Paul Morrison
Hello and welcome to Retail and Consumer Pulse brought to you by WNS. In this podcast series, we explore the world of retail and consumer goods, discussing the latest and most innovative ideas from industry experts and leaders.
My name is Paul Morrison. I lead the WNS Retail and Consumer Practice in Europe. And for today's session, I'm delighted to be joined by Dorotea Baljevic from Frankfurt, principal consultant and EMEA AI lead at the global technology research and advisory firm, ISG. Hello, Dorotea, thanks for joining.
Do you want to say hi and tell us a bit about your work?
Dorotea Baljevic
Hello, Paul, and thank you very much for having me here. Yes, of course. I predominantly focus around anything digital, data and artificial intelligence related for what we call asset-heavy companies, which is very much in line with consumer goods companies - anything that actually produces physical products. That can be anything from automotive, aviation, CPG, life sciences and healthcare. And the reason being this is they have particular purposes. They have a very different aspect on understanding data and AI challenges, which we'll go into today a little bit.
But that's what I predominantly do all across EMEA and focusing on how we can make our products safer, more sustainable in the broader sense of sustainability, but also that it gives value generation for everyone across the stakeholder and shareholder value chain.
Paul Morrison
Brilliant. That's great, Dorotea.
Great to have you on the call. For today, we're going to discuss quite a juicy topic called next level revenue growth, and how AI and analytics are changing the game for consumer goods. So, a big topic that I think sits quite squarely across some of the themes you've touched on there.
Just to frame the discussion, I think, the starting point is the sector of consumer goods, of CPG, is in a tough place. There's been persistent inflation over a period of years. Margins have squeezed as costs have risen. Volumes are stagnant. And behind that, there is, you might say, consumer resistance to further price rises, brand loyalty, as well as possibly on the wane. I saw a statistic from Salesforce that over 80% of CPG leaders are seeing or feeling this difficulty in maintaining consumer loyalty.
And there's growing complexity around the move to online with 20% plus of CPG sales now online. So there's a lot of pressure and complexity. So I think that frames the question around how do CPG players stay ahead in this environment? And we'll dive into how analytics are part of the answer.
Along the way, we may also bring in related topics, such as RGM and RevOps. So, there's quite a lot to unpack. But first of all, perhaps, Dorotea, could you, from your perspective, set out some of the drivers behind this push, this imperative for increasing revenue in consumer goods?
Dorotea Baljevic
Definitely.
And when you were just enumerating everything that's going on, it's no wonder that CPG is feeling like it's a volatile market. And what they're dealing with is not a complicated problem. They're dealing genuinely with something that is complex because they have global supply chains that are highly integrated, which is obviously bringing on more and more uncertainties as we have had changes in not just governments, but different processes and policies in place of where does the workforce come from, where does the sourcing materials come from, what are trade agreements? So this is impacting these margins.
But you've also got something that's happening in the last couple of years on consumer behavior in particular. I don't think we need to talk so much about the supply chain disruptions. Everyone has been talking about that quite heavily ever since the pandemic.
But what we are also seeing is the sensitivities on consumer perceptions, their loyalty to particular brands being extraordinarily volatile. While most people think that you would be able to prioritize things that you want to do, like greener products, new statistics are showing that Europeans are actually prioritizing their own wellness over sustainability in certain choices around food and even clothing. So, all of a sudden, you're having to look at what are they actually trading off in terms of what are the products that we're trying to produce? So it's no longer, have I got CO2 emissions that are being reduced? Am I a friendlier product to the environment? It's what does it value or give back to me as a consumer? And even more so, we tend to be quite greedy, Paul, you and I and every consumer, and we want everything fast.
This major shift to the direct-to-consumer has also been extraordinarily disruptive to major brands. I mean, there is a great case study, you might have talked about this before, with Gillette and the Dollar Shave Club, that came out of the blue. Gillette didn't really take them seriously in 2011.
And they said, well, we're going to go straight to the consumer. In 10 years, they were able to eat, I think it was around 50 to 60% of the market share for Gillette. As of 2025, now Gillette actually has a direct-to-consumer model.
