Online-to-offline (O2O) marketing is quickly becoming an effective alternative to traditional forms of CPG marketing, with better targeting, more predictable impact at retail, and an opportunity to build direct relationships with consumers to support sustainable growth.
In this article, we’ll show you how the O2O cycle can help you create successful new product launches at retail and achieve:
- Better ROI on marketing across sales channels
- Greater lifetime value (LTV) with consumers
- Direct consumer feedback loops to optimize product performance
- Validation for future launches
Whether a new product, a new listing, or even a line extension, product launches have lots of moving parts, and typically large upfront costs, yet so many of them fail.
In fact, the failure rate is estimated at more than 85% (Nielsen).1 The cost of these failures is not just financial, which can be devastating for smaller companies, but also reputational and even emotional for the people involved in conceiving them.
What’s more is that retailers have become more demanding than ever. Ten or 15 years ago, it may have been sufficient to have a good story and “clean ingredients” to get listed at a new retailer, but now that natural products have gone mainstream, that’s just the starting point.
Retailers want to feel confident that products will sell, before listing them, and the conversation is becoming more data-driven; new product validation is key, consumer demand is key, and so are desirable margins. All of this puts more pressure on brands to succeed, and the timelines to prove success on the shelf are also shrinking.
All of these factors have created a need for a better way to launch products. Thankfully, an emerging marketing practice called Online-to-Offline marketing, or O2O marketing, is helping solve these problems for brands, retailers, and their shared market—consumers—by building better products in the first place.
This article will give you an overview of what O2O is, why it matters, and some initial steps to get started.
What Is O2O Marketing?
O2O is a full commerce cycle that starts with building demand online, converting this demand to in-store foot traffic and sales, then capturing feedback from consumers post-purchase.
The consumer is at the center of the journey, and there are multiple points to engage with them across the path to purchase.
The result is more targeted marketing, more predictable impact at retail, and the opportunity to build direct and fruitful relationships with consumers for greater lifetime value and ROI across sales channels.
How Does It Work?
There are four stages of the O2O cycle:
- Online discovery
- Offline purchase
- Post-purchase feedback
- Amplification & advocacy
Stage 1: Online Discovery
The first step starts with where consumers are searching for new products most: online.
Consumers have been demanding more transparency of ingredients from the industry for a while now, and this has caused greater online search for products that fit their changing needs. Online health experts and blogs, product review platforms, and online retailers offering more transparency and education have won consumers over in their discovery journey as trusted sources of information. You, as a brand, have an opportunity to become a trusted source, too.
Stage one of the O2O model is taking advantage of this macro consumer trend of online discovery by aligning investments across top-searched consumer channels and creating thoughtful content to capture emails that can be converted into segments for retail shopper marketing. Three strategies to consider include:
1. SEO & content: Create online content based on keywords your audience is searching for that relate to your product and ensure your product pages are tagged with these top attributes, so when they come to your site, the content is aligned with what they want. You may also want to consider building an in-house education team or partnering with health and fitness experts to support your content strategy and expand your reach across online channels
2. Strategic email acquisition: Leverage your content and marketing campaigns to invite potential shoppers to opt-in for notifications about future new product launches near them. Ask them what they are looking for, even if not on your site right now, to capture feedback on what products people would like to see as well.
3. Collect zip codes & preferred stores data: As part of your email acquisition strategy, collect and cross-reference consumer zip codes and preferred stores with your retail distribution so that you can drive consumers right into your target stores.
Stage 2: Offline Purchase
You’ve built an audience; now it’s time to convert it into retail foot traffic and sales!
With the geographic and preferred retailer data you collected from your strategic email acquisition in stage one, you can now invite people to try your new product launches at retail.
Product trial is one of the number-one drivers of food and beverage sales, so focusing on initial tactics that will build confidence and high volume trial is a good place to start.
You may want to consider:
- Launching with a 100% free product voucher to pick up the product at their favorite store
- BOGOs: Many top retailers include these in launches with high redemption rates.
- Social contests: Encourage consumers to purchase the product and take a photo of it in use to win a shopping spree at their favorite retailer or perhaps a month’s supply of free product.
When promoting your offers, be sure to explain, as best as you can, what aisle they can find the product at, including photos of your packaging and displays, to make it easy to find at the store.
The benefits of this model are that once you’ve built your Online-to-Offline marketing engine, you'll be creating more predictable in-store impact for your launches, versus relying only on in-store traffic and hoping to get noticed on the shelf.
This is particularly important for emerging brands which may not have the brand awareness and several in-store displays yet. By putting yourself in the driver’s seat for your launches, you’ll de-risk the entire process and be set up for longer-term success.
Stage 3: Post-Purchase Feedback
The long term value of the O2O marketing cycle is that if you're structuring the consumer journey in the right way, you’ll get to hear what consumers actually think about your products and build direct relationships with them in addition to driving new product launch sales. Two types of feedback are useful: purchase drivers and product reviews.
