then you get to Netflix, that's disrupted what you do in terms of socializing and entertaining. Almost the. The place that. What do you do once you bought all these consumer packaged goods? You sit and enjoy them. So we got a really nice blend of getting to places, being able to buy things, and being able to enjoy them. So we got really three different perspectives on what consumers are doing. And the reason we chose those three is when you come back into the corporate world and you're in a B2B relationship, most of our expectations are conditioned by what we experience as consumers.

Yeah.

So it's a great place to start to think, if they can do this in the consumer world, then what should we be doing in that B2B world?

Now, just before we get into the slight detail, it's interesting. So you picked Walmart and McDonald's, who are, you know, brick and mortar places, but Uber, Netflix and Amazon are thought of and they have the valuation of tech stocks. And that's interesting that you pick those because. Is that. Because you see that they move faster and they're more innovative.

I. I think they, they've done exactly what it says on the tin of being a disruptor. They've brought change where probably nobody expects a change to be possible. So it depends how far you go back. But you look at how we used to be able to shop. Amazon's changed the way that we think about things. Netflix has changed completely the way that we entertain ourselves at home or on a mobile device. I think it's when you look at something that's so unexpected, it gives you ideas that you don't look for when you're looking for the obvious. So it's this idea of how do you look up and look out and say, well, what. What could possibly happen? And some of the ideas that came from the council session, maybe a little bit too far out, but some of the ideas that did show and we got on the slides here are eminently possible now within the B2B world, but yet we're not doing it. So it's, it's really a provocation for all of us in that CPG world to say actually the world is moving so fast and if your consumers expected. Yeah then why wouldn't your customers expect something in that area that they can relate to? And whenever you do the example with Walmart and McDonald's, everybody can see the examples. They'll have lots of small stores, there'll be drive throughs. Nobody resists that connection. And when we looked at the same connections with those three, it was amazing. The examples that came out that we could start to see happening off four fairly key principles that all those three businesses have done.

Well, let's have a look at the overview here and what we'll do is we're going to, we're going to go into these lines one by one.

So we had. It was actually one of the hardest things to be able to summarize because there was so much from the conversation. Everybody had a different perspective. The part of the exercise when you do this and you think what would a disruptor do? It was endless, example after example. And even though all of us on the council come from consumer packaged goods, it was a different perspective from every single person on there. Which is why I think I love the call so much. But there was four common themes. When we played the council meeting back and watch where they fell, it was first of all about the purpose. They set off with a different mindset to a business that's already established. They, they basically what would I do with a blank sheet of paper? And we can get that into those, into this in a little bit more detail in a moment they really looked in the mirror and said what's our purpose? Truly about the second bit they did was all about they saw data as a competitive advantage because they are all online businesses. They use data as their real strength and their sword to do something different. Their approach to loyalty was actually very, very similar to what CPG brands want. Every brand owner, whether you're in retail as a brand or as a consumer packaged goods, you really want to have loyal customers that super value to them, but super valuable to them. But the, those tech businesses went about loyalty in a very, very different way.

Yeah.

And the final bit, which I think is the most interesting for me, having been an accountant at one point in my early career, they changed the whole revenue management model. The way that they price their goods and services are very different to what we've seen in that traditional marketplace over the last couple of decades.

This is a good overview of the steps that we're going through. Let's drill in them one by one, if that's okay. Let's. Should we have a look at purpose first?

Perfect. So purpose was really, really interesting because they're clearly about making money. So there's lots of things that each of these business wants to do. But when you. When you look right under the skin and get a little bit further into the detail, they've designed every single one of their operating processes for simplicity and ease that customers can benefit from. And it was those two things that really stood out in the conversation, the simplicity and the benefit. And it's no good having a really simple system that adds no benefit, and it's no good having benefits that are really complicated to get hold of. So it was simplicity and benefit that came through. And a couple of examples that are on the screen were fascinating. So I don't ever remember reading instruction manual for an iPhone, but we all manage it. We all have a little bit of a mom when the latest update comes about, but give it 10 days and we've forgotten all about it because it's been made easier.

Yeah.