It's in their annual report, and there's a strategic focus. It took them that long to actually adapt and shape. So, all of a sudden, the focus is going back to - what do we want to go to our customers, our end shareholders? What do they think is actually value, rather than necessarily looking at, we've got all of these uncertainties.
So, we're having to use data to navigate the uncertainties, but also go back to our core. What are we producing, and why, and for whom? And this is really pushing then, how do we generate the right areas of revenue streams for these goods?
Paul Morrison
Yeah, that's a lot of complexity there. The point around direct-to-consumers is a really interesting angle that perhaps we can dig into in a moment.
But you bring out their data as the underlying foundation for the solution in many of these, and solving many of these challenges. What do you think some of the challenges are in turning around these challenges, solving them, and getting on the front foot when it comes to putting in place a data-driven approach for AI and analytics? What are some of the challenges in going on the offensive here?
Dorotea Baljevic
There is a few, and of course, it differs by every CPG. Some invested very early on in their data capability, including training from not just analytics teams, but all the way to their executives. They made it an absolute priority that everything we do is going to be data-driven, whereas others had different models that went along the way. But there is still the war on talent. We don't have that many people that are capable in both understanding the domain of CPG, the products themselves, plus the necessary statistical models or analytics that's required to truly make sense of this.
The technology is actually not so much of the problem. What we see with some of the CPGs is that they've had aging infrastructure or not right fit infrastructure because it hasn't been selected in the best ways. There's this term that maybe some of your listeners will know, the shadow IT or shadow data. Because your internal IT teams and your data teams are too slow, you use your own purchasing powers to build something on the side.
It's meant to be a bit of a pilot, and then it grows into a behemoth. And then all of a sudden, it's not actually able to do these wonderful things that you could say, for instance, customer behaviors. What is happening per region? Can I cut and slice and change the data and forecast it? Because it wasn't built for the intent that it was originally going to be designed for. AI has further convoluted this because as we know, two years ago, ChatGPT came along and blew everything apart and truly made it democratized.
Everyone could be a mini data scientist of source, push their data in, ask and interrogate with something like a generative AI question and be able to come up with some sort of answers. The issue is it didn't actually ever solve the problem with the garbage in garbage out, problems with low quality data, missing data. This still is a major issue. And it's been even more exacerbated when we've got now agentic AI, which takes further off. This AI is going to make decisions on your behalf for certain things and make the right approaches. Again, if there isn't a good basis to do so, it makes this further of an issue.
So, it's going again, it's pairing this back. How can I remove all of that? What are we trying to actually do? How can we compliment this with the skills internally that we have and then move forward? So, data, in fact, is still a challenge. The base data.
Paul Morrison
Absolutely. Those are great points. And I agree with the challenge of the siloed, fragmented, low quality data.
I haven't really worked with a client where there's been some sort of challenge in that data space and talent as well. I think, in the experience of the team at WNS, who work extensively with CPG companies around analytics and AI solutions over many years, I think these are perennial challenges. There's also challenges around budget, cost pressures, organizational inertia and resistance to change, perhaps like many other big change programs, and what we very often see is there's a need to a think about the long term, which means making a start with the low hanging fruit and the highest return initiatives that may be not perfect or optimized to start with, but can demonstrate value, can create funding, create momentum and generate change.
So, what I'm saying is we live in an imperfect world and people in organizations and CPGs space have to get their hands dirty and push ahead pragmatically on that. Is that what you see as well?
Dorotea Baljevic
There is very much a pragmatism, but you just said a very interesting word there. What makes value, and sometimes, that's what gets forgotten along the way in terms of these technology and data investments. I'm all for pragmatism.
I think we had one client, they use the term, let's create some quirks along the way. But that means this is not actually going to be a strategic lever. So, at one point in time, the organization does have to fight and say - what are we going to do to make sure it doesn't harm, let's say core business. But if we can see that this is genuinely going to improve our very rejuvenating activities, how do we invest in that and our people to make sure it's in that right direction? And that's where that balance is genuinely a bit of a struggle for some of the CPG players. You're right, because they go quarter by quarter.
It's extraordinarily fast paced. Often, some of these long term investments are very hard to actually consume. There has to be more of that move and the decision, are we going to compete on systems like AI? Are we going to compete in a different way? And how are we going to complement these skills or that missing data and to make sure that this is quite strategic in a three to five year mark? And that is possible.
