Optimizing Digitized Supply Chains to Drive Customer Loyalty

With supply chain news continuing to dominate the media, this upcoming holiday season looks like retailers and brands will again be faced with the challenges of getting their products into the hands of consumers. In the recent past, the “supply chain” was really only important to manufacturers and retailers that needed visibility into where their product was at a given point in time in the production and shipping process. As with so many legacy businesses, that has all changed with a new generation of consumers who are hyperfocused not only on when they will receive their product, but how and where their purchases were manufactured, and what the provenance is of the materials or ingredients used. Today, consumers are also asking: Was everything sourced ethically? Is this product authentic? Does this product create too big of a carbon footprint?

The key to answering all of these questions is the digitization of the supply chain and the serialization of products with serialized tags or code on pack — a unique code or “digital twin” that gives brands and consumers alike full transparency about the product, its creation, and its journey through the supply chain.

What direct-to-consumer (D-to-C) brands now understand is that a digitized supply chain has a lucrative side effect: increased customer loyalty. Connected packaging turns the product into the (communications) medium by enabling the brand to leverage supply chain data to create compelling content for the consumer in exchange for invaluable customer data. As VentureBeat noted, D-to-C brands understand now what tech companies have known for the past decade — a direct relationship gives “access to more data on how customers use their products, and they can use this data to directly inform product development, creating better user experiences.” This virtuous cycle fosters higher engagement and, ultimately, greater customer loyalty.

Today’s informed consumers hold brands accountable by investigating whether the brand shares their own personal interests in sustainability, mission, vision and additional things such as raw materials sourcing and labor practices. Living up to these values and offering transparency into its manufacturing process is why Patagonia holds the No. 1 spot for best reputation in the U.S. on the Axios Harris Poll ranking of the 100 companies with the best reputation. Millennials and Gen Z consumers will happily share their personal details with the brands they admire because, unlike previous generations, they want to be marketed to in a more relevant and smarter way. By insisting on a two-way relationship between themselves and the brands they support, these consumers are as curious about the brands as the brands are about their consumers.

With new customer acquisition costs estimated at five times greater than the cost of retaining an existing one, according to McKinsey, driving loyalty is one crucial way to improve a customer’s lifetime value and ultimately the bottom line. The loyalty generated at the intersection of supply chain and consumer data depends fully upon the sharing of data via connected products. A brand like Ralph Lauren can fully personalize the conversation it has with consumers, letting them know everything that has gone into making its new Polo shirt. A richer, more personal relationship can be cultivated with this customer because they’ve given Ralph Lauren permission to market to them.

Mowi, the world’s largest producer of Atlantic Salmon, offers a real-world example of how businesses can optimize customer loyalty through connected product. Originally adopting connected packaging to prove that its farm-raised salmon was produced following sustainable practices, this wholesale business pivoted to a D-to-C model during the pandemic. As a wholesaler, Mowi's connected packaging gave the enterprise the desired supply chain visibility, but as a D-to-C brand, it now allowed the end consumer to know everything about the fish they were about to eat — where it was hatched, where it was raised, what it was fed, when it was harvested, and when it was shipped. Mowi, in turn, was given greater insight into its end-use customers’ profiles and allowed the brand to remarket to those consumers by offering recipes, newsletters, and a truer relationship for future purchases.

From mitigating allergic reactions in cosmetics to proving that a product is real and not counterfeit, digitized supply chains provide endless possibilities for fostering engagement and loyalty with unique, authentic and real content creation. Brands that unlock the value created by this transparency will win at loyalty, admiration, and in turn earn a greater share of wallet from today’s more active consumer.

Keith Turco is president and managing director, Americas, EVRYTHNG, an enterprise-grade PaaS for digital identity and data management at scale.