And if you look at the front screen of an Uber, there's a couple of things that we talked about as a counselor that jumped out. One is just the simplicity of it all. I want to go somewhere, I want to get anything delivered. It's this conversation that doesn't feel like it's corporate world. I worked in the beer business and we used to have a phrase about, is it pub talk? Is it things you would talk about in the pub? Is it that type of language? Or my wife saying to me that, oh, you've gone into business mode because you start to use different words again. And it's amazing how we often do that. When we're thinking about talking to customers, we talk in that corporate language. But Uber's made it really, really simple. You can order, you can track, you can pay, you can rate, you can be rated. And you don't need an instruction manual on any of it. It's all there if you chose to look into there. But it's so simple and easy to be able to navigate. And so there's. There's something there about the simplicity from the example of Uber and the benefit to customers. If you look at Netflix and go to a different model, it's probably the easiest place to search for films I've ever seen or something to watch it. It's I, I don't know the exact number, but I'm guessing it must be in the thousands, if not tens of thousands of films and things to watch. But it's so easy to navigate. They make picks for you. You can add it to your list to come back and watch later on. It's just amazing that they've given this benefit to customers that you want to watch anything. We'll help you navigate through that choice and then we'll serve it up to you in the way that you want to be able to watch it. So the idea of finishing something halfway through and it's there for when you want to go back again. Both of those two businesses have found this idea of simplicity and real benefit is so easy for the customer to be able to work through.

I agree. They put the customer first in this set and they've. They make it everything about the customer how can make easy. And they have ruthlessly iterated on the design of their app page to get a better result. So they're doing a B testing on that, you know, a little bit of behind the scenes stuff to actually work out what works better. And now there's AI behind it, you know, to in fact on Netflix, you know, to serve the thing up and they're working out what has a better chance of engaging the customer. And I think that's also interesting. Uber also very interested in customer engagement. What can they do? There's always a promotion going on. There's always something going on there that you can, you can do so very much that is that purpose to get the customer engaged and to use it continually.

It isn't it just look at the Uber example on the screen. It's very easy to be able to see where promotions are running. It's the simplicity just it amazes me about on any one of those businesses. I dread to think what my grandchild will be able to do when he gets to an age where he's 18. Because it'll have moved on to such another level. But when you start to compare some with the B2B platforms that exist between independent stores and brand owners or the distributors, they very rarely look as simple as this. And they very. Sometimes you have to search quite hard to be able to find and understand the real benefit of going onto that platform.

That's really true. And you know, we think about Uber as just being about having a car, maybe food. But look what they've been branching out into. Car hire, flights, training coach. So you know, this is, this is they just, they're seeing themselves As a transport provider, it's logistics really, isn't it? So they've really gone beyond that, partnering with. With people to do that again, using that front end, I think, as a. As a way of doing it. So I think it's a really good example, again, that really came through from some of the ideas of the council members on that. Let's move on, if we can, to our next slide, which is about data. Tell us about. Well, the council members are talking about how. How they can envision change through data.

This was a really interesting one because you could. You could sense the frustration that came through from every one of the council members, me included, that this is an area where I think most CPG businesses could run quicker. You know how you collect not only all of your data, but all the data that makes things simple and more beneficial to the customer. So there's so many different sources of data out there, but the skill set to be able to pull them all into one place and to do something with it, I think is the real game changer over the last probably couple of years and likely to be the fastest place where we'll see development over the next two to three years, in my view. And there's two pieces of stimulus that we talked about. The first one was how normalized consumers have become to have in the Internet of things or technology. Just listening in all the time, whether it's Alexa is a great example from Amazon, but whether you get to security cameras, to home entertainment, the way you heat your house, or the way you turn things on and off, or you just are so much more connected in what's going on in your private life and your personal life, and it's become, I wouldn't say, the norm yet for everyone, but it's becoming a normality for lots of people. So imagine if you took that connectedness into the business landscape, what could you start to do? Which is where the illustration from Amazon go has gone into where there's no longer any tills, but it's a contactless shopping experience. Imagine the way you could become connected with sensors or payment terms. So, for example, you know where the stock is at any point in time. You've got complete traceability of materials all the way back to its conception, all the way through to get into the convenience store. What would happen if you could prove that it had been delivered because technology knew exactly where that product was at any point in time? Yeah, it could trigger payment terms in a very, very different way. But this idea that technology is just there in the background, making Life better. And it's still early days when we talked about as a counselor that sometimes it becomes a little bit too intrusive.

Yeah.