It doesn't need to be ten years, but what can you do right now? What is that decision? And there is a part of pragmatism in place because there are highly intelligent people in CPG space. They know their data better. Sometimes, when analytics specialists come in, they often distrust it because they say - look, I told you it was going to be this. I know my market well.
I've seen what the suppliers have been doing in the past. We've already got a trusted relationship. And sometimes their forecasts are far better than what would be, let's say, apparently unbiased analytics. And there is this all of a sudden greater grievance and insecurity around what are we doing with this data? Is it actually going to help us in the right direction, or is it actually hindering us and potentially taking part of what our role is? So that's a real issue.
Paul Morrison
Absolutely. Well, I think that sets the scene very nicely in terms of some of the challenges, the realities. And I like the point you make there about success here is balancing the dirty realities with having a vision, having a strategic plan and pushing ahead with it. I completely agree with that. So, let's change gear and take a look at some of the ways that technology is changing the game in terms of revenue growth.
And just to set out a point of view, we absolutely do see and we absolutely work with organizations that are achieving massive value creation with AI and analytics in the CPG space. There's a benchmark that we believe is accurate of targeting 3 to 5% revenue uplift through advanced analytics and CPG is absolutely achievable. And then looking at the area of promotional ROI as another key lever of value, 20 to 30% improvement from some of the interventions that we work on and see.
So, these are big numbers for some very large organizations. It's possible to do that. Do you want to pick out a few themes or use cases that jump out to you, Dorotea?
Dorotea Baljevic
Definitely.
And it's, again, more on the consumer side. That's where you can definitely see that there is a significant approach that can be done with technology there. So, one is actually looking at more hyper-personalization. You're making it more experiential. What we're seeing is a lot of consumers, even though it is moving to online, it's not just about the product. It needs to be a product paired with services, and how do I experience myself, my lifestyle with it.
With early adopters, of course, you could see things like Home Depot, IKEA, in terms of showing your color palette based on where you are, what does it look like in your living room, in your bedroom, making sure that it aligns to how can I envision myself with something like this, rather than just having that physical palette and who are you painting on the wall. It's sometimes very difficult to see in a big space. But this has been extended to even further.
It's been more and more in fashion. Recently, we've seen this with the virtual mirrors. We saw this in COVID with luxury brands actually introducing makeup mirrors where you don't actually apply any makeup on yourself at all, you can just with a tap change the color of the lipstick based on the palette that they have, the eye shadow. And this is very unusual because typically, luxury brands were always deemed to be seen as highly personalized service with someone that would be catering for your needs the whole time. But this also increased their sales because it allowed it for a target group of people, that during the pandemic, were not spending money on, let's say, their coffee shop or their lunches in the office. They had more disposable cash.
They could use this on their phone app even, and then make the purchase directly there. So, we actually saw a lot of, I suppose, capable people purchasing things from luxury brands. And then, what we had even more interestingly is the use of virtual reality and augmented reality for products from a farmer's point of view. How do you educate the farmers with new technologies and capabilities of products, and how can they experience this back on their side?
I think this is great and actually showing how can you experience this and see how does it fit into my life? That's becoming more and more present. And it's not showing that we have to micro segment the market. Rather, it's what makes sense for every individual, which means you need more data to do this in terms of behavior.
Paul Morrison
Absolutely. I think those are great examples there. And definitely, I think you hit the nail on the head in terms of calling out earlier and again, the area of wellness and of cosmetics at the leading edge of many of these developments.
A couple of examples that I came across was the use of health data. Organizations can now process appropriately much more personal individual health data where that's granted to them. One example is a company called Bionic that uses the consumer's health data to make hyper-personalized nutrition recommendations for that consumer. That simply wasn't possible before the current generation of solutions. And similarly, in skincare, Boston-based Smart SKN offers hyper-personalized skincare products, powered and enabled and configured by AI in the back end. So, it definitely does seem to be the leading edge, but I think it could not be the only space where hyper-personalization is built into the offer. Then there's potentially a 10 to 15 percent revenue uplift that's available to the CPG. That's across the sector. So, hyper-personalization is a very interesting and dynamic space. What's next on your sort of your top list there?
