Did you know? The average FMCG customer switches brands 32 times a year. The quest for loyalty in this fast-paced industry is fierce. Intense competition, fluctuating prices, and rapidly evolving preferences present a significant challenge for brands vying for long-term customer loyalty.
Wondering about FMCG full form? It stands for “Fast-Moving Consumer Goods”. These products are sold quickly in the market and at a reasonably lower price.
The FMCG industry encompasses a wide range of products, from personal care items to food and beverages, as well as newspapers, stationery, beauty products, and cleaning supplies.
Moreover, this industry is not only a critical contributor to the global economy but also plays a silent yet impactful role in our everyday routines.
Studying FMCG companies unveils the choices shaping our daily lives. However, ever-evolving preferences and high brand switching rates demand a strong focus on customer loyalty for long-term success.
Background: “Coca-Cola“ – The Case Study
About 19,400 Coca-Cola drinks are consumed worldwide every second, adding up to 1.7 billion times daily. Furthermore, Coca-Cola stays popular globally by offering refreshing moments every day. It builds loyalty in the competitive FMCG industry through consistent quality and widespread availability.
This case study looks at Coca-Cola's loyalty program, "My Coke Rewards," and how it became successful in the FMCG industry. We'll see how it grew, overcame challenges, and won over customers with its rewards system.
Evolution and Transformation of Coca-Cola
Launched in 1886, Coca-Cola started with just 9 sales a day!From selling only nine drinks a day, Coca-Cola has grown into a global beverage giant, showing how brands can expand over time.
Early Steps
In 1887, Coca-Cola introduced the first-ever coupon campaign, giving thousands of ‘free drink' coupons, changing how companies advertised and connected with customers.
First Historic Hit
1904 marked a historic year for Coca-Cola with their annual sales reaching the milestone of 1 million gallons.
Introduction of the iconic Coke Bottle
In 1915, the iconic Contour Coke bottle design was introduced by Coca-Cola to distinguish its brand from others and to make the product more recognizable even when it was dark or seen from a distance.
Global Expansion
Coca-Cola created the Coca-Cola Export Corporation in 1930 to market Coca‑Cola outside the United States. By 1938, it reached Australia, Austria, Asia, Norway, and South Africa to strengthen its global leadership position.
“Coke”
In 1945, “Coke” officially became a registered trademark of The Coca‑Cola Company.
Diet Coke
In response to changing consumer choices, Coca-Cola introduced Diet Coke in 1982. It was the first time the company made a drink different from its original Coca-Cola formula and demonstrated its ability to innovate and adapt to evolving market demands.
Digital Transformation
In 2005, Coca-Cola started "My Coke Rewards", a digital FMCG loyalty program where customers earn points for buying Coca-Cola products. Coca-Cola rewards codes from Coke packages were entered on a website or via text message from their mobile phones. These codes were converted into "points" that members could redeem for prizes or sweepstakes entries.
They also used social media to connect better with customers and cater to changing consumer preferences through the
Coca-Cola rewards program.
Product Diversification
Coca-Cola Zero was launched in 2005, a zero-calorie soft drink for health-conscious consumers.
Beyond Points
In 2009, Coca-Cola introduced the
Coca-Cola Freestyle machine with over 100 drink choices. This machine lets customers mix their drinks from a variety of Coca-Cola drinks. It was an instant hit because people loved creating their drinks.
This innovative step was a game changer in Coca-Cola's strategy to build a data-driven connection with its customers. Analysing purchasing habits and preferences, Coca-Cola personalised customer experience for maximum impact.
Never-ending Journey
Coca-Cola's loyalty journey never ends. The company keeps innovating with new technology, social media, and personalization strategies to enhance customer loyalty.
Introduction to the Coca-Cola Loyalty Program
Coca-Cola learned they needed more than just refreshing drinks to succeed in the competitive FMCG market. Hence, in 2016, they introduced the "My Coke Rewards" program to boost brand loyalty and encourage repeat purchases.
This FMCG loyalty program rewards loyal customers with points for buying Coca-Cola products. It also collects data for personalised marketing, which helps increase sales and entice customers to return for more.