That you want to be able to switch it off. But imagine being able to give the choice to your B2B customer world. But when do you want to switch this on and when do you want to switch it off? How far do you want to be able to go? How easy could you make invoicing or reordering a product? How could you get to a point where your front end sales teams know all the information that you're going to be asked by a customer? So I can go back to my customer experience worlds where quite a frequent question was when will that stop be delivered? Imagine not having to go back to your logistics team. Have been able to click onto a screen that says, well actually I can tell you exactly where it is now. It's 12 minutes away from your distribution network and based on the last 25 deliveries we've done, it's going to take you 17 hours to get it from your delivery network all the way through to the store. That's a really different model that you start to aim data to make it simple and provide benefit. But they've really invested in the infrastructures behind the scenes. So the capability not only exists within the data provision, the capability exists within your people and your customers to be able to use it in a different way.

Yeah. This is also where there is a certain amount of tension between privacy and the way things work. What we've seen with the big companies we mentioned is a willingness to go beyond what we think of as privacy. But it is surprising how elastic we are as humans about accepting this in terms of these smart devices. And we're monitored the whole time. We're trading that for convenience. One of the things that came up in the council discussions, which I thought was really interesting is the challenge to a CPG company is understanding what, what the stock is in the store and you know, really thinking about, well, maybe why wouldn't they install a security device that not only helps the store check on its security but is monitoring its stock. Maybe a bit far fetched, but that could be a really good benefit for the store owner for free if they got security and a huge benefit to the CPG company. But there is that tension with private data that, that we'll have to navigate in the next few years, I think.

Well, there is. There's the emotional tension of that private data and there's also the legal tension that in. It was an interesting debate because in these three worlds, the way you almost sign away that privacy is the terms and conditions. Most consumers have signed something to allow Alexa to be able to listen. But in the B2B world, there's, there's a way that the legal environment can, can think about how they can tighten some of these things up. But you're right that one of the biggest things we get from store owners all the time, particularly the small stores, is that theft and leakage is a huge issue. You look at Amazon go, one of their biggest single things is there is no leakage because the moment you walk in the door, they know who you are and they know what's going in the basket. So it's that there's something in this that could become a real game changer over the next decade.

I agree. Really interesting. And lots of things about data. Again, Netflix, you didn't mention on here the way that they use the patterns to create content.

Yeah.

In the CPG world, that's like creating product, isn't it? To think about this content here. You know, Bridgerton, Stranger Things, House of Cards, these were all generated as a result of that. Really good stuff. Nigel.

This podcast is sponsored by CustomerGage and they're the experience leader in the CPG market. Let me tell you why. They're contacting more people in the independent trade and modern trade than any other customer experience company out there. And you'll know the brands that they work with. We're talking Coca Cola, AB, InBev, Heineken. Just E takeaway. They're literally pulsing millions of contacts around the world in more than 60 countries multiple times a year, delivering those insights to thousands and thousands of frontline employees in those companies. But you know, it's not just the CPG business Customer Gauge is famous for. They're ranked number one for B2B customer experience by Gartner. However, if you're in the CPG business and you have not contacted Customer Gauge to understand what is going on in your business, you're seriously missing out. Because we know there are other people out there just doing it once a year. Well, Customer Gauge gives you customer insights 52 weeks a year, right to the front line in real time. It's going to absolutely transform your business like nothing else. But don't take our word for it. Listen to the podcast and they'll tell you exactly why.

So the next one is loyalty. So talk us through how you see loyalty working in with these, with these disruptors.

Well, there was again, two things that came from the conversation. The first one was that it's every single transaction is important to them, not just a survey once every 12 months or when something's gone wrong. It was a continual feed that these three players look for in terms of feedback from their customer base. And the second thing that I think is the really interesting part is that they've taken this principle that feedback is two way.

Yeah.

So it's no longer just about how good a service you're providing from one part of the relationship. It's actually as the receiver you get rated as well. So remember I've actually put a picture on there from a user from Uber based on privacy. It's no guess too far that it's actually my own personal score. I was devastated when I dropped below 5, but it's come back up a little while. But the fact that it's a two way street on, on loyalty. Now imagine that in a world where everybody you talk to in CPG and customer experience, you knew the rating of that individual or you even for one moment knew the rating of that customer, that would be a step change dramatically in that CPG world where customers have their own rating about how easy they are to be able to deal with. What would that happen? And we've got so comfortable within Uber, we're almost competitive that why is it 5.97, not 5.98? What did I do wrong? What can I do to improve and get a better service? And the Netflix example, it's one on here about an output. But once you start to give feedback to Netflix, they use you as a promoter positively to be able to test new content. I got a note a couple of weeks ago saying given all the things I've watched, what would I think about this as a theme? And it was something they're not even commissioned yet. But they were asking me as a promoter from some of the things I previously watched whether this would be of interest and what ideas did I have. And lo and behold, zero day then comes upon the screen three months later and it's amazing how they've really tapped into this two way flow of loyalty rather than it being just seen to be a one way ticket. Loyalty has to run both ways for it to be truly valuable and they've unlocked that in a brilliant way.