Dorotea Baljevic
Just before we go on to that top list, it's really important what you just said there, because what's changing here is these companies are no longer just taking data from consumers. Before, you'd be almost forced to opt in. There would be surveys that would be done, consumer market groups that would be done. And there wasn't much for what value do I as a consumer get back? And this is why these are so successful.
Those numbers that you were talking about, you can actually see the improvement in terms of the number of sales because there's now actually a value transaction. It's not just about I pay for a product. I'm paying for that experience that improves my life. That's the key!
Paul Morrison
That's a great point. So, it's not so creepy or intrusive. This is really useful and valuable and wasn't possible before. I think that's really exciting about it. Thank you.
Dorotea Baljevic
No, no, of course. On the other side, there has been, we talked about this before, more volatility on the market and it's not just in terms of supply chains. It's also consumers. If their price points are being reduced, they will go to competitive products. They will sometimes use what may be perceived as an inferior product or alternatives. They will trade off based on this, but what we have seen is, if there is continued trust. There's actually a great research that's been done over the 22 years. It's the Edelman Trust Barometer Report. And I do encourage everyone to actually read this on an annual basis. It follows across about 35 different countries - what is the behavior of people around brands that they trust, organizations, roles. Huge analysis there! And trust is highly correlated also to how loyal people will be to certain products and businesses.
We have seen that has been almost forgotten along the way in this concept of loyalty management, the points schemes because that data was not necessarily being used with the best intentions all the time for your customers. It was to understand consumer behavior and lock-in potentially. These models have aged. There needs to be a new way forward.
Some of this has actually changed the approach. And I quite like, we were talking about this earlier, Paul. In Germany, there is a very, you would call it a legacy company, close to 150 years old, a clothing warehouse. And what they realized is we need to actually stay present. We need to continue for the next, hopefully, 150 years, and we need to move into the data age. And they started actually investing in very specific use cases around data science and AI capability. And what they saw was, we can actually use the data from a consumer behavior to help them make their next purchase. So, what does this concretely look like? You can go into their bricks and mortar store, or you can actually go online to have a look at their catalog.
And, of course, there's a search function. You might be looking for blue suede shoes. And instead of it actually coming out in an alphabetic order, in a price point order, what it does is, if you've been already a loyal customer, they know from the data points your typical purchasing habits.
Is it certain brands that you really like? Have you liked certain things in store and tried them on? Is there something that you really appreciate, a comfort over style? And what it does is, rather than removing certain fields or the entries from the catalog, it actually prioritizes what you see first. And what they saw was, automatically a 30 to 40% increase in the number of sales online by having this changed.
Paul Morrison
That's a great impact. And it's really interesting to hear about that from, you mentioned it was a national or a local organization. So, a global giant was able to innovate and create that sort of insight and solution. It's more democratic than maybe earlier ages of advanced analytics were previously.
So, that's super interesting. And it brings to mind a similar parallel case study with WNS, planned in the drinks space that typically liked to send out promotional information to its customer base. But it would take 15, 20 days to prepare personalized messages and recommendations. And it turned to Gen AI to automatically create individually tailored recommendations for the whole database to produce that within 15 minutes rather than 15 days. As a result, it created four times as much engagement and sales at the end of the campaign. So, a national brand was able to tap into AI to create basically immediate ROI from AI in a way that just wasn't possible a few years ago. That's another example of how technology is changing things. Just one final thought. I'd be interested in your views.
We're talking about loyalty management in a way, it was. It's not a new thing. Tesco Clubcard was created 30 years ago. And some have been saying, are these kinds of programs dead then? So, presumably, you see there's life in loyalty management then for quite some time. How do you see the big picture?
Dorotea Baljevic
You're quite right. Because this also, National had, I think they were also one of the first adopters in Germany for having a loyalty program.
So, this is decades old. But what has to change is going back to what makes sense from our consumer base. What are they actually wanting to get out of this? It's no longer these point schemes, and what do you actually get from a point scheme? How can you trade that in? If it's a Tesco, as an example, if I'm looking to have a more healthier diet, how can I actually complement that with my basket? What is the best deals of the week? What is the value add that you can actually provide to your consumers at that period of time? So, we often talk about how do you map the persona? Now, CPG is very good at this. But sometimes, what they forget is where is their personas across their journey? There's the term breath to death - from when someone is born all the way into their age, where are they along that journey? And how are their tastes, their preferences, their needs also adapting during that period? And sometimes, that movement doesn't always get mapped all the way.
