Tuesday, October 8, 2013

Kellogg Enhances Brand Loyalty via Family Rewards Program

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Kellogg is gleaning lots of valuable consumer data and encouraging sales of multiple brands with a one-year-old portfolio-wide loyalty program called Kellogg’s Family Rewards. Blazing a trail in the CPG industry, Family Rewards points are rewarded to purchasers of more than 90% of products falling under one of Kellogg’s brands, and then shoppers can use them to collect discounts and prizes.

Research by Nielsen for the Battle Creek, Mich.-based giant measured differential sales results for Family Rewards members “versus an audience that looks like them, but doesn’t participate” in the rewards program, Dan Keller, vice president of customer-relationship management and loyalty for Kellogg, told CPGmatters.

“They’re significantly stronger for those participants than for those who ‘look’ just like them, but aren’t part of the program,” Keller explained. “We get a significant positive sales lift out of Family Rewards.” Even more important, “Many shoppers have moved from single to multiple categories and brands under Kellogg based on rewards points.”

Kellogg’s 16-digit loyalty codes, unique to each package, signal product type, size and flavor of something an individual shopper has bought, in addition to the store where consumers purchased the items and the location of the store. The company also works closely with retailers to exploit the data at the chain level.

And Kellogg ties the loyalty codes to its “K Numbers,” the company’s internal product codes. When consumers submit the codes under Kellogg’s Family Rewards to redeem points, they can be matched back to the products for the first time, so that the company can understand exactly what people are purchasing.

“That gives us actual behavioral or transactional data,” Keller said. “Whereas with a larger group of 20 million consumers, we do a lot of modeling to predict behavior and, with reasonable accuracy, guesstimate what they’re buying and are interested in. With the 5 million households registered for Family Rewards, we can do a much better job of targeting, to motivate the desired incremental behavior and provide differential outbound content to those people based on who they are and what we know about them.”

For example, Keller said, using data generated by Family Rewards, Kellogg can identify households that are purchasing Special K cereal, but not other products within the ever-expanding Special K brand franchise. Then it extends offers to them specifically for Special K breakfast snacks and bars.

“Our objective is to stay way out in front of your expectations,” he said. “It’s a huge opportunity for us as we’re expanding a brand like that. It identifies who is buying and what they’re buying and what the opportunities are” for extended sales.

What’s more, Family Rewards insights can help Kellogg sell more of the products from its ever-growing stable of brands to customers who already favor another. Nearly two-thirds of program entrants are submitting codes first after buying Kellogg cereals. Aconsumer may register under the program that there are kids in the household, that the family already purchases Rice Krispies and Eggo Waffles, and Nabisco cookies instead of those from Kellogg’s Keebler brand.

“Based on our modeling, we will know that they probably have a strong appetite for cookies and so they could be a potential acquisition opportunity for Keebler if they’re a Nabisco household,” Keller explained. Kashi cereal for foodies doesn’t participate in Family Rewards “because we like to keep Kashi distinct and differentiated as a brand from Kellogg overall.” And Pringle products – Kellogg’s most recent major acquisition – haven’t been integrated yet.

Kellogg is exploiting many other ways to slice and dice and leverage its data trove. It sends out more than 10 million e-mails each week after identifying those most likely to be interested in new products and extending special offers such as double points under Family Rewards. It may, for instance, reach out to program members who might be most likely to express interest in line extensions within a given brand and offer them incentives to do so.

The company also can use Family Rewards to gauge members’ interest in the cutting edge of Kellogg’s better-for-you offerings, by e-mailing them editorial content about healthy and nutritious eating. “Anyone who clicks through on that content, we are coming back to on an individual basis and delivering more such content in the future,” Keller said. Kellogg combines that information with data from the codes of products actually purchased by Family Rewards members.

For instance, if a consumer clicks on e-mailed content about gluten-free eating and also is identified by Family Rewards as purchasing Rice Krispies Gluten-Free, Kellogg pays a lot of digital attention to that person. Not only are they likely candidates for purchasing existing gluten-free products, Keller explained, but “they also usually provide very fertile ground for buying new products. We know who to go at first.”

Kellogg also has brought key retailers in as partners to work with Family Rewards data. For example, beginning in 2012, Kellogg has worked with Walmart and Scholastic Books in a handful of initiatives in which product codes counted toward free books as well as regular points under Family Rewards. It has used the program through Walmart to provide participants with a free rental from Redbox,  through Target to get a $5 gift card for Kellogg online, and through purchases of Pop-Tarts at Family Dollar stores to qualify for Family Rewards bonus points.

“We’re also working with several other retailers on programs that aren’t in the market yet,” Keller said. “It’s a huge win for us to work with key retailers on this.”

Keller said Family Rewards has rapidly emerged into a key program for Kellogg to work savvy niche-level marketing programs and pad sales. “We’re becoming the backbone for executing promotions across the organization,” Keller said. “There is an incremental sales lift from the program. And when you factor in the cost efficiencies that we’re building in to support all these promotions, it makes it that much better.”


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