Yeah, I, I agree. I think this is, this is such a step change away from how most people think of most businesses think about loyalty today. It is absolutely built in with every transaction and also the relationship with these companies to check on how you're doing. And rather than worrying about overserving they're going to get you every time. But they, but you're right, they turn it around so well, you know, they're going to rate you back. It's part of an unstated contract you have there with a company to do it. Of course you don't have to do this but, but it, but it really enhances your experience if you've got that two way, two way dialogue. You can mention Amazon on this. But of course Amazon's system of ratings and reviews is essential to drive which products I think people buy. So you know, another, another really good example on that one as well.

It's a good little building. It's one of the things I didn't put on this slide, which is a challenge of trying to summarize all the conversations we had. But it was also, the visibility was another big topic that we talked about that as a user of any of these platforms I can see the rating visibility. It's an open platform and quite often in CPG world it's a closed platform that those rating scores are only made available if the company chooses to make them available.

You're right. It's really front and center here, isn't it? Yeah, that's really. I completely agree. It's really an important part of the experience. Let's move on to the final one of the four, which is revenue management. This is a big slide here. You got a lot of things on here, Nigel. So let's pick out some of the things that you thought were most important.

Well, the idea here was that they've changed the rules on how people pay for things. That was a starting point and there was, there was an interesting backbone that ran all the way through this whole conversation that the consumer gets to choose how much they want to pay. All the services are laid out, but once you've paid to it for a subscription, all of those platforms have made it feel like it's really good value. So you take one day of pain to pay the prescription subscription, but then you get 364 days of joy because there's al always new innovation being given to you. So if you, if you look at prime, you might start with a Prime membership to begin with, but then you can get offered a free trial on Prime Video or Amazon Music or Prime Reading. So you take that into the CPG world. What would happen if Prime Video is actually video clips of training materials you could share with your staff that become some of them are free, but some of them you have to pay for. Or Amazon Music is something you could Play on the music system with inside your convenience store that are adverts that you could play while consumers are walking into the store. Or prime reading could be latest industry or category news. You can very quickly see how you can take this approach that once you sign up to be a part of that prime offer, you get all these extra benefits that make it feel like it's for free and they've taken it on a stage further that there's that we actually thought when we had the conversation none of us could remember a month when there's been absent of something new that's been offered to you as a consumer. So one of the examples that came up was even Vodafone. Now they've partnered up with Amazon that if you take a new Vodafone out, you can get three months on prime for free. Now, I'm not selling Vodafone or Prime with this. It's just the illustration that they're constantly bringing you something that gives you added value to be able to justify the subscription that you've. You've set. But on every single one of those illustrations, the consumer is. It has the choice to choose what they want to be able to pay for. And the consumer comes back again to that very, very first slide about it's simple and if the consumer can see a benefit consumers, an incredibly smart population that they know a good deal when see it and if nobody subscribes to those extra services, they're not good enough. So they create something new. And if I think back to CPG world, my challenge to CPG providers is from a brand perspective, I think they are in a really good spot about providing new things to each of the brands.

Yeah.

If you go into a customer perspective, I Are you as good at providing new things to your customer base, your end customer who's the last individual that touches your product before the consumer gets hold of it. Are you as good at innovation in that space as these disruptors? Because that's one of the things they've really done.

Yeah.

And I think that's where the revenue model starts to change. Not just because it's a subscription model, but there's something new nearly every single month to their customer base.

So that's what you're saying, is that innovation helps drive the revenue and does that. I think that's. That's a really good thought about how it happens. I speak as somebody who's in the software as a service business. So I've lived and breathed subscription revenue for 20 years or so. And for us it's a way to have predictable cash flow and revenue flows into the future. By the way, that's often why these tech companies have got much higher valuation because you know they've got a predictable amount of customer revenue that's going to come in and if you can tackle, churn and upsell, you've got a really good compelling model. And I think this is the interesting thing that is perhaps the biggest gap between the CPG business in these, where disruptors can come in is that they're delivering the whole time of bringing it in. But still, you know, it would be much better for planning of purposes if you could buy some stuff on subscription when you knew and it was going to come in, but also easily go up and down. That's, that's the trick. That's what Amazon have done with prime and Netflix have done as well. You know, you, it's as you say, it's always, there's always some stuff to do. They've got. You're not being penalized for how much content you watch, it's about how much making sure that your eyeballs are still glued to it. That's not something you completely can transfer to the cpg. Well, because you can't have an unlimited amount of drink coming if there is a unit cost to it. But as so much of the cost is in transport, logistics and back office stuff, you would think there'd be some flexibility.

