Welcome to CGT's Expert Exchange. I'm Liz Dominguez, Senior Editor at CGT. During each episode, we speak with an industry leader about the key trends that are impacting the consumer goods industry. In today's episode, we'll be speaking with Sara Richter, Chief Marketing Officer for SAP Emarsys, about the Global Consumer Products Engagement Study, her company commissioned with Deloitte, to explore how digital transformation is impacting the status quo of marketing, both for consumers and brands. Welcome, Sara. So why don't you set the stage for us a little bit. Give us a brief background on some of the key questions that SAP Emarsys was looking to answer by commissioning the Global Consumer Products Engagement Study and how your role kind of plays a part in that. Delighted too. So sitting from where we are, so as we said, our brand name is SAP Emarsys. So that means we're part of SAP overall as a company. And as a country, we've been seeing a really fundamental and we think quite exciting shift in the market where companies, particularly CPG companies, are really investing in building really sustainable digital foundations. And we were excited to see this feeling, if you like, validated by Bain and Company. And some really great research where they actually said that 88% of consumer product companies are actually in the process of transitioning to SAP S/4HANA, which, if you don't know, is SAP's flagship ERP solution. And that's really setting a stage for digital foundation and digital transformation. What was also exciting is that 60% of companies were also investing in advanced marketing technologies. So marketers and in these companies are thinking about how they can actually take this digital foundation and take advantage of it to improve how they engage with their customers. So, we wanted to learn a little bit more. So, my team and I sat down and said, well, we need to understand what's causing this shift. What are the challenges that people are seeing? Where might they be seeing opportunities? And also, let's try to understand it from a global standpoint and then zero in on specific countries and try to under their specific challenges. So, that led us to commissioning the report that you've just mentioned. And we conducted it, as you said, in association with Deloitte. And from a US standpoint, we specifically talked to 2,000 consumers in the US, and we complimented that with 150 US enterprise level decision makers, specifically in CPG. So the next obvious question is, well, OK, that's nice. What did you find out? Did it validate some of these things you saw from Bain and Company? And it really did, and it took us down some really exciting paths. So I think the first thing is we saw three key. Disruptive themes really shaping the D2C landscape in 2025. The first one is about organizational transformation. And that's exciting for me as a marketer to see other marketers really solidifying their roles as change agents and inspiring other departments within companies, IT, commerce, sales and service. The second disruptive theme was something that we're thinking about as AI infused customer loyalty. As I think everybody knows, marketers are really actively welcoming AI into their strategies. And they really have gone past some of the early phases of playing around and really are testing and learning in earnest about what are the best practices, what works for them, and how AI can really help to drive personalization. And I'm sure we're gonna talk more about that later. But the third disruptive theme is connected customer data. And marketing teams are facing so much pressure. To use this wealth of customer data that exists across their entire business to truly fuel customer experiences that drive real results that also resonate with customers. So those are the three themes. When we zero in a little bit more specifically on the US, we're really seeing brands struggling enormously with complexity. And a part of this report, which we're calling the CEM index can really help, but we've seen that CPG marketers let's say 29% of them are citing internal complexity, which is siloed systems and fragmented tools and disjointed marketing efforts as their real barrier to improving engagement. And you can see how critical that is when you think about the three disruptive themes I've just talked about and how that could be really a barrier to moving forward and really taking advantage of some of the opportunities that these themes present. Absolutely. Yeah, you know, we hear more and more that it's not necessarily that not having enough data is the problem. It's the complexity and getting all that data together and analyzing it. And so the report found that consumer behavior is becoming harder to predict and brands are having difficulty engaging. What would you say are some of the major roadblocks that CPGs are tackling within that? Yeah. So as you said, so. 77%, which is a huge number of CP marketers said that consumer behaviour is becoming harder to predict, which means really I think the 77% just don't feel that they can. They don't know what their customers are gonna do next. And 72% then say it's harder to engage meaningfully. So not a huge surprise. You're not sure what your customer is going to do next, what they want next, where they're gonna engage next. It's unlikely that your engagement is gonna be fit for purpose. So what are the major things? You hit on data. And I mentioned that, and I think we will probably keep coming back to that today over and over and over again. 51% of all CP marketers say they can't access and use data in real time. If they can access and use data and real time, then they're not engaging in real-time, and they're not acting in the moment that their customer wants them to act in. And that is a massive barrier to truly successful customer engagement. But they got a challenge because 49% of them are telling us that their organization's data is too unstructured to use effectively. And that can mean lots of different things. But what it boils down to is only a third think they can effectively use that data to personalize their marketing content and campaigns. And if you can't personalize, then from an engagement standpoint, you're dead in the water. Personalization is the fundamental key to success when it comes to customer engagement. It's the fundamental key to success around being in the right place at the right time with the right message. And I think CPG companies are realizing this. When the ones that we talk to in this report, they say they are