So, yes, you're right, Paul. You said CPG can be quite pragmatic. We can't do everything, can't invest. But what are some of the data points that we can augment to understand what's going on there? How can we provide better services so that they continue to see us as a trusted brand, that they continue to be with us during different seasons, different years, as they go into different products? And sometimes, do we partner with different products? Sometimes, our competitors potentially create something that still keeps them involved into our ecosystem. So, the change needs to happen with loyalty management in terms of going back to originally what the term was. How do we keep them there for that entire value chain?
Paul Morrison
Absolutely. Just looking at the clock, I think we will need to start looking at the future in a second. Was there anything else on your key use cases or key themes that you wanted to bring out in this conversation?
Dorotea Baljevic
Perhaps the only key factor is also just really underlying the fact focus on the consumer side, focus on truly understanding and investing. How does that map into your revenue streams and those value streams? Then that makes it much easier to complement what is the necessary technology or the investments that we need to make that will be appropriate to help us hypercharge that.
Like you said, Paul, the numbers are there, but it depends on what do you already have in terms of your internal talent and capabilities? Where can they get that data? And does it need to be hyper-boosted or augmented elsewhere? Because we don't want them to be in competition with their internal capabilities. So, things like real-time pricing, having things that are in these global chains, how can we make them more dynamic? So, there's great AI capabilities. I think it's also in Unilever at the moment where they're complementing their internal supply chain team with AI to be having a look at where are areas of risk? What are alternative option and recommending those options before the news hits out, based on is there natural disasters? Is this an uncertainty in the market? What's a better price point? And then, that helps also with the margins later on.
There are definitely areas there, but really it's for your audience just to remember why we're doing this. We're selling products, hopefully to give joy to our consumers. And what does that look like? How can we start mapping that? And where are we missing the data to help complement that on that journey?
Paul Morrison
It's a great way to frame the topic, because even in a short conversation like this, there are so many different avenues and dimensions to it.
Just maybe another additional way to think about the overall, the big picture here, the two overlapping concepts that are, again, not new, but I believe, and we at WNS believe, are increasingly relevant. And those two terms are RGM, Revenue Growth Management, and RevOps. And without the time to jump into them in too much detail, we would see RGM, Revenue Growth Management, as really bringing together a disciplined, focused drive to optimize pricing, promotion, product mix, trade investment, to really drive revenue.
Now, those are absolutely essential, classic, commercial disciplines that are not new, but bringing them together under RGM, potentially with an RGM or a revenue leader, we see is increasingly common and important in the CPG space. Is that something you see as well?
Dorotea Baljevic
Oh, definitely. You're right.
Those are the five traditional levers. They won't actually continue to change unless we move away from making sure that it's capitalist value for money. So, that will continue to be there.
But what is slightly changing is the need that it can't be a separate team. We can't expect one person from, let's say, supply chain, from consumer products to be leading into the RGM practices, but rather it is a value stream. That means it's embedded in almost everything that everyone's doing.
So, they know exactly how this maps into whether a customer buys this or not, whether we're going to have a good quarter or not, because that's one of the key factors that sometimes we see, and I'm sure you do, Paul, as well, with some of these CPG consumers. Not everyone sees their role, how they report or what data they produce that actually contributes concretely to better behavior, to better purchases and to more revenue coming into place. There's been a mismatch with revenue stream or revenue-generating activities with the value-generating activities that make consumers happy, want to purchase this more, make them more loyal, and that's not necessarily continuously mapped across the entire feed, so that's including sourcing.
Paul Morrison
Please carry on.
Dorotea Baljevic
That includes sourcing raw materials to the manufacturer, the production of this, and of course then the disposal. That is something that I think is the next generation of CPG. We do see some clients are starting on that.
It's not an easy exercise, Paul, because there's a bit of change management there, but RGM is definitely not dead. It's just looking at how can we augment it with data AI practices, but also the right operating model.