It's one of the examples in the middle of the screen, this idea that you can choose how many deliveries you want to have. Do you want it every two weeks, every three weeks, once a month, every five weeks?

And you can easily change it.

You can change it and if you change it, you get a price. So it's that, that simplicity and allowing the, the consumer in these examples to be able to choose. Imagine you could give that same empowerment to your end customer, particularly in that independent business where they can each choose what they wanted to have and they pay a different price accordingly. And to a certain extent you've got the same with an annual operating plan with brands, you know exactly what you're getting for signing up to that 12 month deal. It's how do you take that same thinking into that customer world to provide that customer value?

I agree. Taking it down into the smaller retailers, I think that's where the big, the biggest opportunity is. The other thing we learned from Amazon is it's so brilliantly easy to return stuff if you don't like it. That's another thing. It takes the risk off and can de Risk it for the channel now, if I can. I just want to bring one example in as well of a different pricing model. So you've got AMP prime and Netflix with subscriptions. Uber is less about subscriptions. What it does have is that dynamic pricing model which we all understand if it's raining and people want to get, you know, want to take more Ubers, the price goes up or, you know, if there's an event. And I think that's a deal that everyone's okay with. It's a. Everyone's. Everyone's okay with that bargain much better than it was. You remember what it was like waiting for a black cab in London 20 years ago. You know, if it's raining, forget it. But the price stays the same. It's like. So this is a better way of matching supply and demand. And that I also think will become more prevalent as we become used to it. That's what Uber is teaching us here.

It's a wonderful example that runs through every single thing that we just shared. That they've changed, the rules they've disrupted and the, the stimulus from the council, which is all on these slides when you pull them back together, is if the rules have changed for consumers in what they do daily, then why couldn't the rules change for the service expectations you give to your customers? So the simplest way to describe it we. It's easy to be able to make something bespoke when you've got a handful of customers. So you think about the modern trade, the big retailers, the office groups, but. And it's difficult to do that when you've got 10,000 independent stores in a, in a geography. Yeah, but each of these disruptors have shown that you can do a bespoke offer to millions and millions of consumers. So if you can do that to millions and millions of consumers, you can create a bespoke offer to tens of thousands of independent store owners. That model has been broken by these disruptors. And I think that's the output that came from the conversation that new rules now exist and CPG companies that don't adjust to those new rules of new higher consumer expectations of simplicity and benefit, then I think they're going to get left behind. So it's a fascinating moment that stands ahead of every CPG business for the next five years. If you adjust, you'll be a winner. If you don't, I think you're going to get left behind.

I think that's really good. Just to summarize the points again, Nigel, just so we've got them so you said that the you've got purpose, data loyalty and revenue purpose is all about.

Simplicity and benefit to the customer.

And then you've got data which is.

This is not only the collection of the data but making sure everyone in your organization can benefit from that for the single purpose of benefiting your end.

Customer loyalty, if I hear it right, it's about embedding the voice of customer in everything that you do.

Every single transaction and it becomes two way is the game changer. So as a customer you end up with a rating as well as the brand owner itself.

And then if you can summarize revenue.

Revenue I think is changing the way that you give the power to the end customer or the end consumer to choose what they want to have. So no longer do you have to do this because you're sat in a channel of 10,000 supposedly like minded other customers. Actually that individuality can go into every single one of your revenue models going forward.

I think that's a really good summary of a. What I think was a very entertaining, almost like a breakthrough discussion. I think it felt in some ways.

And when it all started from imagine what would happen if a disruptor came in and I'd encourage every single CPG business to imagine what would happen if overnight a disruptor entered your marketplace.

Yeah.

Are you ready?

Yeah. Your initiative, your point of pressure on the group was to say if this happened, what was it? And that's any CPG company could take that framework.

And the nice part from the council conversation was it was a relatively short period of conversation, less than an hour and there was more examples than we, we just couldn't, we couldn't show them all. It was difficult to summarize. It was amazing what happened in the hours conversation.

Well, a great summary Nigel, as ever and thanks a lot for sharing the output of the council. There was a lot of work that went into that to do that and I look forward to seeing more output from the council later on.

Wonderful. No thank you. Loved it.