looking, 41% are looking to increase customer engagement across their existing channels, right? So they wanna engage more on the channels they know they have today where their customers already are and where they're already starting to see some success. They wanna automate more activities and campaigns. Why does that matter? Allows them to move faster. You need to be able to personalize and you need to personalize at scale and you to be agile which means you need to be quick and then you need to reduce that complexity. You need streamline your tools and processes and 39% of CP marketers are thinking about that. So those are the things that are going through their minds and when they're thinking about investing they're focusing on surprise surprise AI powered customer engagement because AI is gonna allow you to scale, AI is going to allow you to personalize its scale. They're thinking about customer loyalty. You need to be thinking about a customer as more than a single transaction or a single interaction. Customer loyalty is about the lifetime of the customer's engagement with you. How do you continue that? How do understand that not every engagement is going to be a transaction? It's gonna be part of an overall experience, an overall conversation if you like, that you as a customer are going to have with the brand. And you as the customer want that conversation to feel two-way and you want it to feel that it's human to human. And last but not least is omnichannel engagement. I've already touched on the fact if your message is right, but you're not in the right place with it, it isn't going to be received. So you need to engage in the channels where your customers want you to be. And that's really what omnichannel needs means for every single brand. What would you say that personalization and kind of more organic dialog between brands and consumers look like? What does a win in consumer engagement look like with companies you've worked with? Some fabulous examples. What a great question. We have some amazing customers who are absolutely high performing in this area and really are looking at doing customer engagement in a way that should be setting an example for the rest of the market. So the one I think is kind of fun that I've been talking a lot is Ferrara. They actually are in a very competitive environment, which makes sense when you think about it, but they had a problem that was very much some of the things that we've already been talking about, about being limited by legacy technology. And they recognized that they needed to modernize. Because if they didn't, they weren't gonna be able to create a customer-centric omnichannel experience. Partnered with SAP and with Deloitte, interestingly enough, to pivot to a really data-centric, data-informed approach. And you notice we're coming back to data already in the examples as we've talked about that being a key issue. They used SAP Emarsys, SAP's customer identity and access management solution, SAP's Customer Data Platform or CDP, and, yes, SAP HANA, to actually look at unified customer profiles and integrate real-time data. Okay, well, what does that mean in real life? Well, in real life, it meant that they had a 59% increase in contactable customers, which is actually 20% above the industry average open rates for email campaigns, and a 300% growth for one of their candy brands. That's huge. They also, in the process, discovered an entirely new segment. In the process of looking at their data and thinking about who their customers were, they uncovered a new segment of gamers. Because gamers, funnily enough... Really like to sit and eat candy while they're gaming. And they, if they do, and they really like to go to events where gaming and candy and prizes are all combined. So, Ferrara created this amazing set of experiences and engagements around that and identified a segment that they had fans that they didn't even know about, if you like. So they've now started to truly engage with those fans and actually build loyalty with those bands so that they are going to associate their chosen candy with their favorite game and their favorite activities. And you can immediately see how that's creating a much more emotional experience, a much lasting experience and is generating real loyalty. So that's kind of my fun, one of my fun ones. But let's flip because there are other people that are doing completely different things in a completely different market. So John Frieda, many of us will be familiar with John Frieda, particularly those of us who are in the business of buying haircare products. But they were facing a challenge as they were starting to think about how do they connect effectively with customers directly in this D2C world to drive sales? And how do you they identify their audience for new products? Funnily enough, exactly what I just talked about with Ferrara. So they partnered with us and with Bluewheel and they created a really comprehensive Omnichannel launch strategy for their UltraFiller Plus product. And they looked at segmentation and optimized customer journey, marketing automations, a really, really comprehensive email strategy. Again, what does that mean in real life? Well, this product, UltraFiller, became their number one most popular product. That's amazing. During the ramp up of the campaign, they had a Forex conversion rate compared to their average and 88% of their users actually purchased not one, but two more products when they bought this new product. So they drove a whole cross-sale upsale as part of this whole engagement, which again, just goes to show. They were getting it right. They looked at their data. They understood who their customers were. They thought about where and how and when do we engage with those customers. They engaged with them in a personalized, connected, ongoing way. Customers were happy and there were business results. So the two things go hand in hand. Sometimes it's actually about other things that are more emotional. So Molton Brown is another wonderful customer of ours, yet another one I'm sure many of us are familiar with. And they were actually looking at loyalty programs and promotions and subscription channels to support their environmental, social, and government's initiatives, such as relaunching, launching refillable solutions, which is a very different way of thinking. So they partnered with us and the result was a 68% increase in customer value compared to actually the customers who weren't participating in the environmental, social, and governance