According to a study by McKinsey & Company, personalised marketing strategies can lead to a sales uplift of 10% or more.Key Strategies of Coca-Cola's Loyalty Program
"My Coke Rewards" is a strategically designed FMCG loyalty program aimed to keep customers happy and coming back for another sip. Let's explore the key strategies that bring this FMCG Loyalty program to life.
Earn & Redeem System
Purchases earn you points, which can be redeemed for merchandise, unique experiences, and personalised surprises, encouraging customer participation and engagement.
Digitalization- Mobile Application
The program uses a user-friendly mobile app for effortless point tracking, reward redemption, and exclusive content. It increased customer engagement by making this FMCG loyalty program convenient and accessible anytime, anywhere.
Tiered Structure
Loyalty deserves recognition. This FMCG loyalty program gives special rewards to loyal customers based on how much they support the brand. It motivates people to try new products and flavours. This led to increased engagement and purchases, strengthening the brand's market presence.
Personalized Communication
A thriving FMCG loyalty program is only effective when customers actively participate. The more they engage with your brand, the stronger it becomes.
Coca-Cola increased engagement with its “My Coke Rewards” program by sending more personalized emails. As a result, the average click rate went up by 46%, and member activity increased by 57%.
This resulted in a more personalized relationship with consumers, as it made them feel valued and appreciated, adding new drinkers.
The Challenges: Coca-Cola Roadblocks
Despite its robust loyalty strategies, Coca-Cola's “My Coke Rewards” program faced some unforeseen challenges. Let's see what they were:
Environmental Concerns
Coca-Cola faces environmental and health concerns due to the high sugar content in their soft drinks leading to obesity and its significant production of plastic waste each year.
Limitations on Code Entries and Points Redemption
Initially, “My Coke Rewards” limited how many codes members could enter each day and week. They began with a daily limit of 10 codes, later increasing it to 100 per week, then reducing it to 75. These limits slowed down point accumulation, decreasing customer engagement.
Expiration of Points and Codes
Points and codes had expiration dates, so members had to use them or lose them. It made this FMCG loyalty program confusing and frustrated customers, causing them to lose interest in the program.
The Solutions: Bridging the Gaps
Coca-Cola knew that
“a bend in the road is not the end of the road” and navigating challenges is essential for long-term success. They used innovative solutions to overcome these obstacles.
Recycle and Reuse
Coca-Cola is aiming to make 100% of its packaging recyclable globally by 2025 and to use at least 50% recycled material in its packaging by 2030.
The company is also focusing on reducing sugar in drinks with Stevia leaf extract and naturally derived sugar alternatives. They launched 246 low- or no-sugar products in 2022 and cut sugar by 30% in top brands globally. Over 900,000 tons of added sugar were removed from their drinks from 2017-2022.
Revised Points Limit
The company revised the “My Coke Rewards” program by removing the limits on code entries and points. Removing daily and weekly point limits allowed customers to earn as many points as they could on purchases.
Extended Validity
Eliminating point and code expiration in FMCG loyalty program initiatives like Coca-Cola's "My Coke Rewards" allowed members to accumulate points over time, fostering long-term engagement and reducing the risk of customer disappointment.
Promotional Offers
Coca-Cola introduced “Double Points Days” to keep customers engaged. This enabled members to earn bonus points on specific days, ultimately benefiting them through FMCG loyalty program advantages.
Conclusion
True loyalty isn't built on transactions; it's built on connections.The "My Coke Rewards" showcases the crucial role of customer-centric strategies in the
FMCG industry loyalty program landscape. They prove that building meaningful connections can lead to increased customer retention, brand loyalty, and business growth. Coca-Cola's story reveals how fleeting purchases of
FMCG products can be turned into lasting loyalty through strategic FMCG loyalty programs.
Initially, the "My Coke Rewards" program faced point limitations and code expiration. Their “customer comes first” approach turned ordinary transactions into long-lasting bonds, proving that success in the FMCG industry comes from building meaningful connections and truly valuing the customer with the help of FMCG loyalty programs.
Disclaimer: This case study is for informational purposes only and does not constitute any endorsement or affiliation with The Coca-Cola Company. All information utilized within this study has been sourced from publicly available information on the internet.