Paul Morrison
I like that. Absolutely. I think, we see this underlined by solutions as well that are being built with that view, that end-to-end value creation view in mind.
So, a number of platforms, a few platforms that provide that joined-up view that supports that way of thinking. The other framework to drop in the conversation here is, I was saying, RevOps, revenue operations, which is a similar concept but much broader - not only thinking about those core commercial activities, but thinking of the task of creating revenue in a very broad end-to-end process, thinking about sales, marketing, customer service, parts of finance, all linked together and talking together and operating well together.
Again, it's not a new term, but it seems to me, as we had this conversation, we talk about value, we talk about some of the enterprise-wide challenges around data and understanding the customer and so on, the need for that broader view. It seems that RevOps is more relevant than ever in this AI era. What's your take on that?
Dorotea Baljevic
Oh, indeed. It's funny because inadvertently, well, not in technology, we've had this term DevOps, making sure that you have integrated, iterated development of releases of your application code and products, and what that saw was we had to also change the operating model of businesses too. We moved away from traditional project methodologies to agile product methodologies, meaning the business, technology and data teams were closer together.
This is the same thing in the ethos with RevOps. Some people say, well, hold on, aren't we doing the same thing? Well, same principles, but doing it in a very different manner to make sure that the original intent of RGM is actually being fulfilled, and it needs to have these changes in place. I hundred percent agree there.
When we talk about value, I think it's really important to know that sometimes customers get stuck here. It's not just about the revenue, the dollars, the pounds or the euros. It's also about, because we know these factors include the environmental impact and also the social impacts.
There are even questions like, how can I make sure that my employees are healthy and happy? Because researchers show time and time again, healthy, happy employees are more innovative and it also relates to customer loyalty, customer trust and more sales.
Paul Morrison
Great point. Yeah, value is in many things.
Absolutely, completely agree with that. So, just before we wrap up, with time marching on, any other thoughts on next steps, recommendations on this whole agenda, advice to organizations, CPGs that are either starting out or having challenges in this revenue growth revolution we've been talking about?
Dorotea Baljevic
Definitely. For the ones that are absolutely starting out, talk to your peers.
Sometimes, they might look like non-traditional competitors or in similar areas. See what has been done. Do actually seek help. It's much better than trying to do this alone. Sometimes, the pragmatic approach may see you fall behind. And for those ones that are struggling, understand where the gap is.
And it might always be, we don't have the right system. Well, actually, what is it that you don't have in the system? Why are you not trusting that particular data? What is not being shared? What's not actually possible to be done? That will then actually determine, does this relate to your core strategic focus in terms of your business's future plans? And what can then we miss? How can we fulfill that gap moving forward?
Paul Morrison
It's a key point. I like the way you said that sort of get help.
I think that's a very good point. The point is that there is a lot of war wounds along the way where initiatives have been pushed out sometimes successfully, sometimes not. And I would conclude my thought in that we've been talking a lot about technology, what technology is achieving and that's changing the space.
But we still live in an expertise economy. All of these changes are driven by great decisions, by smart people trying to connect with human beings. And expertise has never been more valuable than that. There are different ways that can be tapped into, as you say, use cases and working with peers. There are accelerators, there are tools, there are capabilities that can be built within a team like a CoE to bring together and to nurture some of these capabilities. And there are external experts to help at each part of the way as well. So, help is at hand.
Any final thoughts, Dorotea, before we close?
Dorotea Baljevic
I like what you said, help is in hand. And it's sometimes actually being aware that there are many different models out there.
It's not just the traditional, maybe what people were not aware, just consulting. Consulting even has different commercial practices in place. There are different ways, there are partnerships, there are GCCs, there are university models and there are joint ventures.
There are so many different types to make sure, even for a CPG company, what is the right price point to help them fulfill that gap?
Paul Morrison
Brilliant. Many thanks, Dorotea. We'll have to close there.
Thank you for a great discussion. And I look forward to our next conversation.
Dorotea Baljevic
Thank you, Paul. Definitely.
Paul Morrison
Thanks as well to our listeners for joining Retail and Consumer Pulse today. If you've enjoyed the show, please do like and follow us and you can stream past and future episodes via all the major streaming providers such as Spotify, Apple and Amazon.
Thank you very much and see you next time.