initiatives. So it's my turn to bring data back into the conversation. I wanted to dig into a really interesting finding from the study, which said that 51% of marketers said their organization suffers from dark data. Can you explain what dark data is and how consumer goods companies are addressing the challenge to approach their data roadmap in a way that's more strategic and respects consumer privacy. I would love to. I think it's a really fascinating topic. It's quite a creepy name. Isn't it? Dark data. Yes, it is, doesn't it. You know it's not good immediately. There's no hiding from that. So dark data is defined as data that's collected by marketers with no clear purpose. And probably worse yet, is actually not then in use in any way, shape form that actually benefits the consumer. So therefore, our ominous dark cloud of data here, right, that we're pulling all of this in, we don't know why we're doing it. We don't if we're gonna use it, we're probably not. And most of the time we don't and of course, if you do it enough, it's noticed. And consumers don't like that. But 51% of CP organization told us that their organizations suffer from dark data. That's half. That's quite terrifying. Think about the amount of data. That they're collecting without real purpose and it isn't actually delivering any real benefit. And that is actually having a negative impact because 71% of consumers are actually put off by brands asking for data, but not explaining clearly how it's going to be used. Those numbers go up when it starts to be personal data, so it's 79% of consumers, and 80% wanna see a super clear privacy strategy. So the bottom line is a consumer is gonna expect a value exchange. If I give you my data, my personal data in particular, I'm going to expect you to guard it and be trusted with it, but I'm gonna expect value back from it. So if I tell you something about myself that is particularly relevant. How I engage with you, how I interact with you the products I buy from you, I expect you to come back and use that in your next communications with me. The problem is then that less than half of consumers feel they understand what they're getting in return for their data. So if they don't understand what their getting and they think that 43% feel brands collect it and don't use it, 41% think they take too long to do something with it, they're gonna stop giving us their data well that's a disaster, because if you stop getting that data, you stop, you clog your ability to understand your customers. And once you clog that, you can't engage with them effectively. You can't personalize. You can maintain their loyalty. So this ability to actually leverage consumer data is really pivotal. It's pivotal to understanding your customers and it's pivotal to engagement. It's pivotal to loyalty and it is pivotal to those business outcomes that all marketers want to engage with. And I think if we go back to where we started our chat and we chatted a little bit about some of the things that we saw in the marketplace, some of that data is also not just the data that consumers give us, but the data that's collected through things like ERP systems, which we started our conversation about. Consumers are actually telling us things, how they're buying things. And much of that is actually in our ERP system. So I think it's exciting that 35% of CP marketers are sharing customer data with their ERPs. And 53% are planning to improve this. They're relatively small numbers, but it says it tells you how people's brains are moving and that they are seeing the value in this. And I think the companies that do this are gonna be the ones that shine. They're gonna be the ones who differentiate themselves out of the competition. And to go back to your question you asked me a little while about value, they're gonna the ones that are demonstrating value back to their customers. Great, and so let's get forward looking for our last question here. What does consumer engagement trend shifts look like in the next several years, given that 85% of all marketers believe that they should adapt to change faster than ever before? How do you think companies keep up? Consumers are harder to engage and they're harder to retain. And it's not just about the engagements that we as marketers are providing or how well are we using our data. The reality is there are external factors. Cost of living is an external factor. So you're seeing 57% of preservers switch to own label or store brands from a branded item. Now that's gonna be a combination of cost of living, but also a lack of loyalty and a lack of connection to the brand that they perhaps were purchasing in the past. So I think there's that piece to consider very seriously. I've talked about personalization, I'm gonna talk about it again. It is the craving for personalization from consumers cannot be underestimated. And the reality is to do that at scale and to do it in real time, you have to have AI. 89% of CP marketers absolutely believe that AI is gonna be essential to engaging with customers. And I think that's really important. However, the flip side of that is that only 9% of consumers want more obvious personal interactions using AI. They want the benefits, but they still wanna feel that they're interacting with a human being. The trick for marketers is to understand how to use AI to drive personalization at scale, to activate their data, but maintain that human connection with their customers. And I think that balance is gonna be a real trend and it's gonna be something interesting to watch as we move forward. We chatted about channels. They're popping up and proliferating everywhere. They're volatile. So really trying to understand which channels you should be using. And being able to prepare for huge changes in a channel. So re-interesting that 73% of CP marketers told us that they had been preparing for a possible TikTok ban in the U.S. Based on everything that happened earlier this year. And I think people have kept those plans because they're concerned it could happen. So if one of your major channels literally overnight vanishes on you, and that is a major business driver and a major way of engaging with your customer. How are you thinking about the other channels you have available where you know you can engage with those customers? Absolutely. Thank you so much for bringing all that down for us and for providing these great insights. This brings us to the end of our conversation. Had a great time talking with you and until next time on the Next Expert Exchange.