In the consumer goods sector, understanding the true needs and preferences of customers is essential for companies to deliver products and experiences that truly resonate with the end consumer. Among the most common challenges are the difficulty of connecting with small retailers, reaching more stores, presenting a suitable product assortment, and ensuring effective use of trade incentives.
Fortunately, according to a McKinsey study, companies can find an ideal solution to these challenges in artificial intelligence. It is estimated that the use of AI can increase the economic impact in the consumer goods sector by up to 40% by enabling the collection and analysis of valuable and personalized data, facilitating agile and customer-centric decision-making.
This article delves into the study “Fortune or Fiction? The Real Value of a Digital and AI Transformation in CPG” by McKinsey, exploring its key findings on customer data collection and analysis, and how AI integration can deliver personalized experiences that foster loyalty and drive sales.
1. Creating Individual Consumer Profiles
Data such as location, purchase history, best-selling products, and even sales patterns in nearby stores are incredibly valuable for understanding the consumer. According to the study, AI can use this information to create “dynamic and detailed” customer profiles (in this case, for each store), enabling companies to design much more specific strategies based on observed behaviors.
In addition to collecting and organizing this data, AI plays a critical role in analyzing profiles and predicting purchasing trends or inventory needs, all in an automated manner.
2. Delivering Hyper-Personalized Recommendations
AI facilitates the creation of highly personalized experiences for each consumer. With the detailed profiles generated for every customer, businesses can precisely segment their audience for marketing campaigns and other communication activities. For example, AI can send product recommendations that align with each customer’s interests, resonating more effectively.
This level of personalization leads to greater customer satisfaction and loyalty, promoting sustainable growth by increasing average ticket value and purchase frequency.
3. Designing Tailored Promotions and Trade Incentives
McKinsey notes that using AI in promotions and stock management can lead to an increase of 7 to 13 percentage points in consumer goods companies’ EBITDA margins. How?
Companies leveraging AI to optimize promotions can identify customer segments that respond best to specific campaigns and adjust their promotions accordingly. This allows businesses to optimize both the messaging and timing of campaigns, maximizing impact while avoiding waste from poorly targeted promotions.
In this scenario, only stores that genuinely need trade incentives will receive them, resulting in increased sell-out performance.
AI as a Competitive Advantage
Today, AI-powered consumer insights represent a crucial competitive advantage in the consumer goods sector. Digital transformation is estimated to generate up to $270 billion in annual gains for the global sector, provided companies make significant investments in AI technologies and address the entire value chain to capture the full potential of this transformation.
For industry leaders, investing in AI and digitalizing consumer data analysis processes is an essential step to enhance engagement, loyalty, and sales. By adopting AI, companies not only improve their operations but also build a solid foundation for long-term growth, creating sustainable value and expanding their competitive capabilities.
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