How FMCG companies can reduce CAC by 50%. From ads to sales in 1 step
Let’s kick off with some interesting facts and findings:
- A recent AC Nielsen study, increasing the market penetration is the number 1 marketing objective for brands.
- In 2021 globally around 800 billion USD has been spent on advertising* with the bulk of the investments go into digital advertising.
- 80% or more of the media budget of our FMCG clients are spent on “awareness media” and only a few advertising dollars go into “conversion media”, which is often measured in clicks or leads, but hardly ever in sales.
- The average customer acquisition cost in the CPG industry is 22$ and 182$ in consumer electronics**
We really wonder why brands are not more obsessed with “conversion media” ? And certainly in these turbulent times where every marketing penny spent needs to deliver? Is it sensible to think that awareness and buying are still 2 actions that are separated in time and space? We don’t think so. We believe that all marketing spend has the potential to deliver measurable sales.
By connecting your marketing and sales investments brands can have better, faster and cheaper results. At Hashting, we know that the opportunity is there to bring customer acquisition costs from 22$ under 10$ and realise 10% conversion from click to in-store purchases.
In short: marketing is a sales machine. You just need to start using it differently.
Quick win number 1: add a clear call-to-action to your advertising
During the last 15 years people’s average attention span has decreased by one third. Bottom line: it’s easier to capture the attention of a goldfish (9 sec) than of your average consumer. So why spend time blasting messages towards an army of goldfishes whereas you can use that time to give them purchase incentives? The same tech that caused that attention drop, also opened new doors…
Quick win number 2: spend less on “awareness media” and more on “conversion media”
Conversion media is usually measured in clicks, likes or leads. Why not use metrics further down the funnel, like purchase intention and actual purchases?
Directly linking media spend to short term sales impact not only works for online purchases but also for in-store purchases. Although this seems like a huge barrier, it’s actually a quick fix.
This way you went from “I saw that product” and “I’m interested in it” to an immediate purchase intent with a possible purchase afterwards. Plus in order to provide the voucher or cashback opportunity you obviously need contact data. Did someone say Genius here?
Quick win number 3: use purchase data to optimise your media spend
Before we proceed: a small history lesson. In 1906 Vilfredo Pareto proved the 80-20 rule. In mass brand marketing this means that 80% of your sales will come from 20% of your audience. Call them fans, A-customers, loyalists or anything else. Fact is that these people drive your topline.
So here’s an interesting question. Why do we try to gather personal data of the whole universe knowing that only a small part is the target audience that really matters? Wouldn’t it make more sense to gather highly qualitative, brand related data (zero party data) of current shoppers or loyalists and extrapolate those? Indeed it does.
Our recommendation is to “flip the funnel”. Start with gathering data of your current buyers and expand reach qualitatively step by step. How? Re-focus messaging towards buying behaviour of hyper relevant consumers (lookalike audiences) and send them spot-on messages with clear call-to-actions.
But what if you don’t have a “golden database” of consumers and shoppers?
Start building this “golden database” through trial offers!
Start collecting data through in-store or on-pack promotions in existing sales channels such as supermarkets and independent stores who distribute your product. Additionally, use drive-to-store promotions starting from your media touch points. Make people try your product at reduced cost or even for free through a cashback promotion. With the gathered data you ask them who they are and what they think. And your cost? Production + normal distribution cost of the product.
Another powerful tool is to let current consumers share your offer. This way your brand markets itself based on the inner group. It worked for Dropbox, Uber, AirBnb. Why not for your brand?
In a next article we’ll share some do’s and don’ts to turn your media spend into a sales machine.