1. Understand Purchase Intent
Purchase intent and purchase attribution data is hard to get from traditional sampling and even retail POS data. In both cases, you don’t know the “why behind the buy.” For example, if you are losing market share, or gaining it, why? Sourcing direct product feedback from consumers who just bought your product can help you understand top drivers of sales and what improvements must be made. You can answer questions like:
- Which product attributes are most important to the target audience?
- If the product is not highly rated, what would shoppers improve about the product?
- How often would they buy the product, and for what usage occasions?
- What would prevent them from buying the product again?
2. Product Reviews
Product reviews are also key to any consumer marketing strategy in today’s modern retail world, since consumers are actively reading reviews as part of their discovery and decision making process.
Product reviews can be placed on your homepage to build trust with new site visitors, on your product pages to support SEO and sales, and even be syndicated to third-party retailers. Most conventional retailers require brands to have product reviews in advance of their e-commerce listings. Having a review collection process in place by using the O2O marketing cycle will help you create an always-on review content strategy to keep driving trust and sales.
Here are two simple ways to make product review capture easy:
1. Automate your O2O process with a review capture email flow: If you used email marketing as one of your channels to geo-target consumers to go to retail stores, you can set a trigger event to check in with them during a certain period after the promotional event to collect a product review and/or ask them about their experience.
2. Use QR codes on pack: Invite people to share reviews via QR codes, and promote the reviews on your website. People are now used to using QR codes for menus at restaurants, so why not add them to your packaging?
In sum, by capturing regular ongoing in-market feedback, you’ll stay on top of changing consumer preferences and identify any areas to improve immediately.
Brands that collect post-purchase feedback have done everything from changing product pricing, packaging formats, cooking instructions, and even formulations to improve their sales. Without an ongoing feedback loop, it’s hard to know what’s driving your sales or what’s needed to increase sales in a given retailer or region for any one of your SKUs.
Stage 4: Amplification & Advocacy
The final stage is all about building community and brand reach through consumer advocacy and word of mouth.
If you think about the “k-factor,” which measures viral growth, a high k-factor in CPG can be thought of as the number of consumer peer recommendations that convert into new sales. This can result in tremendous growth, but without it, you are left relying on in-store traffic and hoping your product gets picked up off the shelf. If you have poor placement, not ideal packaging, or a small footprint, you simply won’t grow at the same rate you could with a community strategy.
Ways to build community include:
1. Social sharing contests can support amplifying brand reach online and get people sharing their experiences and how they are enjoying the product with you and their own communities. For example, 56% of consumers surveyed in Social Nature’s community of 780,000 people said they would promote their favorite products through social posts.
2. Brand ambassador programs: Consumers want to support brands they love and believe in! Up to 80% of those surveyed in Social Nature’s community said they would join their favorite brand’s ambassador programs: 75% would share product offers, and 48% would consider joining an online affiliate program.
3. Co-creating winning products with your community: Build products that people want by crowdsourcing feedback from your community for upcoming new product launches, and then seed your new launches in advance by giving sneak previews or special offers. In a survey of Social Nature’s community of 780,000 people, 91% said they would like to share their ideas for new products with the brands directly!
In today’s world, people are craving social connectedness more than ever. Building a lifestyle brand may take time, but it pays off with consumer loyalty and peer-peer influence.
Overall Business Impact
To recap, O2O supports better product launches at retail for CPG brands in three key ways:
1. More predictable in-store impact and better return across marketing investments. Better targeting and demand creation will lead to better in-store results. Direct feedback loops will help optimize products with real-time consumer feedback.
2. Win-wins with both consumers and retailers. Build products that people want and that will sell. The O2O cycle places the consumer at the center of the journey across the path to purchase and ensures steady flows of in-store traffic, trial, and sales.
3. Build greater Lifetime Value (LTV) with community building. By investing in direct relationships with consumers, you’ll continue to innovate products that they want and be able to sell multiple units per customer. You’ll also build consumer loyalty, which is less expensive than constantly having to invest in new consumer acquisition. Because of the 4th stage (Amplification & Advocacy), you’ll have a consumer base that will help you do your marketing at a much lower cost.
To learn more about Online-to-Offline Marketing for better product launches at retail, download this free 50-page guide: The Complete Guide to Online-to-Offline Marketing for CPG Brands.
Jessica Malach is the vice president of marketing and Insights at Social Nature, leading their United States and Canadian consumer insights and brand partner programs. She has been a contributing researcher and speaker on consumer health trends to Natural Foods Merchandiser, Whole Foods Magazine, Nosh/BevNET, Health & Wellness Retailer, Plant Based Foods Association, Canadian Health Food Association, and the Canadian Securities Exchange.
1. The Nielsen Company (US) LLC report. “Setting the Record Straight on Innovation Failure.” Published 2018.